CMSC: Both people's livelihood orientation and high-quality development are equally important. There is still significant room for optimization in the efficiency of the pig farming industry.

CMSC released a research report stating that compared to overseas advantages in production capacity, there is still considerable room for optimization in the efficiency of China's pig breeding industry. The value realization project led by leading enterprises may last for several years. With the support of visible hands, the pig breeding industry has entered a stage of high-quality development; with industry capacity slightly sufficient and inventory levels relatively reasonable, it may be difficult to experience long-term deep losses in the current cycle; due to large cost variances in the industry, high-quality enterprises with long-term stable cost advantages are highly likely to achieve profit accumulation. CMSC's main points are as follows: Changes and constants in policies: balancing people's livelihood and high-quality development Over the past decade, under the enforcement of environmental protection policies and the challenge of African swine fever, inefficient production capacity in the pig breeding industry has rapidly exited, and industry breeding efficiency and epidemic prevention levels have significantly improved; the entire industry is developing towards specialization and scale. The tendency in guiding the development of the pig breeding industry is: 1) people-oriented, ensuring production stability and supply security, and stabilizing prices; 2) promoting the development of the pig breeding industry towards high quality, guiding inefficient production capacity to exit; 3) promoting increased income for farmers, driving rural revitalization, and achieving common prosperity. Changes and constants in the pig industry: weakening cycles, cost is key In the post-African swine fever era, as the industry gradually focuses on advantageous production capacity, capacity digestion slows down, and pig price fluctuations weaken, the cycle weakens gradually, and the pig breeding industry enters a time of meager profits. At the same time, the improvement in epidemic prevention levels and optimization of breeding efficiency jointly drive the downward shift of industry costs, but at the current stage, there is a significant variance in costs among different breeding entities, with a difference of up to 2 yuan/kg or even higher in cost per kilogram. Large-scale breeding entities with cost advantages and disease prevention and control advantages still have the opportunity to gain excess profits and achieve profit accumulation. How do visible hands guide industry changes? Since the beginning of the year, the pig prices have been running above the cost line for a long time, and the industry as a whole has maintained good profitability. The capacity of breeding sows has been rebounding from a high level since April 2025, with about 40.42 million breeding sows in inventory by the end of May, exceeding the benchmark of the normal holding level of 39 million sows. Since mid-2025, various measures have been taken by the Ministry of Agriculture and Rural Affairs, the National Development and Reform Commission, and other relevant departments to guide capacity regulation, promote high-quality development of the pig breeding industry - adjusting short-term pig supply through measures such as reducing weight gain and restricting the sales of second-cycle pigs; strictly controlling new capacity, guiding a reduction of about 1 million sows to around 39.5 million sows, it is expected that the supply-demand pattern of pigs in 2026 will significantly improve; in the long term, it will guide the breeding sow inventory to a reasonable level through environment protection policies, tightened financing channels, and other methods. Risk warning: Unexpected fluctuations in pig prices; lower-than-expected performance in sales and costs of listed companies; unexpected large-scale uncontrollable diseases; policy disturbances; major food safety incidents, etc.