May 30, 2008

China's cut on pork import taxes may not rein prices

China's recent move to slash pork import tariffs may not do to much to ease local pork prices due to global price hikes, analysts said.

Wang Jimin, a researcher with the Chinese Academy of Agricultural Sciences (CAAS), said that even with the tax reduction, the pork import amount would not be big.

Chinese breeders, encouraged by record pork prices last year, have imported more breeding stock to increase their herds. Yet winter storms and an earthquake in Sichuan, the top pork producer, have wrecked the pig industry.

On Wednesday (May 28, 2008), the finance ministry announced that import duties on frozen pork would be cut to 6 percent from 12 percent in June to December.

China, facing shortages after pig disease last year, increased pork imports by nine times in the first four months of this year to 120,000 tonnes, an analyst said.

Exports of pork dropped 54 percent to 24,102 tonnes in the same period, customs said.

Sichuan's exports to Hong Kong have already been interrupted as road and railways were allocated to transporting relief materials to the 5 million homeless after the quake.

Meanwhile, Wang Zhicai, a director with the agricultural ministry, predicted that the piglet population will increase sharply in the third quarter this year, reflecting subsidies for breeding sows last year.

However, the breeding costs have increased 70 percent due to higher corn and soymeal prices, Wang explained.