June 22, 2011

 

 

The prices of pork and hogs climbed higher than the record set in 2008 due to rising costs and short supply, and will continue their rising momentum to the end of the year, analysts said.

 

Pork, a staple of the Chinese diet, cost RMB27.67 (US$4.28) a kilogramme last week, surpassing the previous peak of RMB26 (US$4.02) set in 2008, according to reports.

 

The cost of live hogs also surged to RMB18.57 (US$2.87)/kg at the end of last week, beating the previous record high of RMB17.20 (US$2.66) reached in April 2008.

 

Experts said the rising cost of pork was worrying because it would fuel inflation and extend the period of high prices as it takes time for supply to recover.

 

Zhu Baoliang, deputy director of the economic forecasting department at the State Information Centre, said the central government may have little chance to regulate prices.

 

"Many hog farmers slaughtered breeding stock in the last production period because of losses from low prices and diseases. The government might slightly regulate the prices through the pork reserve, but hogs can't be fattened within six to eight months. So the prices will keep climbing before the next batch of hogs reach the market."

 

The price of corn, which accounts for around 60% of hog feed, hit a record high in March, sending hog and pork prices skyrocketing in the following months, according to reports.

 

Analysts warned that price increases in pork, which accounted for 65% of China's meat consumption, risked sending the costs of grains and vegetables up as consumers seek alternatives to meat.

 

However, analysts rejected the idea that importing pork could help solve the problems. "China accounts for half of the world's pork production, with 600 million live hogs, while the US, the second-biggest hog farming country, keeps about 100 million hogs. Importing two or three million tonnes of pork may only maintain the country's pork consumption for just half a month."

 

The consumer price index jumped to 5.5% on-year in May - the highest since July 2008 and far above the official annual target of 4% - as food costs soared on power shortages and droughts in some areas.

 

Severe flooding in crop growing regions of China, some of which were previously affected by drought, has also fuelled inflation.

 

Fruit and vegetable prices in the eastern province of Zhejiang have soared by as much as 40% after heavy rains destroyed crops, according to the report.

 

Beijing has struggled to contain inflation despite restricting the amount of money banks can lend on numerous occasions and hiking interest rates four times since October.