China consumes about 50 million tons of pork annually, while nation's purchases of U.S. pork rise nearly six-fold during first eight months of 2011, data shows
December 5, 2011
– Animal feed is one of the largest input costs for companies in the hog production industry. Record high corn prices this year have led many farmers in both large and small meat producing operations to look for alternative sources of feed, such as mixing lower priced wheat in with their corn feed. The Bedford Report examines the outlook for companies in China's Consumer Goods Sector and provides equity research on AgFeed Industries, Inc. (NASDAQ: FEED - News) and Zhongpin, Inc. (NASDAQ: HOGS - News). Access to the full company reports can be found at:
China remains the pork industry's main driver. Ma Chuang, deputy secretary-general of the China Animal Agriculture Association notes that China consumes about 50 million tons of pork annually, while the world's total pork exports tally a mere 6 million tons per year.
China's purchases of US pork rose nearly six-fold during the first eight months of 2011, compared with the same period in 2010, according to US Department of Agriculture data. However, experts say the imports are not likely to hurt China's domestic pork industry, according to the Global Times.
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Zhongpin is a meat and food processing company that specializes in pork and pork products, vegetables, and fruits in China. Last month the company announced revenues increased 65% to $398.1 million in the third quarter 2011 from $241.1 million in the third quarter 2010. Zhongpin believes that the outlook for China's pork processing industry remains positive. The company's purchasing cost of hogs and its selling price of pork both increased 60% in the third quarter of 2011 compared with the same period last year.
AgFeed's Chinese based hog production business consists of 21 existing, legacy farms and a system of western style farms that are currently under development. Shares of the company have come under fire of late. In a recent press release issued by AgFeed the company announced that it has received notice from the NASDAQ that, because the Company has not yet filed its Quarterly Report on Form 10-Q for the period ended September 30, 2011 with the Securities and Exchange Commission, AgFeedno longer complies with the continued listing requirements.
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