Under the triple pressures, does the agricultural and animal husbandry industry still need to pursue healthy growth? Why? And how can it achieve healthy growth?

01 Jun,2022

The overall economic environment is grim, and we’re facing triple pressures, which can be summarized in three words: The first pressure: Demand contraction. This means that both the purchasing power and willingness of ordinary people may decline simultaneously. The decline in purchasing power stems from lower incomes, while the drop in willingness to buy isn’t solely due to reduced income. People have pessimistic expectations about the future economy and are deeply concerned about an economic downturn, leading them to either refrain from consuming altogether or delay their purchases—what’s known as “deferred consumption.” For example, if I used to replace my phone every two years, now I might wait three or five years before upgrading; if I used to change cars every five or eight years, now I might hold onto them for 10 or 15 years. As a result, both our consumption capacity and willingness to consume have fallen sharply. This is especially true in the agricultural and animal husbandry sector—particularly pig farming. Raw material costs have risen dramatically, yet pork prices continue to fall below the cost of raising pigs. The second pressure: Supply shocks. You’ve probably noticed that the prices of raw materials and everyday commodities are rising. In particular, the livestock industry has been under tremendous pressure since last year through this year. On the supply side, raw material costs have surged, but pork prices have been falling—and even resulting in losses for many farmers. The third pressure: Weakened expectations. What does it mean to have weakened expectations? It includes weakening expectations for production, profitability, and income—all of which are eroding. Under these triple pressures, why should businesses still strive for healthy growth? First, there’s a fundamental difference between healthy growth and previous growth models. Previously, companies pursued rapid expansion. Healthy growth, on the other hand, involves three key indicators: 1. Sustainability—meaning it’s not like “killing the goose that lays the golden eggs,” where growth this year leads to problems next year. 2. Profitability—relying genuinely on revenue generating net profits and net profit margins. 3. High return on investment—ensuring that your ROI exceeds the industry average. Why should we stick to healthy growth? 1. Because research shows that if companies don’t pursue healthy growth, 87% of them could end up going bankrupt. Businesses only exist in three states: stagnation, growth, or decline. Stagnation and decline often spell doom, and 87% of companies simply won’t survive. So small and medium-sized enterprises must focus on healthy growth. Our growth targets need to shift—whereas previously we might have focused on scaling up, now we can adjust our goals toward improving profit margins. By optimizing costs and refining our expense structure, we can boost our profit margins. 2. Increasing our market share—not just expanding in scale. In the agricultural and animal husbandry sector, particularly in feed and veterinary medicine, the entire industry has contracted by 30-50%, with some regions seeing declines as high as 80%. On average, the industry has shrunk by 50%. Yet, our company needs to remain stable: even if one region experiences a decline, others can still grow. In fact, this growth isn’t driven by industry-wide expansion—it’s actually coming from grabbing market share away from competitors (this point is crucial, and we must recognize it clearly and act proactively). Thus, we have two main goals: first, improving profit margins; second, increasing our market share—especially by seizing market share from competitors and creating incremental growth. These two objectives are essential for us to uphold. So how do we achieve higher profit margins? 1. Enhancing our organizational capabilities—business growth and performance growth must align with the growth of our organizational capabilities. Only when our organizational capabilities grow can our business performance typically improve. Therefore, organizational capability growth encompasses our processes, organizational structure, and corporate culture. By strengthening our internal capabilities at this stage, we can reduce costs and increase efficiency. 2. Strengthening our internal capabilities—boosting our marketing and promotion skills so we can capture more market share. Most small and medium-sized enterprises, especially those in the feed and veterinary medicine sectors, were previously in a phase of large-scale development, where the entire industry was growing along with the tide, leaving us few opportunities to hone our organizational capabilities. Our marketing strategies weren’t clear, and our employees lacked sufficient training. Now, the key focus for enhancing our marketing and promotion capabilities lies in two areas: First, making our marketing strategies crystal-clear (continuously empowering channels and user markets); during the pandemic, we leveraged social media to strengthen brand promotion through channels, and we used community platforms to highlight product value among users. 3. Improving our marketing combat effectiveness—simply put, enhancing individual capabilities and refining monetization strategies. I’d like to remind everyone here: Although we’re facing triple pressures in the broader economic environment, we must stay committed to healthy growth. Amid industry disruptions, we must actively seek out opportunities. Because without growth, we risk extinction or being eliminated from the market. Finally, I wish all businesses—especially those working in the agricultural and animal husbandry sectors—a successful passage through this challenging global economic climate. Wishing you all the best!

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The pig farming industry is abuzz with upheaval—“the Seven-Character Mantra” has made a comeback!

01 Jul,2021

With the arrival of the Year of the Ox in 2021, beautiful phrases like “turning the tide with the ox” and “the ox’s spirit soaring to the heavens” have become heartfelt aspirations among friends in the livestock industry. However, market conditions for cattle, sheep, pigs, and chickens have plummeted, with hog prices falling again and again—directly breaching the cost threshold. The hard work and sweat invested can now only elicit sighs of despair! Despite the best efforts of various “divine warriors and celestial generals,” ultimately, they’ve been powerless to turn the tide, leaving the livestock industry shrouded in turbulent times. In 2018, ASFV—a highly pathogenic virus—traveled a long way to China, this beautiful country, attracted by its reputation as having the world’s largest pig population. Ignoring the “visa” barriers, it took deep root in this pristine land and quickly joined forces with local pathogens such as “circovirus,” bacteria, and toxins, forming the “Infamous Conglomerate.” Using Northeast China as its black stronghold, the virus rapidly spread to every corner of the Chinese mainland. China is the world’s largest country in terms of both pig inventory and pork consumption. ASFV and its secondary and co-infectious diseases have caused a sharp decline in domestic pig production capacity, delivering an unprecedented blow to the pig industry. To counter this, governments at all levels and industry experts have tried everything possible to minimize losses or reverse the damage. After nearly three years of exploration and summarization, industry experts have developed a series of prevention strategies: the “Iron-Link Model,” the “Decentralized Model,” the “Small-Unit Rearing Model,” and others. These strategies have achieved some success, but due to slow progress in vaccine development, using vaccines to combat African swine fever remains a distant prospect. Moreover, with recent low hog prices, many farmers have lost their enthusiasm for raising pigs, leaving them utterly confused about how to proceed. How to keep that spark alive has become the core issue urgently needing resolution for the vast majority of pig farmers. Consequently, “reducing costs and boosting efficiency” has naturally become a hot buzzword in the livestock industry—specifically, the seven-character mantra of “more births, fewer deaths, faster growth” has re-emerged! “More births” refers to the productivity level of sows; “Fewer deaths” refers to the survival rate of piglets; “Faster growth” refers to the overall performance during the entire fattening phase of pigs—the ultimate reflection of economic benefits. Whether it’s more births, fewer deaths, or faster growth, all these goals undoubtedly depend on animal health as their foundation. If animals are subhealthy or close to illness, the “seven-character mantra” becomes impossible to achieve. Whether it’s Professor Fan Fuhao’s “Redundant Nutrition Theory” or Professor Mu Xiang’s “Qi and Blood Abundance Theory,” both aim to ensure animal health. Only when animals are healthy can their nonspecific immunity be guaranteed, enabling their bodies to effectively fight off disease. Therefore, in today’s context of raging epidemics and depressed market conditions, building an animal health system—from both management and nutritional perspectives—has become the industry’s new guiding principle. Health is a broad and profound topic, touching upon every aspect of livestock farming. Simply put, management means controlling the environment, aiming to minimize stressors for animals as much as possible; nutrition means enhancing the animal’s immune system and improving production levels. There are no shortcuts in livestock farming—every step requires careful attention! Looking back at the development of China’s pig farming—from free-range to intensive systems—we’ve experienced countless tears and hardships. But after the outbreak of African swine fever, whether it’s family farms or large-scale breeding groups, everyone seems to be becoming increasingly rational, recognizing that environment and nutrition are the two core pillars of pig production. Focusing on nutrition and reducing stress have become the two most fundamental approaches determining whether the pig farming industry can survive. In short, market conditions may be uncontrollable, but animal health is controllable; diseases may be unknown, but immunity can be cultivated. “Existence itself is the truth.” Let existing products play their rightful roles and return to their original positions: vaccines for disease prevention, medicines for treatment, and nutrition for increased productivity! Focus on nutrition, and let Xilai Gao walk alongside you every step of the way!

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