China is the world’s largest pork producer and consumer, and the huge pork consumer market has also cultivated a complete pork industry chain. According to statistics from the U.S. Department of Agriculture, China contributed 48% of the production and 50% of the consumption of 110 million tons of pork in the world in 2017. China’s per capita annual pork consumption is also significantly higher than the world average.
The pork industry chain can be divided into three major business segments, namely upstream pig breeding, midstream slaughter and downstream meat product consumption.
Upstream of the pork industry chain-pig breeding
Pig breeding companies purchase breeding pigs, feed, vaccines and other products, and produce fattening pigs through the steps of sow littering and piglet fattening.
On the other hand, the distribution of pig production capacity in China is extremely uneven. The main production areas are mainly concentrated in the Sichuan Basin, the Huanghuai Valley (maize and wheat main production areas) and the middle and lower reaches of the Yangtze River (main rice production areas). In recent years, the amount of breeding in the Northeast has gradually expanded.
China’s pork consumption also has certain regional characteristics. People in the northern regions tend to eat beef and mutton instead of pork. The per capita consumption of pork is very obviously low in the north and high in the south, especially higher in the economically developed southeast coastal regions.
China has a number of enterprises with considerable production capacity in the breeding industry, but due to the large base of the national pork market, the concentration of breeding is still very low at this stage. Under the fragmented market structure, some large-scale breeding enterprises can only affect the price of live pigs in a few areas, and the national leader has not yet emerged.
Midstream of the pork industry chain-pig slaughter
One end of slaughter is connected to upstream breeding, and the other end is connected to downstream meat product consumption, which is a key link in the pork industry chain. The profit of a slaughter company is closely related to the profit per slaughter head and the slaughter volume, and is directly affected by multiple factors such as upstream live pig prices, downstream meat prices, slaughter unit costs, and live pig supply.
The overall market concentration of the slaughter market is low, and the production capacity of large slaughter companies has not been fully released.
Downstream of the pork industry chain-meat processing and sales
Pig slaughter companies purchase fattening pigs for slaughter and process them into fresh frozen meat, part of which is sold directly to end consumers, and the other part is used to supply downstream meat processing companies. Meat processing companies purchase pork to carry out product deep processing, and finally form low-temperature meat products and high-temperature meat products, which enter the hands of consumers through supermarkets, stores and other channels.