Earlier 2019 China’s largest pig, livestock and poultry producer announced its plan to
purchase Jiangsu Jinghai Poultry Industry Group in a bid to diversify and
expand its business in white feather broiler chicken market. The company took this decision after it
recorded the loss of $68.6 billion for the first three months of 2019 because
of the outspread of ASF, weak hog prices destroyed earnings on top of greater
investment to protect its herd from disease.
The dramatic shift
in China’s farm sector has been triggered by the devastating African swine
fever outbreak, a disease that is fatal to pigs but does not harm people. The
poultry demand and prices in China continue to rise in response to concern
about the impact ASF on the pork supply, as the epidemic has already reduced
China’s swineherd by over 20%. This has caused consumers to shift from pig to
other protein sources, specifically chicken.
Though Wens raises
yellow feathered chicken and has reported an increase in its sales volume to
20% in the quarter of $184 million birds, but now considering the demand and
growth ratio of white broilers in the market, the company is planning on
expanding and diversifying its poultry division. Currently, the domestic broiler industry
remains constrained by limited Grand Parent Stock availability; this has to
lead to an increase in Chinese imports from countries that were earlier banned
such as the US.
China’s poultry
industry has gone through drastic changes in recent years, as it is no longer
dominated by hundreds of millions of smallholders keeping birds as a sideline
activity. Many small farmers have given up production, especially in the
economically more developed eastern province of the country. The main driver of
change in the poultry industry on the demand side are, demographic changes,
rising population and increased urbanization ; income growth both in urban and
rural areas; development in transportation , the processing industry and retailing;
rising per capita consumption and the requirement of exports markets and
protein shift from pig to chicken.
On the supply
side, drivers of change include technological innovation and its diffusion,
feed processing and the provision of better public service, such as disease
prevention and control, quality standards and information. The future of the
industry is expected to show a rigorous growth specifically with more corporate
and larger firms entering the business pertaining to higher profits and demand.