In 2024, the hog market will usher in major changes! Document 1 clearly sets out a course of action
First, the policy direction: the current policy on pigs has not changed much, and the overall adjustment is centered on ability. In the No. 1 document in 2024, only the words "improve the pig production regulation system" are used to set the tone for next year's pig market. Judging from the policy trends in the past two years, from 2020 to 2023, the policies of "accelerating recovery", "ensuring basic production capacity", and "strengthening the management of pig production capacity with fertile sows as the main body" can be seen that from 2020 to 2023, China's policy orientations such as "basic production capacity" and "strengthening the management of pig production capacity with fertile sows as the main body" are all issues worthy of attention. The adjustment of pork ** this year is the same as in previous years, it is still capacity-centered, and the large changes in ** are controlled through control.
Extended reading: Judging from the practice of the past few years, the pig market regulation measures introduced by the state are formulated to stabilize the operation of the market and ensure the needs of people's lives. Although the policy is mentioned in only one document, which on the surface does not seem to be special, in fact it is based on national considerations as a whole and is oriented towards the whole. From 2020 onwards, the main focus of the state was on how to quickly get pig production back up, and then shifted to ensuring basic pork production capacity. Based on this, China's pig production policy in 2022 and 2023 will focus on "stabilizing pigs" and focusing on "sows that can reproduce". This shows that this time's policy is not isolated, but has been accumulated in accordance with the overall trend and practice of many years of development. Therefore, we believe that the pig market control policy in 2024 will not change much, and we will still focus on capacity control.
Second, de-capacity is still the mainstream of the current pork. In 2021, the total number of fertile sows in China will be 43.27 million, breaking the historical average. It can be seen that the current supply in the pork market is excessive. Although production has been reduced for the past two years, production is still very high. By the end of 2023, the number of fertile sows in China will only drop to 41.42 million, which is basically the same as in 2020. It follows that the process of capacity reduction will be a long-term and arduous task. It should be noted that most of the reduction in production is due to the long-term production of pigs, which has caused the withdrawal of small and medium-sized individual farmers. In this environment, the discourse power of the aquaculture industry is gradually occupied by large enterprises, which are constantly expanding their production scale. Therefore, by 2024, reducing production will be the top issue in the hog market.
Read more: In the past two years, although the destocking process has been effective, the supply of pork is still high, far from the expected level. Statistics show that by the end of 2021, the number of fertile sows in China has reached 43.27 million, much higher than the historical average. This shows that the current supply of pork is significantly greater than the actual demand, which has put a lot of pressure on the smooth operation of the pig market.
From the perspective of the production cycle, in the past two years, the pig production capacity has indeed been reduced, but in fact, the pig stock has not declined significantly. At the end of 2023, the number of fertile sows in the country dropped to 41.42 million, about the same as in 2020. It can be seen that the process of capacity reduction is a long-term and time-consuming task, which must be constantly adjusted and optimized.
From the perspective of the aquaculture industry, the reason for this reduction is largely due to the voluntary withdrawal of small and medium-sized enterprises. Due to the increasing pressure on farms, many small and medium-sized individual farmers have opted out because they cannot afford the high operating costs. At the same time, large companies have also seized the best advantages, expanded the scale of enterprises, and made the competition in the industry more intense. It is expected that by 2024, China's pig consumption will continue to be digested and digested, and in order to achieve a balance between supply and demand, it must be adjusted and optimized in depth.
3. Capacity regulation or expansion. Although the "Implementation Plan for the Regulation and Control of Pig Production Capacity (Revised in 2023) for Comments" is only a draft, it reflects the determination and strength of the state to manage the production and operation of pigs. According to the provisions of the draft, the state will adjust the number of existing fertile sows from 41 million to 39 million, and reduce at least 35 million. In addition, provinces are required to appropriately reduce the number of fertile sows by about 5% according to the new indicators, especially those provinces with low self-rearing rates. This shows that even if it is only temporary, the relevant authorities have given clear advice on how to control the scale of pig production.
Read more: The state has readjusted the total pig production and controlled it in detail, showing the strength of the state's control over the pig market. According to the draft of the "Implementation Plan for the Regulation and Control of Pig Production Capacity (Revised in 2023)", China will adjust the number of existing breeding sows from 41 million to 39 million this year, and propose that all localities should appropriately reduce it by 5% according to the new indicators. The above policies are adopted in order to solve the current shortage of pork supply, adjust the contradiction between supply and demand, and ensure the normal operation of the market.
It should be noted that this control indicator and measure is still in the process of consultation and may be further revised in the future. However, it can be seen from the "Solicitation of Opinions" released this time that the country's position on controlling the pig market is very clear and firm. Moreover, in terms of the current situation, even if fine-tuned according to the new indicators, it is well over 39 million heads. In the coming period, China's pig market will still face certain destocking pressure and challenges.
ConclusionAll in all, in 2024, the pig ** will still be centered on production capacity, and digestion capacity will still be the mainstream. Next, we will further improve the pig production regulation system to ensure the smooth operation of pork supply and pork. Although there will be certain difficulties and pressures in terms of de-capacity, de-leveraging and de-leveraging, in order to ensure the steady development of the economy, we will increase the supervision of the real estate industry. Therefore, in terms of the overall trend, the supply and demand of pork are generally relatively balanced, and it is unlikely that it will be the most likely.