Yurun Food Group, China’s biggest hog processor, said it expects higher sales volumes and improved margins this year as falling pork prices and government stimulus spending encouraged demand.
“We target a 30% gain in sales volume of our frozen and chilled pork, as well as a 10% increase in downstream meat products,” Chairman Zhu Yicai said. Prices of pork, China’s main meat staple, are expected to fall an average 20% this year on ample supply, Zhu said.
Wholesale pork prices in China, the world’s largest pork producer, have fallen almost a third from their February 2008 peak as farmers rebuild stocks after diseases and snowstorms decimated herds. Premier Wen Jiabao said this month the nation’s 8% growth target is within reach with the government pledging 4 trillion yuan of stimulus spending to revive the economy.
Decrease in pork prices
Yurun Food’s gross profit margin fell to 13% in 2008, from 14.1% a year earlier, as the sharp decrease in pork prices in the second half of last year hurt margins of its upstream frozen and chilled pork products.
China’s pork imports may fall this year as its domestic hog herd expands and pork prices fall. China imported 361.6 million pounds of pork from the US last year, representing a 59% increase from 2007, according to the US Department of Agriculture data. In January, China’s import of pork from the US fell 90% from a year earlier to 5.8 million pounds, the data showed.