June 1, 2007

 

Higher pork prices in Hong Kong may be permanent

 

 

Hong Kong may no longer see the pork prices it once had, said Hui Wai-kin, the Pork Traders General Association of Hong Kong.

 

Hui said the higher prices reflect the increased cost of rearing pigs and the appreciation of the yuan and prices are unlikely to ever come down again. 

 

The current pork shortage in China and the resultant increase in pork prices is spilling over into Hong Kong, which is dependant on neighbouring Guangzhou province for its pork supplies.

 

Hong Kong's only fresh pork supplier, the Ng Fung Hong company, raised the wholesale price by 7 percent this week, from HK$1,060 (US$135.6) per 100 catties to HK$1,134 (US$145.1). (1 catty=604 grammes) This would be the equivalent of US$2.4 per kg.  

 

The territory imports 4,000 live pigs daily from Guangzhou and Shenzhen. The Ministry of Commerce has said the market situation would be monitored to ensure constant supply.

 

Some of Hong Kong's restaurants may pass on the cost to consumers but most would absorb the increase, David Ng Tak-leung, the president of the Hong Kong Federation of Restaurants and Related Trades, said.

 

He also noted that the price of pork this year is 20 percent more than it was two years ago.

 

Meanwhile, figures from China's Ministry of Agriculture show pork prices in the mainland were up 29.3 percent in April compared with a year ago.

 

Egg prices in China has also surged 30.9 percent to reach a 15-year high.

 

Even though Hong Kong has seen a doubling in the prices of eggs from China since last year, demand is unlikely to be affected, industry organizations said.

 

Fred Kwan Yum-keung, associate professor of economics and finance at City University, said the impact should be minimal, adding that retail pork prices may not actually increase or people may adjust their eating habits and switch to other meats.

 

Unlike China, increase in food prices in Hong Kong is unlikely to add to inflation. In China, food products account for one-third of the Consumer Price Index.

 

The effect of higher pork prices on inflation could only be seen if prices of rice and vegetables are also increased.