Muyuan to Navigate Subdued Hog Prices Environment Through Cost Reduction

Muyuan Foods operates an integrated model in hog breeding and production, profiting from selling hogs at scale. The company has invested heavily between 2020 and 2022 to increase its hog production capacity. Although it is the largest hog producer in China, its volume only makes up a high-single-digit market share given the fragmented industry. China hog supply is made up of a large number of small producers. The company believes that the industry will evolve in the interest of resource efficiency and better food safety practices, and large producers with scale should see opportunities. In the meantime, the fragmented industry leads to more volatile hog price cycles, which Muyuan strives to manage by lowering production costs in order to buffer profit during a downcycle.