Editorial note: The text below is the second of Initium's three, comprehensive installments on the changing nature of meat production and consumption in China (with an eye to One Health). It is translated from Chinese.
A plate of pork on your table or mine could be a story of booms and busts in wealth creation. You may become a millionaire overnight, or you may lose your family overnight, or your family may be ruined forever. The Chinese market raises and consumes nearly half of the world's live pigs; market share that determines the fate of every pig raised in China's remote villages. Although per capita consumption has stabilized in the country’s recent history, every 3-4 years, China undergoes a cycle of sharp increases and declines. This is known as the "pig” or “hog” cycle.
Over the past three years, China has experienced a "super pig cycle" unheard of in the history of pork development in the world, with unprecedented increases in pig prices. Such prices continued to rise for 33 months after June 2018, by 262%. This was the result of a major plague, African Swine Fever (ASF), an ancient virus that broke out in China in 2018 and wiped out huge numbers of the country's hogs. By 2019, China's pig population was down by 70%. They either died violently due to ASF, were put to death due to the risk of infection or simply sold out of panic. This caused a reversal of supply and demand in China's hog market, with supply falling far short of demand and hog prices rising sharply.
High profits in pig rearing have attracted many participants over the years, with legacy farmers increasing their investments, and a large number of newcomers following suit. Pig farming in China is, of course, the source of the country's domestic pork production, and nearly half of the farmers are individuals or operate small and medium-sized breeding plants. But more and more newcomers are entering the market, which means more and more pigs are being raised and sold. As a result, market prices plummet because the supply is much larger than the demand, and many people who enter this cycle become trapped. A large number of piglets are even abandoned.
In this super pig cycle game, bets are placed on one pig after another: sows, piglets and mast hogs. But in this particular gamble, the banker takes all the money. It is implied in the system that the only goal is to merely possess pigs. After all, who can resist the temptation of getting rich? The value of the chips is already predetermined.
Profits stimulate everyone
On June 2019, at 3 p.m., two luxury Mercedes-Benz sedans stopped at the door of Xu Yang's home in rural Yichang, Hubei. Three men walked into the house, they were two brokers. Back then, news about who had tradable hogs traveled fast. The people who came were carrying bundles of cash in their cars - perhaps to demonstrate the lure of cash, or to lock in a deal as soon as possible. Xu Yang said that neither he nor his parents had ever seen so much cash, and that "it was quite astonishing".
The two brokers quoted prices; with no dispute, the higher bidder got the goods. One hundred ten pigs, weighing 110 kilograms on average, 630,000 yuan (US$87,000). But no one had a bill counter, so Xu Yang and his parents could only unpack the piles of banknotes one by one and count them by hand. But this took way too much time, and in the blink of an eye, it was dinner time and they were still counting. They came up with an idea: the Xu’s would deposit the money in the bank the next morning. It would be much easier for the bank to count the notes, if the payment didn’t match what was promised, both parties would be informed. The people who came to buy stayed for dinner. Everyone was pleased, especially Xu Yang's parents. The family drank a lot of alcohol together with a group of three people. Halfway through the meal, Xu Yang saw his mother leaving the table and dragging the uncounted cash into the back room. "I guess she had been counting till late at night." But the excitement of seeing cash was fine just once. For all future transactions, the Xus asked for a direct transfer.
At that time, the price of hogs, along with the price of pork, was gradually climbing to a historical high. ASF was sweeping through China, and the country’s swine stock was greatly reduced. It was difficult to find even one hog on the market. When the Xu family's pigs were shipped, the price per kilogram had risen from less than 20 yuan in 2018 to 35 yuan at the time (US$3-4). Not counting the cost of labor because the farm was singlehandedly managed by Xu Yang’s parents, the production cost of each hog was around 15 yuan (US$2) per kilogram after adding in the expense of feed and vaccines. This was their first batch of hogs, more than 110 of them, and the average net profit per hog was 2200 yuan (US$304).
After making profits from the first batch, the Xu’s immediately decided to buy more piglets. They got 300 one-month-old piglets on credit from a relative who was the manager of an industrialized pig farm in Jiangsu, at 300 yuan (US$42) each. From Taihu, Jiangsu to Yichang, Hubei, the piglets died one after another during the long journey, and finally, less than 270 of them survived. After about 6 months of rearing, the second batch of hogs was ready to sell. The Xus experienced peak hog prices.
"That’s when we made a lot of money," Xu Yang said. In November 2019, the Xu family's hogs sold for 38 yuan (US$5) per kilogram. The price of the country’s hog market at that time jumped 262% compared to a year and a half ago. This batch of hogs was sold until April 2020. The Xu’s made more than 1 million yuan (US$138,000).
However, soon after the second batch of hogs was sold, the family farm was reported by villagers to the authorities for pollution violations. Soon, people from the village committee, the Bureau of Animal Husbandry, and even the Bureau of Water Resources arrived at their house. It seemed to be a serious situation. The Xu family faced fines, and then the fines turned into remediation. The authorities requested that the Xus build a proper septic tank. Before being reported, the Xus, just like other pig farmers in the village, discharge the excrement produced by the hogs into a nearby bottomless sinkhole (a kind of natural terrain, often greater than 100 meters in diameter and depth, with the bottom reaching the groundwater supply).
Xu Yang believed that his family was reported because they were among the very first villagers to raise hogs. In the second half of 2020, pig farming had become a new trend in the village. Before that, many things were popular, such as planting Sichuan peppers, raising a kind of meat goat called a Boerbok, and cattle rearing. After the government declared a 10-year ban on fishing in the Yangtze River, aquaculture was no longer permitted; almost every family started to raise hogs. This village by the Yangtze, the longest and largest river in China, was a microcosm of the pig farming boom in China at the time. According to the statistics of the Chinese Ministry of Agriculture and Rural Affairs, in 2020, the number of large-scale pig farms in the country increased by 16,000 and the number of backyard farmers increased by 2.28 million compared to the beginning of the same year.
The unprecedentedly high profit was a strong stimulus to everyone. Xu Yang didn’t know how many pigs were raised by other families, because everyone avoided this topic even in casual conversation. But Xu Yang knew that everyone was building pig farms. The two previous batches of hogs owned by Xu's family were raised on their first farm. It was a big empty field that had been rented a long time ago. With piles into the ground, fences around the lot, and a cover on top, a piggery was constructed. A prominent figure in the village also started pig farming at the same time when the Xu family built a new pig farm. The person from the village invested more than 2 million yuan to build a pig farm "like a tower." In the southern village where the Xu family lived, houses were scattered and there was a lot of open space.
After being reported by the authorities, the Xus decided to rebuild their pig farm. They built two new pigsties on their farmland that could accommodate a total of more than 200 pigs, spending more than 200,000 yuan (US$27,600). The new pig farm had a concrete floor and each pen was equipped with air conditioning and heating lamps. But when they wanted to expand, they realized that there were no masons left in the village. It was in the second half of 2020, the first of the covid-19 pandemic, and even those who had only worked as laborers (i.e., those who supplied bricks and mud to masons who actually knew how to build) were hired as masons. They were all hired to build pig farms.
Xu Yang's uncle joined in the pig-raising party when the Xu family decided to have their second batch of hogs. They agreed to buy animal feed together collectively to reduce costs. The Xu family's neighbors also began raising pigs, and around the spring of 2020, they started to build their own farms. With an investment of nearly 1 million yuan (US$138,000), the neighbor’s farm had a water and septic tank, which alone cost more than 400,000 yuan (US$55,200).
Xu Yang's new pig farm still did not have a septic tank installed, though. They hired a large extractor to dig a deep pit of about 5 meters deep right next to the new pig farm and added cover on top, thus simulating a septic tank. Through the neighbor's wife, who was from the northwest of China, they also partnered to buy a truckload of corn, reducing the feed costs even further.
It was in the second half of 2020 that the price of sows and piglets in the hog market was also soaring. In just one year, the price of a piglet had risen to 1,500 yuan (US$200). "During the craziest time, a piglet could cost 1,800 yuan (US$250)," said Xu Yang. The relatives who sold 300 piglets to his family stopped selling them to the Xus. They kept all the piglets themselves and even wanted to buy more. The price of a small sow that could be raised for breeding had risen to more than 4,000 yuan (US$550).
In fact, there were places where the price was even higher. Gu Wenhua, a farmer from Jiaxing Zhejiang, who had 30 years of experience in piggeries, was surprised. In the same period of time, the highest price per kilogram of hogs rose to 45 yuan (US$6), while in 2018, it was only around 10 (US$1). A piglet could be sold for 2,800 yuan or even 3,000 yuan (US$386-414). If a small sow could be raised for breeding, it would be as high as 6,000 yuan (US$830). "Back then, the net profit for one hog would be about 4,000 yuan (US$552).”
The supply could no longer keep up with demand. Whether it was the Xu family in Yichang, Hubei, or the Gu family in Jiaxing, Zhejiang, they all faced a situation where live-pigs were hard to come by in the market. Gu’s business could only develop once he found a local supplier of sows and piglets. He only got three the first time around. Xu Yang’s parents also relied on different farmers to get a batch of female piglets. At that time, a litter of piglets was often promised to many people just after they were born.
To read the rest of this story (in Chinese), please click here.
This story was produced with the support of the Earth Journalism Network and was originally published in Chinese by Initium Media on September 4, 2022. It has been lightly edited for length and clarity.
Banner image: A pig on the farm / Credit: Lin Zhendong/Initium Media.