1 Introduction to the Project

1.1 Project background

1.1.1 Product introduction

Fattening pigs refer to pigs that are specially raised by breeders to meet specific standards for weight and fat content. Generally speaking, the weight of fattening pigs is between 90-120 kilograms, with a fat content of over 15%. Due to the fact that meat pigs can only achieve good meat quality when their weight and muscle content are moderate, they are easier to sell in the market, resulting in a high demand for fattening pigs.

The construction site of the project is located in Dawan Village, Shancheng Town, Meihekou City, with an annual output of 100000 fattening pigs.

1.1.2 Market prospect

China has a long history of pig farming, and pig farming plays an important role in China’s traditional agricultural economy. It is one of the important means of agricultural management in most regions. After years of continuous development, China’s pig farming industry has gradually evolved into an important pillar industry that has strict requirements for funding, technology, management, and other aspects related to national economy and people’s livelihood. In recent years, the domestic pig market prices have fluctuated significantly. Against the backdrop of rising labor costs and feed raw material prices, the production and consumption links of pigs have been severely separated, which not only amplifies market risks and transaction costs, but also causes significant fluctuations in market prices and a decline in the welfare of producers and consumers. As a result, there is a real demand for high-quality development of the pig breeding industry on both the production and consumption sides.

Encouraged by the high profits brought by the high pig prices in 2020, China’s pig farming industry expanded rapidly in 2021, with a significant increase in breeding scale, a significant increase in pork production, a significant decrease in pork prices, and some pig farming enterprises losing money or even going bankrupt; in 2022, domestic pig production capacity continued to be released, and pork production maintained a growth trend. However, against the backdrop of significant losses in the industry the previous year, the growth rate of pork production in China significantly slowed down in 2022. According to statistics from the National Bureau of Statistics, in 2023, the national pork production was 57.94 million tons, a year-on-year increase of 4.57%, with a gap of 268000 tons from the peak production in recent years (58.208 million tons in 2014).

The direct reason for the increase in pork production is the increase in the number of live pigs slaughtered. In 2022, China's total number of live pigs slaughtered was 727 million (726.62 million), a year-on-year increase of 3.86%. The year-on-year growth rate of pig output is slightly lower than that of pork production, indicating that due to the rapid development of the domestic pig breeding industry in recent years, the pork output per pig (pig carcass weight) has increased. At present, the domestic pig breeds are the most widely bred, including the imported Landrace, Yorkshire, Duroc, and the domestic local breeds Ningxiang pigs, Neijiang pigs, Rongchang pigs, Taihu pigs, Xiang pigs, and Northeast China pigs. After decades of development, the supply capacity of China’s pig breeding industry continues to increase.

The consumption of pork is very diverse, not only frequently appearing on the dining table, but also processed into various snacks and snacks as daily consumption or holiday gifts. The main types of pork consumption in China are hot fresh meat, cold fresh meat, and frozen meat. Among them, influenced by traditional consumption habits, hot fresh meat products account for a relatively high proportion of pork consumption in the country.

In terms of market share, hot fresh pork accounts for about 70% of the Chinese market, with consumption concentrated in agricultural markets and relatively short shelf life (1-2 days); cold fresh pork has a storage time of about a week and is relatively expensive. Its consumption places are distributed in agricultural markets, franchise stores, supermarkets, etc. It accounts for about 10% of the pork market in China; due to the fact that freezing can damage the original taste and flavor of pork, frozen pork accounts for about 20% of the Chinese pork market. However, frozen meat has a longer shelf life (6-12 months) and a relatively lower price.

With the historical process, policy guidance, and epidemic promotion, the concentration of the pig industry has increased. Many small-scale farms were eliminated in the swine fever outbreak in 2018. While accelerating the process of increasing industry concentration, the decline in China’s pig inventory has continued to expand, pig prices have risen significantly, and the pig cycle has risen, bringing about a “super pig cycle”. However, as we enter 2021, with the gradual recovery of pig inventory and the relative decline in market demand, pork prices have begun to enter a downward channel. As the pig cycle evolves, the past two years have been a transitional period between the old and new pig cycles. At this stage, the production capacity has not been fully utilized, and the price is in a state of fluctuating status. In June, 2024, the retail price of pork (lean meat) in 36 large and medium-sized cities across the country was 32.76 yuan/kg, an increase of 2.42 yuan/kg month on month and 2.68 yuan/kg year-on-year.

As the world’s largest producer and consumer of pork, China has a huge market size. Data shows that the global pig production and pork market size in 2023 is approximately RMB 1777.6 billion. With the upgrading of domestic consumption and the increasing demand for food safety and quality, the consumption of fresh pork is steadily increasing, and it is expected to reach RMB 1898.8 billion by 2030, with a compound annual growth rate of 0.8%.

For a long time, free range farming has been the main mode of pig farming in China. Compared with standardized and large-scale breeding methods, free range farming has outdated breeding technology, low management level, insufficient ability to predict and prevent diseases, significant damage to the ecological environment around pig farms, and lack of strict regulatory measures for the use of antibiotics and other additives in pig production management, which can easily lead to food safety accidents. In recent years, the increase in environmental protection investment, rising land costs and scarcity of breeding land, frequent outbreaks of diseases such as African swine fever, accelerated promotion of food safety, rising labor costs, and increased investment in fixed assets have continuously forced China’s pig farming industry to move towards standardization and scale. Small and medium-sized breeding enterprises and free range farmers are gradually withdrawing from industry competition, while the breeding scale of large-scale breeding enterprises continues to grow, and this situation has shown an accelerating trend in recent years. The competitive advantage of large-scale breeding enterprises is becoming increasingly evident.

With the acceleration of urbanization in China, there have been new changes in the consumption demand for livestock products among urban and rural residents: their consumption habits are gradually shifting towards emphasizing food safety and preferring high-quality products, and the demand for high-quality and safe livestock products is constantly increasing. The increasing demand for high food safety standards and high-quality pork is conducive to the development of standardized and large-scale breeding enterprises with integrated development and traceable food safety, and helps to improve industry concentration.

1.1.3 Technical analysis

At present, the more common breeding methods include hybrid breeding, conventional breeding, genome selection breeding, genome modification breeding, and precise nutritional regulation of local pigs.

The project introduces high-quality lean meat pigs and significantly improves the lean meat percentage of the offspring compared to local pigs through hybrid breeding methods.

1.1.4 Advantageous conditions of project construction

(1) Policy conditions

In recent years, in order to increase the development of the pig farming industry and promote the improvement of animal husbandry quality and efficiency, China and various departments have introduced a series of policies. On February 21, 2023, the National Development and Planning Department issued the Implementation Opinions on Implementing the Key Work Deployment of the Party Central Committee and the State Council for Comprehensively Promoting Rural Revitalization in 2023, proposing to focus on stabilizing pig farming, increasing cattle and sheep production, and developing dairy industry, promoting the improvement and efficiency of animal husbandry, and strengthening the regulation of pig production capacity. Conduct an assessment of pig production capacity regulation to ensure a reasonable range of around 41 million breeding sows.

In 2024, the Ministry of Agriculture and Rural Affairs issued the Implementation Plan for Pig Production Capacity Regulation (Revised in 2024), which, while adhering to the current work ideas, overall requirements, and the basic task of “three grasps and two guarantees”, adjusted the national target for the normal number of breeding sows from 41 million to 39 million, and adjusted the lower limit of the normal fluctuation of breeding sow inventory (green area) from 95% of the normal number to 92%. At the same time, the Plan has optimized the implementation of local responsibilities for ensuring stable production and supply of live pigs, strengthened key measures such as guiding production and market expectations, and improved monitoring and early warning, production capacity regulation and other guarantee measures.

On April 30, 2022, the People’s Government of Jilin Province issued the Opinions on Seizing the Annual Agricultural Harvest, proposing to organize pig slaughtering and processing enterprises and large-scale pig breeding enterprises to establish a “point-to-point” transportation mode to ensure the effective supply of pig products.

The Bureau of Agriculture and Rural Affairs of Meihekou City and the Bureau of Finance of Meihekou City have issued the Implementation Plan for the Use of Incentive Funds for Major Counties in Meihekou City for Pig Transfer in 2023 (MNCL [2024] No. 2), which rewards pig breeding farms that meet the requirements.

(2) Resource advantages

There are multiple enterprises engaged in the operation of fattening pig feed in Meihekou City, which has improved the development of the pig breeding industry chain in Meihekou City.

During the 14th Five-Year Plan, Meihekou will be granted more autonomy in land use, project approval, and industrial development to the high-tech zone, allowing for early experimentation. And focus on enhancing the flexibility of land management, providing ample facility agricultural land for the construction of the project.

(3) Industrial advantages

Meihekou City is the main county for pig farming in Jilin Province. Pig farming is one of the pillar industries of agriculture in Meihekou City and the leading industry for developing rural economy. The annual output for 2023 is 203300 pigs, with a stock of 137100 pigs.

(3) Location and transportation advantages

Meihekou has prominent location advantages and is an important regional center city in Northeast China. Meihekou is located in the southeast of Jilin Province and is an important transportation hub and commercial port town in Northeast China. It is an important node city in the central and eastern parts of Jilin Province and a regional center city in the southeast. Together with Changchun, Jilin, and Siping, it forms four important nodes in the province, and integrates with more than 10 counties and cities in Jilin Province and Liaoning Province, radiating and driving more than 4 million people in the surrounding areas.

1.2 Contents and scale of project construction

1.2.1 Product scale

After the completion of the project, 100000 fattening pigs will be slaughtered annually.

1.2.2 Construction contents of the project

The project covers an area of 40 mu and has a building area of 10000 square meters. It mainly includes the construction of breeding pig houses, pregnancy pig houses, delivery pig houses, breeding pig houses, and fattening pig houses.

1.3 Total investment of the project and capital raising

1.3.1 Total investment of the project

The total investment of the project is 166 million yuan, including the construction investment of 116.2 million yuan and current funds of 49.8 million yuan.

1.3.2 Capital raising

Self-financing by the enterprise

1.4 Financial analysis and social evaluation

1.4.1 Main financial indexes

After the project reaches the production capacity, its annual sales revenue will be 170 million yuan, its profit will be 25 million yuan, its investment payback period will be 8.7 years (after the tax, including the construction period of 2 years) and its return on investment will be 15.1%.

Note: “10 thousand yuan” in the table is in RMB.

1.4.2 Social evaluation

Through the construction of this project, high-quality lean meat pigs will be introduced, and through hybrid breeding, complementary advantages will be achieved to ensure natural pig breeding from the source. This will not only increase the lean meat rate but also maintain the delicious and sweet taste of the meat, making pork products in Meihekou City truly natural, green and pollution-free food, which is conducive to the development of the pig industry in Meihekou City and increasing farmers’ income.

1.5 Cooperative way

Joint venture or cooperation, and other methods can be discussed face-to-face.

1.6 What to be invested by the foreign party

Funds, and other methods can be discussed face-to-face.

1.7 Construction site of the project

Dawan Village, Shancheng Town, Meihekou City, Jilin Province

1.8 Progress of the project

It is attracting foreign investment.

2. Introduction to the Partner

2.1 Basic information

Name: People’s Government of Shancheng Town, Meihekou City, Jilin Province

Address: Tuanjie Street, Shancheng Town, Meihekou City, Jilin Province

2.2 Overview

Shancheng Town is a key town in the western part of Meihekou City, known as the node of “one main city and two wings”. Named after the ancient city of Goguryeo built in the Han and Jin Dynasties to the north of the city, it is a century old commercial port town known as the “Little Fengtian”. In history, Emperor Qianlong passed through Shancheng Town twice during his eastern tours, leaving behind the beautiful poem, that is, “Deep forests and large valleys are too ancient, forests have fallen leaves and valleys have springs”.

Shancheng Town takes agriculture as its pillar industry and vigorously develops planting and breeding industries. The current cultivated land area is 130000 mu, including 44000 mu of paddy fields and 86000 mu of dry fields; the forest area is 42000 mu and the water area is 5500 mu. The land in the town is fertile, irrigation is convenient, and the crop yields in each village are high.

There are 14 private enterprises in Shancheng Town, including 3 enterprises above the designated size. Famous enterprises both inside and outside the province, including Haishan Paper Co., Ltd., Wantong Pharmaceutical Co., Ltd., and Shibaguo Rice Co., Ltd., as well as industrial enterprises such as concrete plants, quarries, and boiler factories, are steadily developing and improving.

2.3 Contact method

Postal code: 135000

Contact person: Zhang Yizhen 

Tel: +86-13630716007

E-mail: mhxqjhj@163.com 

Contact method of the city (prefecture) where the project is located:

Contact unit: Meihekou Bureau of Commerce

Contact person: Mu Zhanyuan

Tel: +86-15643552255

+86-435-4326686

E-mail: 4965278@qq.com