China’s ‘pork king’ and world’s richest farmer faces end to fortuitous crisis

Via Financial Times

Swine flu made him the richest farmer in the world; coronavirus added a quick $6bn to his personal fortune.

Qin Yinglin’s pig farming wealth has grown rapidly in recent months — more than doubling to $22bn since June last year yet few people in China, the world’s biggest pork market, know his name. His fortune now trumps that of the Louis-Dreyfus family of the eponymous 169-year-old agriculture empire.

But the outbreak of swine flu that wiped out half of China’s pigs and sent shares soaring last year in Muyuan Foods, Mr Qin’s Shenzhen-listed company, has started to stabilise in 2020. For Mr Qin, the restocking of China’s pork supply will also mean a decline in his personal wealth.

“This is a limited story [for Muyuan] in terms of time,” said Wilhelm Uffelmann, the head of consultancy Roland Berger’s food and agribusiness practice.

African swine flu ravaged China’s pig farming industry in 2019 and drove up prices to record highs. By October last year, pork prices were about 160 per cent higher than the same period the year before, as up to half of the country’s pigs were culled or killed off by the disease.

Many farms suffered but Muyuan sales have thrived and profit in the first three months of 2020 surged 863 per cent to Rmb4.1bn ($574m). Analysts said the company has more self-owned farms than many of its competitors, which contract out pig farming to much smaller companies. By owning a high percentage of its own farms, Muyuan has been able to better control its hygiene and biosecurity, helping it navigate the swine flu outbreak.

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“The epidemic will force the weaker companies and farmers to completely withdraw [from the industry] but it will be an opportunity for profit and development for the stronger enterprises,” the 55-year-old Mr Qin told Chinese media earlier this year. The businessman would not comment for this story.

Muyuan has humble beginnings, and Mr Qin and his wife Qian Ying carry the credentials of self-made multibillionaires.

The pair graduated with animal husbandry degrees in the late-1980s, during the early days of China’s economic reforms, according to official biographies. They started their first pig farm from scratch in 1992 with 22 piglets, most of which were wiped out in an outbreak of swine disease. His farms in 2019 raised more than 10m pigs.

The meat section at a supermarket in Binzhou, Shandong province in China in December
Pork is China’s most-popular protein, and higher prices or a shortage can leave Chinese consumers upset with the government © AFP via Getty Images

International Financial Corporation, the private sector arm of the World Bank, invested Rmb65m in 2010 and also provided the group with a Rmb200m loan. IFC bought 12m shares at Rmb5.42. Muyuan’s stock price hit Rmb133 in late April.

Mr Qin has had little time to prepare for such a steep rise in his personal fortune. Among billionaires, he experienced one of the most rapid increases in wealth last year.

During the worst phase of the swine flu in 2019, shares in Muyuan surged about 200 per cent. Then, when the nation was put under lockdown in early February, the supply of pork and other foods were constrained — providing another boon for Muyuan that boosted the stock by 80 per cent between February 3 and April 28.

With about 57 per cent of the shares in Muyuan, Mr Qin and Ms Qian have seen the value of their personal holdings in the company rise more than 110 per cent since June last year, hitting $22bn at the end of March. That makes him the world’s richest farmer, according to Shanghai-based research company Hurun Report.

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The world’s second-richest farmer is also a Chinese pig farmer. Liu Yonghao and his family, who control New Hope Group, are worth an estimated $12.5bn, according to Hurun.

“Who would have thought that pig farming could create wealth on such a scale,” said Hurun Group chairman and chief researcher Rupert Hoogewerf.

It is unclear how long Mr Qin will hold on to the title of world’s richest farmer.

Pork is China’s most popular protein, and higher prices or a shortage can leave Chinese consumers upset with the government. The recent surge in prices has led to more official intervention in the hopes of stabilising supply.

“Culture-wise, pork is an essential ingredient for every household in China,” said Helena Huang, China economist at ICBC Standard Bank. “In the middle of the lockdown people were complaining about the high prices. So Beijing sees it as very important to bring the price down.”

As the swine flu outbreak stabilises and the coronavirus lockdown is lifted, pork prices are falling. The average price per kilogramme has come down by about 24 per cent from a high after China’s lunar new year in early February, according to investment bank CICC. The number of fertile sows, a gauge of supply, has increased about 13 per cent since a low point in September last year.

The trend is expected to lead to a “normalisation of pork prices and pig-raising profit”, said CICC economist Liu Liu.

Lower prices will be good for Chinese consumers. But analysts expect that Muyuan’s share price, along with Mr Qin’s personal wealth, will fall in the coming months.

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“The company is undergoing an overpricing,” said Mr Uffelmann at Roland Berger. “Which is only due to the current shortage of supply of pork in China and skyrocketing high prices.”