Core view
Grain supply is facing structural shortage, and corn and soybean are highly dependent on imports. With the gradual increase of the proportion of animal protein in residents' food consumption, the consumption demand of livestock, poultry, eggs, milk and aquatic products shows a continuous growth trend, which drives the continuous increase of the demand for feed and its raw materials. In China's limited cultivated land resources, we must first ensure the production of rations, and then there is a shortage in the supply of corn and soybean for forage crops. The Ministry of agriculture predicts that in 2021 / 22, China's corn production and demand gap will be close to 15.15 million tons and soybean production and demand gap will be close to 100 million tons. As foreign Shenzhen Agricultural Products Group Co.Ltd(000061) is in the lead in transgenic, agricultural modernization and large-scale, its cost advantage is much higher than that of China, and the cost advantage is transformed into price advantage. Therefore, China's corn and soybean imports are highly dependent and vulnerable to global prices.
The core of improving feed and grain supply is to improve production capacity. China is short of cultivated land resources, so it is difficult to meet the further expansion of Shenzhen Agricultural Products Group Co.Ltd(000061) of planting. At the same time, the unit yield of soybean and corn in China has lagged behind that of large agricultural countries, and the unit yield of corn and soybean in the United States is more than 70% higher than that in China. Under the constraints of endowment conditions such as cultivated land resources and water resources, improving China's comprehensive agricultural production capacity and ensuring the self-sufficiency of Shenzhen Agricultural Products Group Co.Ltd(000061) will be a long-term policy orientation. 1) Build high standard farmland. Giving full play to the higher output level of limited cultivated land resources is an important means to improve the comprehensive agricultural production capacity. The average grain production capacity per mu of high standard farmland can be increased by 10% ~ 20%, with an average cost saving and efficiency increase of about 500 yuan per mu. The Ministry of agriculture plans to build 1.2 billion mu of high standard farmland by 2030, an increase of 300 million mu compared with the current; 2) Develop biological breeding. Promoting GM commercialization is the main way to improve crop efficiency. Through the policy guidance of Document No. 1 for three times from 2019 to 2021, the GM commercialization policy is basically perfect, and the market space of seed enterprises is huge.
The technology of breeding industry is weak, and the share of imported varieties of livestock and poultry provenance is high. In the early stage of reform and opening up, the requirement of Chinese residents for the livestock and poultry industry was to provide a sufficient number of products. The livestock and poultry industry paid low attention to production technology and cost, and the breeding was extensive. With the continuous development of the industry, the differences in breeding efficiency and technology between China and foreign countries have gradually emerged. China's livestock and poultry germplasm resources have far lagged behind the world, especially in the two major breeds of pigs and white feather broilers. At present, foreign ternary lean pigs account for 80% of China's pork market, and foreign white feather broiler breeds account for about 90% of China's ancestral chicken breeds, with a high degree of import dependence. Under the background of increasing global geopolitical risk uncertainty and increasing risks of animal diseases and zoonotic diseases, it is crucial to improve the self-sufficiency rate of core sources of Chinese pigs and white feather broilers.
The scale of feeding links is insufficient, and the breeding level needs to be improved urgently. The scale of animal husbandry in China is low. Taking pig breeding as an example, in 2020, more than 500 large-scale farms in China accounted for about 57.1%, while the United States reached 99.5% in 2017. The level of large-scale breeding is very different from that of the world. The low degree of scale has brought more hidden dangers and risks to animal husbandry. 1) price fluctuation: retail investors are short-sighted to the breeding industry and their financial strength is weak, resulting in periodic fluctuations in pig prices; 2) Rising import dependence: due to the shortage of supply and the lack of competitive advantage in breeding costs, the import proportion of pork and beef in China increased significantly from 2020 to 2021. The import proportion of pork once reached 9.6% and beef continued to rise to about 25%. 3) Hidden dangers of food safety: compared with other countries, the cost of vaccine and epidemic prevention for a single pig in China accounts for only 1%, while that in the United States accounts for more than 3%. The insufficient investment in epidemic prevention not only reduces the success rate of breeding, but also increases the risk of food safety. At the same time, the relatively scattered breeding links make it difficult to concentrate the slaughtering links. The Cr6 of slaughtering links in China is only 8%, far lower than 90% and 61% in Denmark and the United States.
Investment proposal and investment object
China's agriculture is large but not strong. With the changes in the internal and external environment, in the medium and long term, agriculture must stabilize the basic situation and develop modernization. As the key to ensuring stable supply and improving production efficiency, leading enterprises have great development potential and long-term investment value.
Improve the efficiency of cultivated land and promote the revitalization of seed industry: Jiangsu Provincial Agricultural Reclamation And Development Co.Ltd(601952) , Heilongjiang Agriculture Company Limited(600598) , Shandong Denghai Seeds Co.Ltd(002041) , Yuan Longping High-Tech Agriculture Co.Ltd(000998) , Winall Hi-Tech Seed Co.Ltd(300087) , Beijing Dabeinong Technology Group Co.Ltd(002385) .
Reduce provenance dependence and develop large-scale breeding: Muyuan Foods Co.Ltd(002714) , Wens Foodstuff Group Co.Ltd(300498) , Fujian Sunner Development Co.Ltd(002299) , Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) .
Improve forage supply and strengthen animal epidemic prevention: Guangdong Haid Group Co.Limited(002311) , Wellhope Foods Co.Ltd(603609) , Jinyu Bio-Technology Co.Ltd(600201) , Pulike Biological Engineering Inc(603566) , Wuhan Keqian Biology Co.Ltd(688526) .
Risk tips
Policy risk, industry competition and product risk, demand growth is less than expected.
