May 6, 2011

 

Hong Kong accused of pork price fixing

 

 

Pork importers are fixing prices and manipulating the market, according to Hong Kong pork buyers' accusation.

 

The pork buyers' union has called on the government to open a live hog market to prevent monopolies from controlling pork prices, according to an official source.

The union, consisting of buyers and meat shops, accused suppliers of jointly manipulating fresh hog supplies in order to reap huge profits on Wednesday (May 4).

Since 2007, live pigs have been imported daily from the mainland by three authorised suppliers namely Ng Fung Hong Limited, Guangnan Hong Limited, and Hong Kong Agriculture Special Zone Limited.

From January 2010 to March 2011, the average wholesale price of live pigs surged 40% from HKD1,044 (US$134.32) to HKD1,412 (US$181.67) per 50kg, causing retail fresh pork prices to jump from HKD28 (US$3.60) per 0.5kg to HKD38 (US$4.89), the union announced.

The union revealed that the price of wholesale live pigs on the mainland has been fixed at HKD1,200 (US$154.39) per 50kg, but the average wholesale price in Hong Kong stands at around HKD1,400 (US$180.12), showing that suppliers are hustling big gains with large commissions and lower expenditures on staff.

Buyers alleged that the price hike was because of unstable supplies of live pigs transported to Hong Kong and the recent pork price fluctuations should be attributed to the three days normal and four days less import pattern adopted by the suppliers and their artificial price-boosting activities.

Kwan Kwok-wah, vice-chairman of the union, said, "We observed an abnormal practice of live pig supplies in the last six months. Sometimes, they import less and we have to bid higher because of limited supply. When the price gets higher, they import more the next day."

Due to unpredictable supplies of live pigs in the following day, bidders are inclined to secure more stocks at higher prices, thus, creating a sense of uncertainty in the market, explained Joe Chan Chi-wang, a member of the union.

Ng Kwok-ming, another member of the union, said, "Three suppliers act like they have some kind of prior agreement. Once one company imports less, the other two will follow suit."

Vice-Chairman Kwan asked "Day-on-day differences are around 800 live pigs, how can that be possible?"

According to statistics of the Food and Environmental Hygiene Department, the average numbers of daily imported live pigs varied from 4,512 in January to 3,726 in February, the lowest figure in the past 12 months. The number rose to 3,942 in April.

The union said Hong Kong needs at least 4,600-4,800 pigs a day to meet the demand and to stabilise bidding price at HKD1,200 (US$154.39) per 50kg.

If the shortage continues, the union expects the retail pork price to increase to HKD42 (US$5.40) per 0.5kg.

The union called upon the Ministry of Commerce to open the market to all Hong Kong buyers to obtain live pigs directly from mainland suppliers to ensure a stable supply.

Kwan said some meat shop owners are experiencing difficulties at the moment. Raising retail prices will drive away customers; alternatively the shop owners simply cannot afford the increased wholesale price, he said.

A meat shop owner, Lee, said he has lost 20% of his business in the last three months.

"More customers have opted to buy chilled or frozen meat because it is cheaper," he said and he also added that he is considering to quit his business.

On May 4, a spokesman for the Food and Environmental Hygiene Department, however, responded that the import of live pigs maintained sufficient, at about 4,000, during recent months.

The spokesman said the Ministry of Commerce had granted import licenses to two more suppliers in 2007, as a move to open the market, in addition to Ng Fung Hong, the original sole authorised supplier.

The spokesman added that food prices are formulated by the market and the price of live pigs is affected by soaring global food prices, increased demand for internal consumption on the mainland as well as the exchange rate of renminbi.

However, the government will assist the trade in enlarging the food supply channel in order to maintain reasonable food prices, the spokesman added.