China Offers Incentives to Encourage Investment in Hog Farming

(Bloomberg) --

China is broadening its range of policy incentives to encourage large private hog farms to expand by upgrading technology and safety standards, part of efforts to boost investment after African swine fever devastated herds and the coronavirus epidemic slowed the economy.

China outlined 16 measures on Monday, including subsidies for purchases of automatic feeding and waste treatment facilities and easier access to land use for large private hog-breeding enterprises to help their expansion.

“Private enterprises are the major force in ensuring effective supplies of pork and other meat products,” according to a joint statement published by the National Development and Reform Commission and the agriculture ministry.

The number of hogs slaughtered in China last year dropped by more than 20% to 540 million head, while pork prices rose over 40% from the previous year, they said. Big private hog-breeding enterprises include Wens Foodstuff Group Co., Muyuan Foodstuff Co. and New Hope Group.

Cold Storage

Companies are also encouraged to expand from breeding to downstream slaughtering and cold storage logistics as China switches to transport of meat rather than live hogs to boost bio-security amid the outbreak of African swine fever, according to the document.

The incentives will not only boost pork supplies and cut shortages in the world’s top consumer, but also spur investment in the hog industry as the coronavirus epidemic slows the economy, said Lin Guofa, senior analyst at Bric Agriculture Group, a Beijing-based farm consulting firm. “It is a huge investment, but better than building more roads.”

If China plans to add 100 million hogs to its herd, the total investment will be more than 100 billion yuan ($14.3 billion), calculated Lin.

China suffered an even deeper slump than analysts feared at the start of the year as the coronavirus shuttered factories, shops and restaurants across the nation, underscoring the fallout now facing the global economy as the virus spreads around the world.

To contact Bloomberg News staff for this story: Niu Shuping in Beijing at nshuping@bloomberg.net

To contact the editors responsible for this story: Anna Kitanaka at akitanaka@bloomberg.net, James Poole, Atul Prakash

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With assistance from Bloomberg