June 5, 2007

 

China's pork prices would take months to come down from high levels

 

China's pork prices, at high levels currently, is likely to stay that way for the next one or two months due to the longer production cycle of pigs, according to Xu Lianzhong, a senior economist with the price supervision center under the National Development and Reform Commission.

 

The only comfort is that pork prices have already peaked and would unlikely rise further, Xu said.

 

The Ministry of Agriculture said earlier that the ministry is taking measures to ensure market demand for pork could be met. It has sent out inspectors nationwide to monitor pork prices.

 

According to the National Bureau of Statistics, China's pork production was 17.73 million tonnes in the first quarter of this year, up three percent on-year. However, the pig population of 467 million live pigs was down 0.3 percent.

 

The Ministry of Agriculture said last week that high meat and egg prices would affect the country's consumer price index (CPI), a major indicator for inflation.

 

The CPI broke the psychological level of three percent in April.

 

Food products account a-third of CPI in China, with meat, poultry and related products, about 20 percent.

 

According to the Ministry of Agriculture, in April, live pigs nationwide were priced 71.3 percent higher than a month earlier, and pork, 29.3 percent higher.

 

In Beijing, price of slaughtered pigs went up more than 30 percent, while that of eggs rose to record high for past five years.

 

To worsen matters, blue ear disease, also known as Porcine Reproductive and Respiratory Syndrome (PRRS), in south China's Guangdong Province  and Guangxi Zhuang Autonomous Region, causing deaths and culling of huge numbers of pigs.

 

The outbreak is a direct factor in creating a shortage in the regions, which need to buy pigs from northern provinces, Xu said.

 

The shortage sent a strong signal for distributors for a price hike and thus exacerbated the unbalanced supply and demand already present in recent years, Xu said.

 

Previous losses have also made pig farmers more reluctant to raise pigs. This led to a marginal decline in population of live pigs for the current year, Xu added.

 

Meanwhile, price of eggs rose 30.9 percent in April. However, Xu said egg prices would soon stabilize as egg supplies could be replenished quickly.