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?

Release time： 2022-06-01

【Summary Description】 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!

The overall economic situation Severe Facing triple pressures, summarized in three words:

The first layer of pressure: called demand contraction.

In other words, both the purchasing power and the willingness to buy among ordinary people may decline simultaneously. The decline in purchasing power is due to falling incomes, while the decline in willingness to buy may stem not only from lower incomes but also from pessimistic economic expectations about the future—people are deeply concerned about an economic downturn ahead, which makes them reluctant to consume or prompts them to delay consumption. In other words, they’re no longer buying new things—a phenomenon known as “delayed consumption.”

Suppose I used to replace my phone every two years; now I’m extending that to every three or five years. Similarly, I used to replace my car every five or eight years, but now I’m waiting 10 or 15 years before replacing it. As a result, both our spending power and our willingness to spend are declining simultaneously.

This is especially true in the agricultural and livestock industry—particularly in pig farming, where raw material costs have risen sharply, yet pork prices continue to fall below the break-even point for pig farmers.

The second layer of pressure: supply shocks

Everyone can feel that the prices of our raw materials and mass-market goods are rising. In particular, the livestock industry has been under tremendous pressure from last year to this year. On the supply side, the prices of raw materials have gone up, yet the price of pork—our key product—is falling, and in some cases, we’re even suffering losses.

Third source of pressure: Weakening expectations

What does it mean when we talk about weakening expectations? It includes our production forecasts, our profit forecasts, our revenue forecasts—and all of these are weakening. So, under the backdrop of triple pressures, why do companies still insist on pursuing healthy growth?

First, there’s a distinction between healthy growth and previous growth patterns. Previously, the focus was on rapid expansion, whereas healthy growth encompasses three key indicators:

1. Sustainability—that is, it’s not a short-term gain at the expense of long-term harm; it’s not like this year’s growth will lead to problems next year.

2. Profitability: What we truly rely on is revenue that generates net profit and a net profit margin.

3. High return on investment—that is, whether your return on investment can exceed the industry average.

Why should we pursue sustainable growth?

1. Because studies show that if companies fail to pursue sustainable growth, 87% of them could face extinction. “Because a business can only exist in one of three states—either stagnation, growth, or decline—any stagnation or decline almost invariably spells doom. In fact, 87% of businesses simply don’t make it past this stage. That’s why small and medium-sized enterprises must pursue healthy growth, and our growth objectives need to shift. Whereas in the past our goal might have been simply to expand in scale, today we can adjust our focus to boosting profitability. To do this, we can optimize costs, refine our expense structure, and thereby increase our profit margins.”

2. It’s about increasing our market share. It’s not just about scale—our agricultural and livestock industry, particularly the feed and veterinary medicine sectors, has seen an overall decline of 30% to 50%, with some regions experiencing declines as high as 80%. On average, the industry has contracted by 50%. Nevertheless, our company must remain stable. While one particular region has declined, other regions are still growing. In fact, the share of this growth doesn't reflect an overall industry-wide increase—it’s actually come at the expense of competitors. ( This point is extremely critical—we must clearly recognize it and take proactive action. ), so we have two objectives: the first is profitability; the second is our market share, especially by seizing market share from our competitors to achieve incremental growth. We must stick to both of these goals.

So how can we achieve growth in profit margins?

1. Enhance our organizational capabilities Enterprise growth and performance improvement must, in reality, align with the growth of organizational capabilities. Only when our organizational capabilities grow can our performance typically improve. Therefore, the growth of our organizational capabilities—including our processes, organizational structure, and corporate culture—enables us to strengthen our internal strengths at this critical juncture, thereby achieving cost reductions and efficiency gains.

2. Cultivate our internal strength. This will enhance our marketing and promotion capabilities, enabling us to capture a larger share of the market. In fact, most small and medium-sized enterprises—especially those in the feed and veterinary medicine industries—during their previous phase of scale-driven development, when the entire industry was growing along with the general trend, didn't have the opportunity to systematically build up their organizational capabilities. Our marketing strategies were unclear, and our employees lacked sufficient training. Therefore, at this stage, we should focus primarily on two key areas when it comes to developing our marketing and promotion capabilities: First, our marketing strategy needs to be clear—continuously empowering both channels and the user market. During the pandemic, we’ve leveraged self-media platforms to strengthen brand promotion (through channels) and used community engagement to highlight product value (with users).

3. We need to enhance our marketing’s combat capability. Simply put, both personal skill enhancement and monetization strategies need to be improved.

Here, I’d like to remind everyone that although our broader environment is facing triple pressures, we must remain committed to healthy growth. In the face of industry breakthroughs, we must proactively and positively seek out opportunities—because without growth, we risk either extinction or being left behind.

Finally, I wish all businesses—especially those in the agricultural and livestock industries—well as they navigate this challenging global economic climate. Wishing you all the best!

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?

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