By Diao Ying (China Daily)
Updated: 2008-01-28 07:32

Liu Yonghao, who started out selling pig feed and later became one of the mainland's richest, sees recent pork price hikes as a call to go back to his old business.

Liu Yonghao

The price of pork is now 60 percent higher from the same time last year, according to official figures. The price rises since last May have been mainly attributed to a decrease in supply and rising feed costs.

But Liu thinks there is a fundamental cause behind the price hike. "Individual farming households are quickly quitting pig raising but large producers haven't stepped in to fill the breach, hence supply cannot meet demand," says the 56 year-old who started his business as a street vendor in the 1980s.

"As the largest consumer and producer of agricultural products, China needs a bunch of large agricultural companies," said Liu.

His company, New Hope Group, whose interests range from high-tech to chemicals, is on the way to become one of the first and biggest such giants.

From 2005, through a series of mergers and acquisitions, Liu - a Sichuan native - now controls nearly 10 leading agricultural companies in various regions, including Kinghey, the pork supplier for the Beijing Olympic Games.

Liu is trying to build the whole supply chain of agricultural products from animal feed and pig and poultry raising to meat processing.

Liu and his three brothers were among the earliest and most famous private entrepreneurs back in the 1980s. After raising chicken and quail, they turned to making pig feed as pork production boomed.

The Liu brothers then became the largest animal feed makers in the country, with a market share of nearly 10 percent at the peak.