BEIJING, China: Falling hog prices, mounting losses and rising debt are putting pressure on the biggest pig breeders in China, the consumer of half the world’s pork.

Big agribusinesses have entered the sector and are rapidly modernising it, but with demand currently in a downturn, huge losses are expected next year, potentially forcing China’s pig companies to slim down their breeding herds and sell off farms.

However, they are still digging in, hoping to wait out the market downturn and reap the rewards when prices recover.

Lyle Jones, China sales director at US-based Genesus Inc., which supplies breeding pigs to leading producers, said, “It all comes down to how deep these companies’ pockets are.”

For the first time in almost a decade, China’s cash hog prices have averaged well below producers’ costs this year, dropping 15 percent to 14.5 yuan per kilogram in the past three months alone.

The downturn occurred despite both the start of the peak winter season for pork consumption and the government’s efforts to prop up prices with token purchases for official reserves.

This is squeezing a number of big producers in the US$200 billion-a-year industry, with the top 10 producers alone recording a 13 percent increase in net debt this year as of end-September, according to state media.

New Hope Liuhe, China’s third-largest and the world’s fifth largest pork producer, sold off farms last year and told investors in July it would sell more, while bringing in strategic investors to its poultry and food units.

Meanwhile, Jiangxi Zhengbang Technology, which became China’s second-largest producer after a rapid expansion drive, was forced into restructuring last year despite support from local government.

The costs of battling disease have also risen substantially, with African swine fever now endemic and a constant threat to farms.

China’s agriculture ministry has warned of heavier losses for the sector and urged pig producers to reduce output, while major producers, despite remaining reluctant to close farms and reduce breeding herds, have cut spending on new equipment and undertaken various cost-cutting measures.