* Pig farmer Wen's to move into meat processing
* Looking to dampen impact from competition, falling hog
* Also wants to boost number of retail outlets
By Dominique Patton
QINGDAO, China, May 17 China's top pig farmer
Guangdong Wen's Foodstuff Group is pushing into
processing meat, broadening its operations to limit the impact
from tougher competition and falling pork prices in the world's
biggest market for the food.
Hog and pork markets have tumbled in recent months as
suppliers rushed to cash-in on last year's record prices for the
meat, a staple form of protein at the heart of Chinese cuisine.
That is driving Wen's to branch out into livestock
slaughtering and meat processing, Luo Xufang, a vice president
at the company, said late on Tuesday.
"Large-scale companies are increasing, so Wen's has to
consider the issue of competition. In the second-half of this
year, we will push ahead into the slaughter and processing
industry," Luo said in a presentation to an industry conference
in China, without giving details.
When prices for hogs fall, slaughterhouses and processors
typically benefit, boosting the incentive to become more
integrated, said Luo.
Live hog prices, currently around 15 yuan ($2.18) per kg,
are expected to fall further after dropping from a record 22
yuan per kg last June.
But tapping the potentially lucrative processing market
could also be risky, as rivals, including WH Group Ltd
, have ramped up investment in processing in recent
years, leading to overcapacity there too.
Meanwhile, the company also plans to build more than 5,000
retail outlets in southern China to sell Wen's-branded food
products, a move that fulfils government policy to focus more on
consumption rather than simply production, said Luo. It was
unclear how many such shops are already operating and what the
timeframe for this would be.
China's 10 largest pig farming firms accounted for only 5.8
percent of hogs sent to slaughter last year, but that was up by
2.8 percentage points on the previous year, said Zhang Guangan,
director of the China Swine Industry Association.
Their share is set to keep growing, with groups like
state-owned Cofco Corp and Wen's building huge new farms in less
developed parts of the country.
Wen's, which produced 17 million pigs last year to rival
U.S. company Smithfield, is aiming to lift output to 27.5
million hogs in two years.
But that comes as China's meat industry grapples with
stagnating demand-growth and changing tastes, with many younger
people willing to splash cash on Western-style meats like bacon
Luo said that pork demand had been lacklustre.
"We haven't done a very detailed study, but from our sales
situation, we get the impression that consumption has dropped,"
he said, referring to volumes sold to slaughterhouses.
($1 = 6.8843 Chinese yuan renminbi)
(Reporting by Dominique Patton; Editing by Josephine Mason and