Producers Concerned as Pork Prices Surge

by 5m Editor
18 July 2011, at 9:37am

CHINA - Chinese pig farmers said they were concerned about the recent surge in pork prices, citing fears that the current boom might prompt vast profit-driven expansion and lead to price plunge.

Latest statistics show China's pork prices surged 57 percent year-on-year in June, stoking inflation worries while setting pork suppliers fidgeting upon the potential shake-up in the industry.

Shang Yudong, a pig farmer in Central China's Henan province, said this year's price hike was evocative of the year 2008, when a soaring pork price fueled an unfettered production expansion, resulting in a glutted market and flagging prices in 2009 and 2010.

"If history is any guide, a price plunge is always after a price surge, and that's why many farmers have not been super excited about this year's windfall," said Mr Shang.

Mr Shang said if a similar price fall should occur, much of the profit he earned from this year's higher prices would be wiped out.

Yin Zhongquan, who owns a pig farm in Southwest China's Sichuan province, said it had been difficult for pig farmers to keep much wealth after all these years of rise and fall of pork prices.

"The alternation of profit-making and loss-making years is a common complaint among pig farmers. Instead of extravagant profits, we now pray more for a stable price and a reasonable profit," said Mr Yin.

Fragile industry

China leads the world in the volume of pork produced and consumed every year. The pork has been an essential ingredient in famous Chinese cuisines from stuffed steamed buns to Mu Shu Pork.

Yet despite the huge consumption, China's pork is largely supplied by small family farms, which has been one contributer and victim to the price fluctuations.

"About 60 per cent of Chinese pig farms are small ones that produce fewer than 50 hogs each every year," said Li Binglong, professor at China Agricultural University.

The small farmers, lacking market information, were easily tempted into overproduction in boom times but usually lacked the ability to tide over difficult times when the prices were pulled down, said Li.

According to a report by the Ministry of Agriculture, during the past two years when pork prices had been low, over half of the country's pig farmers reported losses, and many either closed farms or butchered their sow pigs to reduce production.

The result was that a 4.8 per cent decline in the live pig.