Summary of China's Swine Industry Performance in 2021 and Forecast for Industry Trends in 2022

 China is the world's largest hog-raising nation, with 685 million pigs marketed in 2016. The country’s overall pork market size was approximately 1.4 trillion yuan—roughly 2.3 times the total sales of smartphones—and contributed more than 2% to the GDP. As the primary meat consumed in China, hog prices have experienced persistent fluctuations in recent years, significantly impacting both producers and consumers. Consequently, the trend in hog prices has drawn intense attention from the government and various sectors of society.
  I. Analysis of the Supply and Demand Situation for Live Pigs
  1. Live hog inventory
  Currently, China's live pig inventory has largely recovered to more than 90% of its typical annual level. As of the end of the third quarter of 2021, the national pig population stood at 437.64 million, representing a year-on-year increase of 18.2%, though slightly down 0.3% from the end of the second quarter. At the close of Q2 2021, the national pig herd totaled 439.11 million, up 99.15 million heads—or a robust 29.2% growth—compared to the end of Q1. Meanwhile, by the end of 2021, the total number of pigs raised reached 449.22 million, marking a significant year-on-year rise of 10.5%.

  Data sources: National Bureau of Statistics, compiled by the China Business Industry Research Institute

  2. Live hog marketing volume
  The fundamental reason for the decline in hog prices in 2021 was the gradual improvement in market supply capacity. Since 2021, the national inventory of breeding sows continued to grow, laying the groundwork for a sustained recovery in production capacity, while the number of pigs being marketed increased significantly. In the first three quarters of 2021, China’s total pig output reached 491.93 million head, representing a year-on-year increase of 35.9%. This growth rate accelerated further by 1.5 percentage points compared to the first half of the year. For the entire year of 2021, the country saw a total of 671.28 million pigs marketed, up 27.4% from the previous year.

  Data sources: National Bureau of Statistics, compiled by the China Business Industry Research Institute

  3. Live hog slaughter volume
  Since 2021, despite declining pork and meat prices, hog slaughter volumes have been drawing significant attention. Data shows that China's hog slaughter volume has remained relatively volatile, peaking at 240 million head in 2018. In 2020, the country’s hog slaughter reached 160 million head, representing a year-on-year decline of about 15%. However, in the first quarter of 2021, large-scale hog slaughtering enterprises across China processed 50 million head—up 39.1% compared to the same period last year. From January to August 2021, nationwide, large-scale, designated hog-slaughtering facilities collectively handled 150 million head, marking a robust 56.4% increase year-on-year, with the growth rate continuing to accelerate.
  From early November to early December, the average daily slaughter volume of live pigs at key domestic processing enterprises was 168,700 heads—down 20.6% compared to the October peak. The decline in pig slaughter volumes stems from shifts in both the supply side (live pig availability) and the demand side (product consumption), with sluggish consumer demand remaining the primary driver.

  Data sources: Compiled by the Ministry of Agriculture and Rural Affairs and the China Business Industry Research Institute

  4. Pork Production
  Since 2021, as the earlier measures aimed at stabilizing production and ensuring supply have continued to yield tangible results, newly built, renovated, and expanded pig farms have steadily released additional production capacity, leading to a rapid recovery in hog production. In 2020, China’s national pork output reached 41.13 million tons, a decrease of 1.42 million tons—or 3.3%—compared to 2019. However, in the first quarter of 2021, pork production surged by 31.9% year-on-year to 13.69 million tons, marking a significant rebound. This sharp increase in output has also been a key factor driving the sustained decline in pork prices since early 2021. By the second quarter of 2021, the supply of live pigs is expected to return to levels seen at the end of 2017. Meanwhile, in the first half of 2021, total pork production climbed to 27.15 million tons, up by 7.17 million tons—or 35.9%—compared to the same period the previous year. For the full year 2021, China’s total pork output is projected to reach 52.96 million tons, representing a robust 38% increase from the previous year.
  5. Pork Imports
  Given the current imbalance between supply and demand in China's pork market, the country has significantly increased its imports of pork from overseas. Major suppliers of Chinese pork include regions such as the European Union, Brazil, and the United States. On the other hand, China enjoys tariff advantages when importing pork from these countries. Starting from January 1, 2020, China temporarily reduced the import tariff on pork from 12% to 8%, a move aimed at boosting pork imports and effectively easing the domestic supply shortage. Additionally, as winter approaches and the meat market enters its peak consumption season, imports of meat products—including pork—tend to rise accordingly. From January to November 2021, China imported 3.54 million tons of pork, representing a 10.3% year-on-year decline.

  Data source: China Business Industry Research Institute Database

  From a monetary perspective, as import volumes rise, the value of pork imports has also increased. From January to November 2021, China's pork import value reached $9,820.0 million, representing an 8.7% year-on-year decline.

  6. Pork Prices
  Since 2021, pork prices have steadily declined. By July, pig prices had stabilized roughly at the cost line—slightly below it—while live pigs on the market were trading around 15 yuan per kilogram. This represents a 57.9% drop compared to the early-year price of 35.68 yuan/kg. In January 2022, the wholesale price of fresh domestic pork reached 22.2 yuan/kg.

  Data sources: Choice, compiled by the China Business Industry Research Institute

  II. Pig Feed and Pig-to-Grain Ratio Analysis
  1. Pig feed production
  In 2020, China's feed production reached 253 million tons. From January to November 2021, the country's total feed output surged to 268 million tons, representing a year-on-year increase of 13.8%. Among these, pig feed accounted for 117 million tons, up 44.9% compared to the same period last year. The primary driver of feed growth in 2021 was the robust expansion of pig feed production.
  Looking at the past three months (August-October 2021), the total national production of pig feed was 11.18 million, 10.99 million, and 10.91 million tons, respectively. Meanwhile, the output of weaner pig feed stood at 3.16 million, 3.14 million, and 3.13 million tons, while maternal pig feed production reached 1.26 million, 1.16 million, and 1.07 million tons, respectively.

  Data sources: China Industrial Feed Association and China Business Industry Research Institute.

2. Pig feed prices
  Generally speaking, if the supply of feed ingredients remains relatively stable, their prices should move inversely to pig prices. The main feed ingredients include corn, soybean meal, and wheat bran. On January 24, 2022, the price of live pig feed was 3.34 yuan/kg, while the wholesale price of fresh pork that same day was 22.2 yuan/kg.

  3. Pig-to-Feed Ratio
  In 2021, as pork prices plummeted sharply, the pig-to-feed price ratio and hog farming profits declined rapidly. From June to October 2021, the pig-to-feed ratio consistently fell below 6:1, pushing farm-level losses to over 1,000 yuan per head at one point. However, by early December 2021, the pig-to-feed ratio rebounded above 6:1, reversing the losses into profitable operations for farmers.
  III. Forecast Analysis for the Future Swine Market
  1. Number of Sows in Reproductive Herd
  Second, when will the turning point arrive for market hog shipments? Based on current sow inventory levels and the live pig breeding cycle, hog shipments are expected to continue increasing gradually from January to May 2022, with the turning point likely occurring around mid-year.

  Data sources: Ministry of Agriculture and Rural Affairs, compiled by the China Business Industry Research Institute

  2. Looking ahead to 2022, the swine industry has several key areas worth paying attention to.
  First, there’s the change in the sow inventory. According to the latest data on breeding sows released by the Ministry of Agriculture, the number has dropped by 4.7% compared to the end of June. This indicates that the turning point for sow inventory has already emerged, signaling that the hog industry is now entering a period of capacity reduction.
  Second, when will the turning point arrive for market hog shipments? Based on current sow inventory levels and the生猪 (live pig) breeding cycle, hog shipments are expected to continue increasing gradually from January to May 2022, with the turning point likely occurring around mid-year.
  Third, there has been a shift in the structure of the sow herd. Since pig production capacity began to recover, the proportion of two-way crossbred sows has steadily increased. As of the end of October this year, nearly 80% of all breeding sows are now two-way crosses. Looking ahead, the share of two-way crossbred sows is expected to continue rising, further optimizing the overall structure of the sow population.
  Fourth, changes in feed demand are expected to continue slowing down in 2022, particularly as the number of breeding sows declines.
  Fifth, pig-to-grain ratio and farming profits in 2022 are expected to fluctuate around the breeding break-even point, with decreasing volatility.
  Based on the analysis above, we predict the 2022 supply situation for live pigs: As the number of breeding sows begins to decline, the pig farming industry is inevitably entering a capacity-reduction cycle. However, given the currently high base level of live pig inventory—and considering the evolving structure of the sow herd—we expect live pig supply to remain ample in the first half of 2022. The turning point in slaughter volume may occur around mid-year, while pig supplies in the second half of the year could start to decline. That said, the pace and extent of this decline are unlikely to be significant. Source: China Business Industry Research Institute