An Industry Study on the Intensive Pig Farming Industry

Topics: Intensive pig farming, Meat, Pig Pages: 46 (15114 words) Published: July 26, 2008
Executive Summary
Intensive pig farming is an agricultural industry that operates by raising live pigs for slaughtering which will then be turned into pork for human consumption. Piggeries, as the firm is called, serve as a major food source in the Philippines, with the highest grossing per capita consumption among red meats. The industry is fairly attractive to investors as its high capital requirement and risky nature is effectively balanced out by the steady demand of a readily available market. The competitive structure of the industry consists of two groups. The first being commercial firms, examples of the biggest are Robina, Monterey and Foremost farms. These firms partake in large scale production of pigs; with herds usually numbering in the thousands and with numerous farms spread throughout a wide geographical area. Backyard farms, which are far more numerous, make up the second group. Backyard establishments raise less than a hundred pigs. Despite being dwarfed in operation size, small scale farms still hold the majority of the market share at 75%. Competition within the groups, as well as, between backyard and big firms is intense due to the production of a relatively homogenous product which is sold to an impartial consumer. There is very little demand growth for the industry, due mainly to economic trends affecting the purchasing power of the Filipino people. Growth in demand is commonly attributed to a growing population rather than an increase in the per capita consumption. This economic trend’s effect is further aggravated by rising pork prices due to supply shortages caused by diseases, as well as, rising feed prices. The latter being the top value input of the industry (70%) and as such has a large effect on market price. Profit margin for the industry is relatively small due to price caps that allow the product to remain competitive with its substitutes. This is the industries single greatest threat. Rising costs in its production could raise prices to such a level that consumers would just opt to buy the cheaper substitutes. In answer to this dilemma, firms are looking research and development to help lower costs in an attempt to make this industry more efficient and lucrative. Piggery business units are a worthy investment for one who seeks an industry that is a leader among its agricultural counterparts and is willing to take the risk duly present in businesses dealing with the propagation of life. Industry Study

Background of the Industry
Hog raising is our industry of choice. Intensive pig farming, the focus of our industry analysis, is the practice of raising domestic swine up to its slaughter weight in a confinement. Pigs are being raised on a massive scale, which results in a dense hog population within the confines of hog houses. The domestication of pigs started five thousand to nine thousand years ago. Pigs were first domesticated in Mesopotamia, in countries such as Syria, Iraq and Turkey and then spread across Asia, Europe and Africa. Pigs became integral in settled farming communities as they are easily integrated into the farming system. On the other hand, hog raising did not catch on in nomadic communities because of the difficulty of transport and high mortality rate of the hogs. Pigs farming began in small-scale outdoor enclosures called a pigsty or sty. The building materials utilized were affordable, making it relatively easy for a single family to fund and manage the enterprise. This system allows for a more efficient family as the less productive members of the family are held responsible for the care of the pigs, and eventually earn income for the family. These farms can only support a small number of pigs yet are able to price their hogs competitively by absorbing a large portion of the costs as part of their cost of living. Further development in hog farming resulted in intensive piggeries, typically large warehouse-like buildings, which specialize in raising...
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