According to a new report from Rabobank, China’s pork industry has begun a new cycle, which will see less price volatility and more government monitoring. The cycle started in mid-2022, following a year in which hog prices bottomed out with great losses for the industry. The main drivers influencing this cycle include policies, new industry structures, sustainability demands, and consumer trends. Market opportunities will be available to both local and global players, with considerable growth potential.
This new upward cycle started in June 2022. Between January 2003 and June 2022, China’s pork market went through five full cycles, each lasting around three to four years. This latest cycle will differ from previous ones, as the market is more consolidated, economic growth is slower, and there is a greater social and environmental focus in China. “We expect the new cycle to have less price volatility and a slightly shorter length compared to previous cycles,” says Chenjun Pan, Senior Analyst – Animal Protein at Rabobank. “Where cost leaders were the survivors from the previous cycle, in the longer term, winners will be those who are not only cost leaders but are also able to integrate supply chains.”
Why this cycle will be different
Each cycle is triggered by different factors, with the industry in different stages of development. Still, recent cycles have all pushed the pork industry closer toward consolidation, industrialization, and modernization. In addition to current market conditions, other factors will also influence this new cycle: China is currently in a transitional period of economic and technological development; new trends, like convenience, are influencing consumer demand; and social issues are putting climate change and the need for emissions reductions under the spotlight.