"We can't bear it anymore", some investors want to transfer pig farms at low prices. But to people outside the "siege", the pig industry, which fell to the floor price, is quite attractive. Some venture capital institutions took the opportunity to increase their inspection efforts, waiting for the opportunity to "undercut".

In early June 2010, Deng Lin (pseudonym), chairman of the Sichuan Dazhu Green Ecological Pig Farm, was very worried about the pig farm that slaughtered nearly 100,000 pigs a year. As the price of live pigs continued to fall and the price of feed continued to rise, he now pays more than 200 yuan for raising a pig, and is caught in the dilemma of "selling and losing, and feeding and losing".

Deng Lin is not alone in losing money. It is understood that most of the pig farmers in Jinzhou, Liaoning are at a loss. Many people talk about the bitterness of raising pigs. The most common word is "to cry without tears."

According to data from the Ministry of Commerce, pork prices have skyrocketed and fallen in the past three years. The wholesale price of fresh pork nationwide rose from 16.48 yuan / kg in June 2007 to 22.82 yuan / kg in February 2008, but the surge followed a round of plunge, which fell to 14.01 yuan / kg in June 2009. Since January 2010, the wholesale prices of fresh pork nationwide have been declining all the way. By mid-April, the price of pigs had fallen for 14 consecutive weeks at only 14.55 yuan / kg. Subsequently, pork prices have been oscillating at the "bottom". By the second week of July, the average wholesale price of fresh pork nationwide was 14.95 yuan / kg, although the lower point rebounded by 2.3%, but it was about 30% cheaper than the same period in 2008.

The decline in pork prices will inevitably affect the price of live pigs. In early May 2010, Deng Lin's hogs were only sold at a price of 9.1 yuan / kg. But he clearly remembered that in 2007, the selling price of live pigs was 21 yuan / kg, more than double the current price. On the contrary, the price of corn as the main feed material for live pigs has increased year by year, reaching 2.113 yuan / kg in the second week of July 2010, a 24% increase over the same period in 2008. Since April 2010, the ratio of pigs to grains (the ratio of the price of pigs to corn), which measures the profit and loss of live pig farming, has been lower than the yellow warning line (5.5: 1 to 5: 1), and the lowest value of Sichuan pig grains is 4.07: 1. The red warning zone is well below 5. This means that excessively low pig prices and excessively high feed prices have pushed pig farmers to greater losses.

Deng Lin did not expect such a big risk. In 2002, Deng Lin contracted a small coal kiln in Shanxi. In December 2007, with the money earned from coal mining and fund-raising from his friends, Deng Lin came to Sichuan, a large pig farming province, with 100 million yuan, and contracted a pig farm with his friends. Pig ". At the end of 2007, when the profit of the pig industry was the highest, the profit of each pig was generally more than 300 yuan, and the piglets reached more than 400 yuan.

"At that time I thought pig farming would make money. Coal mining is too dangerous. Is pig farming even more dangerous than coal mining?" Deng Lin said. With strong capital, Deng Lin's pig farm is second to none in the local area. Deng Lin originally thought that pig farming is similar to coal mining. The larger the scale of capital, the greater the pricing power and the greater the profit margin. However, unexpectedly, less than two years ago, pork prices fell sharply. Deng Lin not only did not make a profit, but also took the old capital into it. Seeing that the investment of 100 million yuan is about to "float", Deng Lin hesitated: Is it "cutting meat" to transfer, or does it persist through the "cold winter"?

It was during this period that the information on the pig farm transfers on the major pig farming sites began to increase, and words such as "fund shortage" and "transfer with tears" appeared in many transfer information. These transferred pig farms are the same as Deng Lin's pig farms. Investors entered the market at the best time in 2007. The large-scale outbreak of hog epidemic in 2006 caused a sharp decline in hog supply, leading to a surge in pork prices in 2007, which attracted many capitals into the hog breeding industry, including private capital such as Deng Lin, but also Carlyle, Goldman Sachs, Deutsche Bank International capital. However, today, many funds have to find another way out. A large-scale pig farming company in Shanghai, which had received 60 million equity financing from Deutsche Bank, revealed that foreign equity parties have already intended to transfer equity.

"We can't bear it anymore." Deng Lin said.

But to people outside the "siege", the pig industry, which fell to the floor price, is quite attractive. "It's like 'the Yangtze River waves push forward, and the waves die on the beach.'" An investor described how people from all walks of life went to invest in the pig industry.

It is reported that the outbreaks of pigs in Guangdong, Hunan and other places in June led to the closure of some pig farms. For transfer at very low prices, some venture capital institutions took the opportunity to increase contact and inspection efforts, waiting for the opportunity to "undercut".

What's more interesting is that the downturn in the stock and property markets forced hot money to find another way out. The phenomenon of agricultural products such as "garlic you ruthless" and "beans you play" was very popular. A person in the futures industry, who asked not to be named, pointed out that after the relevant departments strengthened the supervision on the hype of mung beans, garlic and other crops, part of the funds were withdrawn, and pig breeding may be one way out.

"Actually, as can be seen from the last round of soaring pig prices, financial capital gradually began to intervene when pork prices rose. Now that pig prices are hovering at the bottom, hot money has a strong impact on the growth of agricultural products including live pigs. Desire. "The person in the futures industry said.

Industrial capital has taken action. On June 8, Xiaowang Xinzhuang Pig Farm, the first pig farm in the whole industry chain of COFCO Meat, was completed and put into production, and 100,000 commercial pigs were slaughtered annually. COFCO's move is regarded as a "bottom bargaining" which is quite representative. However, the relevant person in charge of COFCO denied the "bottom bargaining" claim, and said that this was just a specific measure in line with the group's overall strategy. It is worth noting that COFCO started to invest in the construction of the pig farm nine months ago. The first batch of more than 800 piglets introduced will be put on the market as early as the fall of 2010. At that time, it will be a stage of increasing market demand.

In fact, the reason why many people who want to copy the bottom of the paper dare to think at this time is because many people expect that pork prices will soon rise.

Liu Shenyang, director of the Liaoning Weiye Boar Breeding Farm, said: "The state has collected and stored frozen pork, and the price of pork has rebounded, but this price (pig farmers) still compensates. However, we think that pork prices can go up in November 2010. "

Ma Chuang, deputy secretary general of the China Animal Husbandry Association, predicts that this round of pig losses will lead to a significant reduction in inventory and a shortage of supply in the later period. Although it is difficult to find a huge increase from 2007 to 2008, pork prices will rise significantly in the near future .

In addition, in June, floods in many southern provinces caused a large number of pigs, sows, and piglets to be drowned. In addition, the high fever caused by the high temperature weather after the flood will also cause the supply of live pigs to be tight, thus triggering prices to some extent. rise. This means that after 3 to 5 months, the supply of the national pork market will be significantly reduced, and the peak season for pork consumption in autumn will gradually come, and pork price increases will become a high probability event.

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