China’s pork crisis creates bumper payday for small-time farmers willing to take a risk

07-Dec-2019 Intellasia | AFP | 6:02 AM Print This Post

Fujianese farmer Wang started raising pigs in August 2018, the same month an outbreak of African swine fever was reported in the northeastern city of Shenyang.

The disease subsequently ripped through China, wiping out millions of livestock through culling or disease and sending pork prices soaring in a country where the meat is a staple part of the daily diet. By some estimates, swine fever will kill one quarter of all the world’s pigs.

Wang, however, was one of the lucky ones: 99 per cent of his pigs survived. He now has more than 20 breeding sows in Quanzhou, a port city that lies across the strait from Taiwan in Fujian province, and is banking on a bumper payday just in time for January’s Lunar New Year holiday.

With some of the sows expected to farrow soon, Wang plans to sell 15 finishing pigs before the holiday, when the pig price is expected to peak due to the demand among Chinese people to serve pork as part of their family banquets.

I have about 20 pigs, and none of them have died so far, because I have chosen a remote site for the farm, so that my pigs have less chance of getting infected

Xu Chaochao

“I used Chinese medicine to feed and prevent the fever. Our local government is very interested in my formula,” Wang said proudly, adding that local authorities want to set up a breeding base for up to 100,000 pigs and has asked him to draft a feeding plan.

Almost 1,000km away, near the inland Hunanese city of Shaoyang, Xu Chaochao is also hoping the Lunar New Year will prove bountiful. Xu has been in the pig farming business since 2012, but only started a farm of his own this year in the midst of the swine fever crisis because “the profit is too high” to miss.

“I have about 20 pigs, and none of them have died so far, because I have chosen a remote site for the farm, so that my pigs have less chance of getting infected,” he said.

China’s swine fever crisis has been a national disaster, leading to a 101.3 per cent spike in pork prices in October from a year earlier, when consumer inflation ran at an almost eight-year high. Millions of farmers have suffered severe losses, including one pig breeder from Guangxi province, Wen Jian, who had 10,000 pigs in 2018 according to state media outlet China Daily but was left with just 400 in November. Swine fever cost him to the tune of 13 million yuan (US$1.84 million).

But for some small, opportunistic farmers like Xu and Wang, African swine fever has been a windfall.

“The blow of swine fever is devastating,” said Li Wei, an analyst at consulting firm Huatai Futures. “However, some of the farmers are still willing to take the risk, as the current profit is huge, even if the chances of [pig] survival are only 20 per cent, they could still probably make a profit.”

Xu currently makes 20 yuan (US$2.84) per kilogram on the pigs he raised, but hopes that before Lunar New Year, “there is still space to increase the price by 2 or 3 yuan per kilogram”.

The blow of swine fever is devastating. However, some of the farmers are still willing to take the risk

Li Wei

Despite wholesale pork prices falling for a fourth straight week since October’s record culminating in an almost 20 per cent drop over November, according to the Ministry of Agriculture and Rural Affairs analysts agree with the farmers that the price is set for a rebound before the January holiday, even if the worst of the swine fever crisis is behind China for now.

To counter October’s spike in pork prices, the government worked intensively to curb widespread discontent, including using up national pork reserves and lifting a ban on Canadian beef and pork imports, amid fears that losing access to a crucial part of the diet could lead to social unrest.

Some foreign government officials in China reported that Chinese officials had been on the phone offering to fast track pork imports, however this did not always materialise in practice.

One European diplomat said this week that while Chinese importers had been in touch to request more shipments of pork to offset the gap, the paperwork remained cumbersome and the red tape difficult to navigate. “For some producers, it is not worth the effort,” he said, preferring to remain anonymous.

Another agricultural official from a European nation, who also wished not to be named, said that he had been encouraged to ship pork into the country “as much as possible” but that the price point they had hoped to capitalise on had been neutralised by the release of pork reserves.

“The pork price dropping from November is quite normal, as there was a bubble in the October price,” said Zhang Lili, senior analyst at intelligence provider Sublime China Information. “Earlier pork hoarding also contributed to the price drop. Farmers used to sell off pigs when they reached 115kg, but in previous months, they wouldn’t sell until the pigs reached 130kg or even 150kg.

“With the Chinese winter solstice and the Lunar New Year approaching, the peak season for consumption, we expect the pork price will continue to rise. The chances of the price being higher than the October peak are not high, and even if it surpasses the peak, it will not last long.”

“Overall, breeding sow inventories are expanding and we see a bottoming in hog inventories. Production in November will be better based on this trend even though the data for November has not been fully collected,”

Yang Zhenhai

On Wednesday, Yang Zhenhai, head of the Ministry of Agriculture and Rural Affairs’ animal husbandry bureau expressed optimism over the country’s hog population and pork prices.

“Overall, breeding sow inventories are expanding and we see a bottoming out in hog inventories. Production in November will be better based on this trend even though the data for November has not been fully collected,” he said.

Yang added that China’s frozen pork reserve is relatively abundant and imports of pork have been increasing, along with poultry, beef and mutton production. “The overall market supply is expected to be good, which does not support rising pork prices,” he added.

Various state departments have introduced policies including subsidies, discounted loans, live pig insurance and land supply to boost the pig population. Local authorities have also set targets for boosting pig populations in different provinces, with city mayors responsible for ensuring pork self-sufficiency.

On Wednesday, China’s Ministry of Agriculture and Rural Affairs issued a three-year plan to speed up the recovery of pig production, urging local authorities to curb the decline of the pig inventory as soon as possible, and ensure a stable pork market supply during the Lunar New Year holiday and the National People’s Congress.

“Pig production has to recover to close to normal levels by the end of 2020, and has to recover to normal level in 2021,” the notice on the ministry’s website said.

https://sg.news.yahoo.com/china-pork-crisis-creates-bumper-030754691.html

 


Category: China

Print This Post