Rising Pork Prices Having a Negative Impact on Food Consumption in China

By Cheng FANG of FAO from GIEWS/FAO Crop Prospects and Food Situation No 6 December 2007.
calendar icon 4 January 2008
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Pork prices in China rose significantly during the third quarter of 2007 compared to the same period in 2006, with increases of up to 98 percent in Liaoning province, 81 percent in Sichuan province, and 62 percent in Guangdong province (Figure i). This reflects a substantial reduction in China’s 2007 pig numbers due to an outbreak of the Porcine Reproductive and Respiratory Syndrome (PRRS) disease, also known as Blue Ear Disease in China. Over 1 million pigs have reportedly been lost as a result of PRRS. Piglet prices have surged and by August 2007 were 2.6 times higher than a year earlier (Figure ii) Other factors contributing to the pigmeat reduction include higher feed prices, with quotations of maize 15 percent more expensive than a year ago and 25 percent above their levels of two years earlier as well as increasing non-agriculture job opportunities that has resulted in shortages/higher cost of labour in rural areas.

Pork is the major meat product in China in terms of both production and consumption. In 2005, production of pigmeat, estimated at 50.1 million tonnes, accounted for some 65 percent of total meat output. Consumption data for the same year indicate that pigmeat represents three-quarters of all meat consumption. Rising prices have reportedly had a significant negative impact on meat consumption, especially for the low-income populations whose share of food in total expenditures is almost 50 percent. Although Chinese consumers have shifted pork consumption to other meats, this substitution has been limited since the rising pork price has pushed other meat and all food stuff prices up significantly (Figure iii). The all-meat price index average 44 percent more over the period from July to October 2007 than during the same period a year ago, the average all-food price index was 17 percent up during the same period.

The pork shortage in China is also expected to strongly impact world meat and feed markets since China produces and consumes about half of the world’s pork. Tentative unofficial information indicates that China’s pigmeat output could decline by up to one-third this year. As a result, China would need larger imports to meet consumption requirements. Pork imports, including formal and informal trade, are already reported to be substantial throughout southern China this year, which may be one of the reasons why there has been a relatively lower increase in pork prices in Guangdong province.

In order to support pork production, the Chinese Government has recently adopted several policy measures, including direct cash and insurance subsidies for sows, improvements to the swine breeding system, subsidies to counties with large swine and pork quantities exported to other counties, and new solutions for land and loan issues related to pork production. However, how effective these policies will be in raising pork production will depend on control of the PRRS disease.

Further Reading

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December 2007

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