December 26, 2007

China unlikely to implement minimum price for live hogs

China is unlikely to implement minimum price for live hogs the same way it has done for other grains such as wheat, an officer from the Ministry of Finance said.

Now would not be the right time for China to implement a minimum price for live hogs, Zeng Xiao An, Vice-Director in the Economic Construction Department of China's Ministry of Finance disclosed at a web discussion.

Zeng said the idea has been put forward a number of times by hog producers and experts and the government has looked into the issue. Live hogs and grain supplies are different issues and should require a different treatment due to three reasons.

Firstly, there is the difficulty in storage. As pork is a perishable item, there is only a limited time period for it to be stored.

The second argument against minimum price for live hogs is the high cost of storing pork, especially the building of cold storage facilities.

Thirdly, there are now more market channels for obtaining pork supplies, which poses operational issues in setting up a minimum-price system. These reasons meant that there should be serious deliberation before such a scheme would be implemented, he added.   

Zeng also commented on the soaring prices of edible oils in China, suggesting two reasons for the current high prices. The first had to do with the lower efficiency of oilseed production in  Chinese farming systems, which dampened farmers' enthusiasm for planting the crop. The second is an over-reliance on foreign supplies which subjected local buyers to high international prices prevailing currently.