Chinese pork glut hurts prices

Tuesday, August 4, 2009

China is the world's largest pork producer and, with more than a billion mouths to feed, the largest consumer as well.

Still, China has an oversupply, pork prices have dropped below breakeven and in late spring the government responded by buying pork and freezing it in reserves.

It has been two years since China had a pork shortage because of a harsh winter and blue ear disease. Unwilling to rely on imports, the government responded by offering incentives and more large pork facilities were built to boost livestock numbers. High prices helped.

Some news articles blamed fears about catching H1N1 for driving consumers away this spring. However, an Internet search turned up warnings last fall that a crisis was near. In mid-2008, there were 470 million pigs in China, 10 per cent more than a year earlier, and there are more pigs now. The average price of a kilogram of pork last October was 20 Yuan. The mid-May price was 13.68 Yuan. Late June, 100 Yuan was about C$16.91.