September 15, 2008

Growing pig surplus may cause pork price to spiral in China 

Due to the blue ear virus, China weathered months of skyrocketing pork prices last year and factors that may affect stable pig production became increasingly apparent, as told by Wang Zhicai, the Ministry of Agriculture's livestock husbandry division director.

"While the pig population's rapid increase might lead to surplus pork supplies, rising feedstuff costs might diminish the industry's profitability and without proper measures, it might lead to a new wave of market fluctuations," Wang said.

Though pork prices had almost doubled since last summer because of rising costs, shrinking supplies and blue ear's spread, China's pig supply levels have rebounded through government subsidies which helped to lower pork prices.

Industry statistics show there were about 470 million pigs in the first half of the year, about a 10-percent increase over the same period of 2007.

Pig farmers should decrease the numbers of female pigs ahead of time to prevent further price nosedives, he said.

The Ministry of Agriculture recently said the pork price has been continuously dropping since January, and prices have declined 13 percent on average since then.

The current average price in major markets is about US$2.92/kg, down about US$0.44 from January and pig farmers could currently make a profit of US$2.34/kg on average which is less than half the US$5.85 they could earn at the peak season at the end of 2007.

China consumes an average of about 50 million tonnes of pork annually but only consumed 42 million tonnes last year due to the shortage. Consumption this year is expected to be 46 million tonnes.