Bailout plan for pig farmers as price plummets

By Fu Jing (China Daily)
Updated: 2009-05-13 08:21

Pig farmers are warned to stop expanding their farms after fear of the A(H1N1) flu and a glut of hogs caused China's pork prices to plummet.

The price of pork dropped 28.6 percent year-on-year in April, according to the latest National Bureau of Statistics data.

The decrease has prompted the Chinese government to consider buying up large quantities of pork to stabilize the price.

Zhou Wangjun, from the National Development and Reform Commission (NDRC), said the program would likely start in a month but did not give further details.

"All I can say is that the price would be relatively higher than the current market price," he said.

Millions of families earn a living from pig farming in China, the world's largest pork producing country. The total output was at 46 million tons in 2008, more than 80 percent of the nation's total red meat production.

Zhou said the falling price was related to oversupply and also the seasonal influence of consumers eating fewer pork dishes in warmer months.

In addition, A(H1N1) flu - known initially as swine flu - had impacted pork sales although consumer fears had now eased, he said.

The price is expected to continue to decline into the second quarter of 2010, even though it should appear to stabilize around the end of this year.

"There will be a severe oversupply of pork until this time next year and we are warning farmers now," Zhou said, adding individual farmers "had better stop raising more pigs" to avoid further losses.

NDRC data showed the current number of hogs and sows exceeded the level of an average year.

Chen Xueliang, a pig farmer in Pingwu county, Sichuan province, said the "price of pork is different every day and we don't know when it will stop declining."

Tragically, Chen lost his daughter and home in the Sichuan earthquake last year. He and his wife began raising pigs in August and now have 40 hogs. "Sichuan is a national pork producer. I think many farmers like us will see major losses," he said.

The farmer said hogs sold to the slaughterhouse at nearly 16 yuan ($2.2) per kg last August.

Today, pigs sell at half that price but the cost of their feed is increasing.

"We are losing at both ends of the trade," he said.

Despite difficulties faced by individual farmers, large farms and agricultural investors are still trying hard to withstand the crisis.

Liu Yonghao, chairman of the New Hope Group, the largest foodstuff producer in China, last week called for the public to consume as much pork as possible to help Chinese farmers get through the crisis.

Ding Lei, chief executive officer of NetEase.com, one of the largest Internet portals in China, and a recent investor in pig farming, told reporters he had full confidence in his new enterprise. "I am not a quitter because the Chinese will never stop eating pork," he said.