Analysis of the reasons for losses in broiler farming -- May 2009

　　Due to the direct impact of market fluctuations on the prices of chicks, feed, and adult chickens, as well as disease prevention and control, the difficulty of broiler farming is gradually increasing, and economic benefits are declining and becoming unstable. Since 2008, the broiler market has been volatile, and since May, it has been declining. By early July, the price was less than 8 yuan per kilogram, resulting in a loss of more than 2 yuan per kilogram. Broiler farming faces enormous difficulties.

　　1. Market Oversupply

　　The "bull market" in the broiler industry, which began at the end of 2006, lasted for nearly a year and a half. Farmers blindly increased their flocks, leading to a rapid increase in the number of broilers. On the other hand, current prices are rising significantly, especially for necessities such as food and cooking oil, increasing household expenditure and reducing meat consumption, thus affecting broiler consumption.

　　Broiler product consumption has weakened, resulting in a market oversupply and a decline in broiler prices. The recent sluggish sales of chicken products and large inventories at slaughterhouses across the country mean that slaughterhouses may resort to price suppression, limiting the potential for price increases and resulting in continued losses in broiler farming for some time.

　　2. Increased Production Costs

　　The development of bioenergy, the growth of corn processing enterprises, and the continued global shortage of food will inevitably lead to tighter supplies of grain. Corn is 1700 yuan/ton, 400 yuan/ton higher than the same period last year, and soybean meal is 4650 yuan/ton, 1200 yuan/ton higher than the same period last year. The continued rise in feed raw materials, coupled with increased transportation and labor costs, will keep production costs high.

　　Feed raw material prices continue to rise, coupled with increased transportation costs and labor costs, resulting in continued high production costs.

　　3. Obstructed Chicken Exports

　　Due to trade barriers, the EU and US poultry markets are not yet open to China. In the 2008 fiscal year, Chinese poultry products could not be exported to the US. On the other hand, reports of avian influenza in Hong Kong have led to the rejection of live poultry from mainland China, resulting in sluggish sales of broilers. From January to February 2008, processed poultry exports decreased by 12.04% year-on-year.

　　4. Impact of Imported Products

　　From January to February 2008, China's poultry imports increased by more than 35% year-on-year. The increase in imported products will inevitably impact the domestic market.

　　5. Impact of National Policies

　　The increasingly stringent land policies and tight monetary policies will inevitably restrict the further development of broiler enterprises, especially the expansion of breeding, slaughtering, and processing enterprises. Some small and medium-sized enterprises are facing difficulties and even bankruptcy due to broken capital chains.

　　6. Food Safety Requirements

　　The 2008 Olympic Games will be held in China. The huge consumption potential will undoubtedly have a positive impact on China's broiler market and will require Chinese enterprises to produce healthy and safe broiler products. The state will inevitably increase inspections of slaughterhouses, leading to the suspension of operations for many enterprises and a significant drop in broiler slaughter volume in some regions.