Massive snowstorm in China kills 15.8 million livestock, damages crops

Vicious winter weather has killed 15.8 million heads of livestockwhile dealing an "extremely serious" blow to winter crops, Chinese agricultural officials said on Thursday (February 1, 2008).

The news comes amid fears that rising food prices could exacerbate already historically high inflation.

The toll includes 14 million fowl and 870,000 pigs who froze to death or died due to disruptions in feed and water supplies, the government's official China News Service said.

China had an estimated 5.4 billion fowl and nearly 500 million live pigs in 2006, according to Ministry of Agriculture figures.

"The calamity has strained the ability to keep livestock warm and ensure food and water supplies," Chen Weisheng, vice director of the Agriculture Ministry's livestock department, was quoted as saying.

China's inflation was already at an 11-year high, due largely to surging food prices, even before a bout of severe winter weather began on Jan. 10.

The weather has caused massive gridlock to the country's transport system, hampering distribution of food. China has also mobilised its army to help in food distribution and aiding in road clearing. 

Meanwhile, snow battering central China has dealt an "extremely serious" blow to winter crops, raising the likelihood of future shortages.

Regions hit by the worst winter storms in 50 years provide the bulk of China's winter fruit and vegetable production, Chen Xiwen, deputy director of the Communist Party's leading financial team, told reporters.

The full magnitude of the losses was unclear and much depended on the weather, he said.

"The impact of the snow disaster in southern China on winter crop production is extremely serious," Chen said. "The impact on fresh vegetables and on fruit in some places has been catastrophic."

Separately, the government plans to provide 100 million yuan (US$13.8 million) in subsidies to revive production of crops, livestock and poultry, said Wang Shoucong, deputy chief of the Agriculture Ministry's planting management department.

President and Communist Party leader Hu Jintao, meanwhile, visited a coal mine and shipping centers to encourage ramped up production and smooth deliveries amid rising electricity shortages.

Two weeks of near continuous snow and ice storms have paralyzed much of central and eastern China, stopping traffic and wrecking crops

Chen said the overall effect on agriculture depended on how long the storms lasted and whether they moved into northern China, which produces most of the country's wheat and oil crops.

"If it heads northward, then the impact on the whole year's grain production will be noticeable," Chen said.

Cabinet and party officials have ordered plans into place to deal with an emergency, he said.

Chen gave no figures on economic losses, although the Civil Affairs Ministry put the figure at 22 billion yuan (US$3 billion) since the storms began Jan. 10. Along with crops, fish and poultry farms have also been hard hit.

Wholesalers in Beijing were quoted as saying only about 20 percent of the usual supplies of fresh vegetables were reaching the city.

Lamb and other meat prices soared in the southern transport and manufacturing hub of Guangzhou.

Fuel prices have also increased, with anthracite coal for household heating rising by 75 percent to 1,500 yuan (US$208) per tonnene from before the snow.

Authorities have ordered a priority given to coal and food shipments, with all tolls, fees and restrictions waived.

Food shortages complicate Beijing's struggle to lower inflation by increasing supplies, a task the government has made a top economic and political priority.

Double-digit increases in food prices for much of last year drove December's inflation rate to 6.5 percent.

In other remarks, Chen said January's inflation rate would likely stay around the December mark, despite the weather-related disruptions.

Inflation is unlikely to "fluctuate much above or below 6.5 percent," Chen said, stressing that was his personal view rather than an official prediction.

The government has already responded with a variety of measures, from freezing prices for a slew of goods, to boosting farm subsidies and curbing industrial use of corn.

The weather crisis overshadowed essentially good news for China's farmers in 2007, a bumper year when grain production rose 0.7 percent over the previous year to 501.5 million tonnes.

Farmers' per capita annual incomes hit a record high of 4,140 yuan (US$575), up more than 10 percent from the year before, although Chen warned they also suffered from rising consumer prices.

"The agriculture and rural economy has maintained good momentum," Chen said.

Goldman Sachs economist Hong Liang said short-term price rises and production losses could be offset by a rise in grain production because of wetter conditions.

However, Liang said the crisis exposed severe structural problems and vulnerabilities, revealing the need for more infrastructure development and better economic management.

"A small shock to the supply side can cause massive bottlenecks and inflation pressures," Liang said in a report to clients.