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China’s hog farmers struggle as pork prices swing and throw off debt-fueled expansion plans



A breeder feeds piglets at a pig farm on May 13, 2020, in Bijie, Guizhou Province of China.

Visual China Group | Getty Images

BEIJING — Massive swings in pork prices in the last two years are roiling China’s hog farm industry.

To capitalize on a doubling in prices in 2019, the five largest pork producers sought to expand quickly and increased their gross debt by nearly threefold over 2.5 years, S&P Global Ratings said in a report Wednesday.

But pork prices have tumbled just as quickly as they rose, pressuring the now-indebted producers. The consumer price index released Thursday showed prices for the Chinese meat staple fell 44.9% in August from a year ago.

An outbreak of African swine fever beginning in 2018 swiftly decimated China’s hog production by about 40%, according to Flora Chang, associate director at S&P Global Ratings, and an author of the report.

“The high price lured large pork producers to produce more. … They borrowed aggressively to fund expansion,” she said, noting that due to the coronavirus pandemic in 2020, financing was easily available.

Entrepreneurs and companies also rushed to take advantage of government subsidies. Zhejiang province promised 1500 yuan or $231 for every breeding sow.

Three years later, that’s produced a glut of supply. Pork prices have plunged to around 20 yuan per kilogram ($1.40 per pound), near the same level of early 2019, according to wholesale price data from the agriculture ministry. At their peak in late 2019 and early 2020, pork prices were near 50 yuan per kilogram or higher, the data showed.

Planning challenges

The unprecedented price swings have complicated hog producers’ efforts to finance potential growth.

With limited “ability to plan according to price projections,” the S&P report noted how companies were suddenly bearing extremely high levels of debt. The analysts said that in the 12 months through June 30, hog producer Wens Foodstuff saw its debt-to-earnings (before interest, taxes, depreciation, and amortization) ratio jump to more than ninefold, up from 1.9 times in 2020.

However, the report noted that Muyuan was less affected by African swine fever and its debt leverage rose only slightly, to 1.3 times from 1, in the 12 months through the end of June.

Government efforts to stabilize prices

Pork is a primary part of Chinese diets and the government has worked to ensure sufficient supply by releasing the meat from national reserves during shortages, and, more recently, encouraging consumption to counter oversupply.

“Recently [pork] prices have fallen very quickly, and [we] hope everyone can take advantage of this opportunity to eat more pork, buy more pork,” Ma Youxiang, deputy minister of the Ministry of Agriculture and Rural Affairs, said at a press conference on Sept. 1. That’s according to a CNBC translation of the Chinese statement.

The tone was different in 2019, when authorities spoke of encouraging production of not only pork but poultry and beef in order to stabilize prices.

Stock investors also poured in, sending shares of major hog producers like New Hope soaring 174% in 2019. But after additional gains of 16% last year, the stock is down more than 45% for the year so far.

“The drop in pork prices directly affects corporate profits,” said Bai Xubo, securities affairs representative at New Hope, noting supply of pork is expected to remain in a surplus, with high levels of imported frozen meat and a backlog at ports while consumer demand remains weak.

That’s according to a CNBC translation of a Chinese statement Thursday.

Bai remained confident in the foundation of the company’s core business and said the real competitive advantage comes from efforts to improve efficiency. New Hope can also use pork futures and business developments in slaughtering and processing to hedge against price fluctuations.

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It takes about nine to ten months to raise a pig from sow pregnancy to sale, S&P’s Chang said.

That’s left time for smaller farmers to come into the market when pork prices rise.

In fact, the almost non-existent barrier to entry in the hog industry right now in China has created price volatility of about 10 yuan to 20 yuan every few years as farmers try to ride price changes, Chang said. “Now with [African swine fever] and rising environmental standards, you might see higher barriers to entry.”

The analysts expect the market share of the top five producers will likely rise to more than 15%, versus 10.5% in June and compared with 30% for the top five players in the U.S.

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Xpeng launches flying car that can also operate on roads



HT Aero, an affiliate of Chinese electric carmaker Xpeng Inc., launched a new vehicle capable of flying in the air and driving on roads. The launch of HT Aero’s 6th–generation model happened at the Xpeng Tech Day on Sunday, October 24, 2021.


GUANGZHOU, China — HT Aero, an affiliate of Chinese electric vehicle maker Xpeng Inc., launched a new flying car on Sunday that it says can also drive on roads.

The company says it plans for a rollout in 2024.

HT Aero’s vehicle will have a lightweight design and a rotor that folds away, the company said. That will allow the car to drive on roads and then fly once the rotors are expanded.

The vehicle will have a number of safety features including parachutes, the company said.

HT Aero is backed by Xpeng and its founder He Xiaopeng. The company raised $500 million last week from a number of outside investors including high-profile venture capital firms.

Flying cars — also called electric vertical take-off and landing vehicles — have garnered a lot of interest from automakers and start-ups.

However, there are a number of challenges for these vehicles to become wide-scale including regulation and safety issues.

HT Aero’s new land and air vehicle was launched at Xpeng’s Tech Day where the company also took the wraps of the latest version of its advanced driver assistance system called XPILOT 4.0.

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Twitter and Square CEO Jack Dorsey says ‘hyperinflation’ will happen soon in the U.S. and the world



Jack Dorsey, CEO of Twitter and co-founder & CEO of Square, speaks during the crypto-currency conference Bitcoin 2021 Convention at the Mana Convention Center in Miami, Florida, on June 4, 2021.

Marco Bello | AFP | Getty Images

Twitter co-founder Jack Dorsey weighed in on escalating inflation in the U.S., saying things are going to get considerably worse.

“Hyperinflation is going to change everything,” Dorsey tweeted Friday night. “It’s happening.”

The tweet comes with consumer price inflation running near a 30-year high in the U.S. and growing concern that the problem could be worse that policymakers have anticipated.

On Friday, Federal Reserve Chairman Jerome Powell acknowledged that inflation pressures “are likely to last longer than previously expected,” noting that they could run “well into next year.” The central bank leader added that he expects the Fed soon to begin pulling back on the extraordinary measures it has provided to help the economy that critics say have stoked the inflation run.

In addition to overseeing a social media platform that has 206 million active daily users, Dorsey is a strong bitcoin advocate. He has said that Square, the debit and credit card processing platform that Dorsey co-founded, is looking at getting into mining the cryptocurrency. Square also owns some bitcoin and facilitates trading in it.

Responding to user comments, Dorsey added Friday that he sees the inflation problem escalating around the globe. “It will happen in the US soon, and so the world,” he tweeted. Dorsey is currently both the CEO of Twitter and Square.

It’s one thing to call for faster inflation, but it may be surprising to some that Dorsey used the word hyperinflation, a condition of rapidly rising prices that can ruin currencies and bring down whole economies.

Billionaire investor Paul Tudor Jones and others have called for a period of rising inflation. Jones told CNBC earlier in the week that he owns some bitcoin and sees it as a good inflation hedge.

“Clearly, there’s a place for crypto. Clearly, it’s winning the race against gold at the moment,” Jones said Wednesday.

But most of the major investors have not gone so far as to call for hyperinflation like Dorsey.

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Alec Baldwin fatal prop gun shooting raises questions about working conditions



While injuries or death from prop firearms are extremely rare, the accidental killing of Halyna Hutchins on a Sante Fe movie set Thursday has sparked inquiries about working conditions for Hollywood crew members.

“I’ve been in the industry 21 years,” said Kevin Williams, the prop department supervisor at the UCLA School of Theater, Film and Television. “I have not heard of any circumstances like this. So, this is definitely one of these things, and it sounds like a cliche to say, but it really sounds like a freak accident.”

The circumstances of the shooting are under investigation. The Santa Fe County Sheriff’s office confirmed that actor Alec Baldwin fired a prop gun on the set of “Rust,” a Western being filmed at the Bonanza Creek Ranch, killing the film’s director of photography and injuring its director, Joel Souza.

Security guards and a compliance officer at New Mexico’s Bonanza Creek Ranch on Oct. 22, 2021, the film set where actor Alec Baldwin fatally shot cinematographer Halyna Hutchins and wounded a director when he discharged a prop gun.

Adria Malcolm | Reuters

Souza has since been discharged from the hospital. No charges have been filed. The Santa Fe County Sheriff’s office did not immediately respond to CNBC’s request for comment.

While it’s unclear at this point what exactly transpired Thursday, many in the industry have begun to inquire about working conditions on set. These queries come as the International Alliance of Theatrical Stage Employees works to finalize a new three-year contract with the Alliance of Motion Picture and Television Producers that addresses the union’s calls for better working hours, safer workplace conditions and improved benefits.

“There have been times that I have been on projects for 18 to 20 hours and then been asked to return in six,” Williams said.

Crew protested working conditions

The IATSE issued a statement Friday addressing Hutchins’ death and encouraging its members to contact the union’s safety hotline if they feel unsafe on set.

“Our entire alliance mourns this unspeakable loss with Halyna’s family, friends, and the ‘Rust’ crew,” the statement read. “Creating a culture of safety requires relentless vigilance from every one of us, day in and day out. Please, if you see something, say something.”

The union declined to comment further.

A person familiar with the matter told NBC News that half a dozen camera crew workers walked off the “Rust” set in protest of working conditions just hours before the shooting took place. Among their concerns were multiple misfires of the prop gun.

Earlier Friday, the Los Angeles Times reported, citing three unnamed people involved with the production, that the crew was frustrated with the production’s long hours. It also alleged that there were two previous prop gun misfires on set, one the previous week and one on Saturday.

​”The safety of our cast and crew is the top priority of Rust Productions and everyone associated with the company,” Rust Movie Productions said in a statement provided to CNBC. “Though we were not made aware of any official complaints concerning weapon or prop safety on set, we will be conducting an internal review of our procedures while production is shut down.”

Rust Productions is cooperating with the Santa Fe authorities in their investigation.

A ‘potential failure in the system’

Hollywood productions typically adhere to strict safety measures for stunt work, particularly when it comes to weapon and prop safety. The Industry-Wide Labor-Management Safety Committee has written and distributed safety bulletins on best practices for television and movie productions.

“Blanks can kill,” the first bulletin reads. “Treat all firearms as though they are loaded. ‘Live ammunition’ is never to be used nor brought onto any studio lot or stage.”

These guidelines are recommendations and may not apply to reality shows such as “Mythbusters” or “Top Shot” where live rounds are used to test scientific theories or for marksmanship competition.

“I can say unequivocally that a blank round versus a live round is really easy to identify in the hands of an experienced armorer or prop master,” Williams said. “I can’t imagine anybody would say ‘whoops’ and just put that in there.”

He also noted that safety demonstrations are done with all cast and crew involved in firearm stunts who are instructed that prop weapons should never be pointed at another actor or crew member. In cases where a director wants to film a weapon being pointed at the camera and discharged, ballistic shields are used, he said.

“There are a lot of safety measures put in place,” he said. “If it turns out that a live round was loaded into a vintage weapon and it turns out that that is how this happened, then we need to figure out why.”

That’s a “potential failure in the system,” Williams said.

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