November 23, 2010

Zhongpin gains from state pork reserve policy

As a pork reserve participant, Zhongpin should benefit from the China's release of frozen pork reserve, one of the 16 measures issued by the State Council to stabilise consumer prices and to ensure market supplies, according to the company chief.

Excluding direct price intervention items, the 16 measures focus on production development, stabilisation of supply, reduction of delivery costs, standardisation of market order, and enhancement of market supervision.

Since early October 2010, hog prices have maintained a slight rise and in that period have hit a high for the year to date. Pork prices have generally also risen during the fourth quarter of 2010.

"China's pork market is market-oriented and heavily influenced by demand and supply, so the Chinese government generally adjusts the market by implementing policy using its frozen pork reserve instead of imposing direct price intervention measures," said Xianfu Zhu, Chairman and Chief Executive Officer of Zhongpin Inc, China's leading meat and food processing company.

The hog breeding industry in China turns profitable during the second half of 2010. Rising hog prices further increases breeders' profits and encourages farmers to replenish hog stocks.

Currently in the hog market, supply and demand are essentially in balance. The trend for hog prices is expected to be steady by the end of this year, predicted Zhu.