China Largest Livestock and poultry Company Planning on expanding: 01-13-2020

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.

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