Hong Kong Piggeries Head for China as City Cites Health Concern

Mrs. Li stands with her pigs on her farm

"The government is concerned about the handling of manure and sewage," said Li, 70, who will shut his 50,000 square-foot (4,600 square-meter) farm by year-end because he can't afford to meet proposed hygiene standards. "I want to continue the business, but these stringent measures have deterred me."

Hong Kong's government is encouraging 90 percent of the city's hog farms to close, citing health risks as the population expands. That may leave the territory -- already reliant on China for four-fifths of its live pork -- more vulnerable to price swings as inflation and food scares roil the Chinese market.

Wholesale pork prices in China have surged 46 percent this year because of rising feed costs and disease. Hong Kong's live hog supply fell 35 percent below normal in July after a fresh outbreak of so-called blue-ear virus in China.

"Hong Kong should keep some of its own pig farms to secure at least a short-term supply in case of crisis," said Chong Tai Leung, an economist at the Chinese University of Hong Kong.

Shortages in China, the world's largest pork producer and consumer, have helped Chicago hog futures rise 16 percent this year as traders bet the country will import more U.S. meat.

Pig inventories at some Chinese farms have fallen as much as 50 percent, according to Lang Yanping, a livestock analyst at Shanghai JC Intelligence Co., a commodity market researcher.

"Hong Kong can switch from the mainland to overseas'' for the 4,500 live hogs it imports daily, said Ma Ngok, a political scientist at Chinese University in Hong Kong. "But living costs will rise significantly."

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