Chinese Chicken Farmers Expected to Gain 2700% Profits: 01-08-2020

According to a poultry company from eastern China, the current shortfall of protein source because of an outbreak of ASF  in pigs last year have surged the demand for alternative protein sources such as chicken, beef, and duck. This increase in demand has soared the prices especially for white-feathered chickens and the company is expecting a profit of 2,993% 2019. Shandong Yisheng’s Livestock and Poultry Breeding Co reported that it expects first-half net income of 900 million to 905 million Yuan ($131 million) this year, as compared to just 32 million Yuan that company earned at the same period 2018.

According to Shenzhen’s Stock Exchange, the company share rose to 7.5% in 2019 and this is about 200% advance as compared to 2018. Though this growth and profits seemed to be quite attractive for the poultry market and farmers, this abrupt profits growth even because of shortage of supply indicates the signs of weakness in the industry and company. Though the Chinese government is trying to reduce the gap between the supply and demand, by increasing the imports of poultry specifically white-feathered broilers but the prices are expected to remain high in the market as even the imports will take time to build up the stock white-feathered chicken.

China’s white and yellow feathered chicken makes up the majority of chicken mat production with hybrid chicken and ex/laying, ex/breeding chickens contributing a relatively small portion. Yellow-feathered chicken production is concentrated in the South, led by Guangdong province. While white-feathered chicken production is concentrated in the North led by Shandong Province. According to market experts, the white-feathered chicken sector will expand production to capture a larger portion of chicken meat demand in the country. The average grow-out and weight of white-feathered chicken are favorable for the producer seeking to expand in this sector, as averaging 40 days’ of production time with a weight between 2.2 and 2.7kg. Considering current market conditions, white-feathered poultry provides lucrative returns and encourage investments.

Many swine breeders in the country are also expanding into the white-feathered chicken production, as recently Wen, the largest swine and white-feathered chicken breeding company acquired white-feathered production giant Jinghai. Furthermore, a swine company KimLou also added a white-feathered chicken operation and is expected to establish 1.1million sets of parent stocks, projected to 2020-21. According to industry experts, the small and medium breeding companies will not be able to enjoy robust profit growth because their production will be constrained by the financial limitation to purchase more commercial parent stock.

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