Prices of the mainstay—used in dishes such as lunchtime dumplings and spicy mapo tofu—have risen 18% in China since the week ended Aug. 9 and are up more than 50% in the past year. The average price of pork, excluding offal, in the week ended Aug. 23 was 31.77 yuan a kilogram ($2.02 a pound), according to data from China’s Ministry of Commerce.
African swine fever has decimated pork supplies. China’s pig herd had fallen 32% on year in July, according to data released by the Ministry of Agriculture and Rural Affairs. Analysts expect 2019 production could fall as much as 30% and drop further in 2020.
“It’s hard to know where prices are going to go. We’re in uncharted territory,” said Darin Friedrichs, senior Asia commodity analyst, at INTL FCStone in Shanghai. He said his own grocery bills have increased—by 35% for pork belly since November and 32% for pork chops since January.
Pork prices and increases in the cost of vegetables were already the main driver of a 2.8% rise in the consumer-price index in July, the fastest pace in 18 months. The food-price component of the index was up 27% in July, lifting the headline inflation index by 0.59 percentage point. At the same time, China’s tariffs on U.S. pork in the countries’ volley-for-volley trade war has increased prices of American meat.
African swine fever, which is harmless to humans but almost always deadly in pigs, was identified over a year ago, but the impact on prices is only now being seen. Farmers fearing their herds would be infected rushed to sell them, causing a glut of pork at the end of 2018 and in early 2019.
As prices rise, consumers are changing their buying habits, pushing up prices for other meat. Chicken prices are up 5% since the start of the year, according the Ministry of Commerce..
Chinese people typically eat far more pork than other meat. A customer at a wholesale market in Beijing said her family was now eating more chicken than pork.
Pork prices are likely to remain elevated for some time, said Betty Wang, a senior economist at ANZ. She said farmers have culled so many pigs that it would take a while for supplies to build up again. “If people feel that food inflation is going up, it may spur policy actions,” she added.
Outside the wholesale market, red banners advertised government subsidies for pork slaughterhouses. The government has been trying to push farms and slaughterhouses to increase production to relieve pressure on prices, but herd numbers continue to fall.
“I’ve never seen anything like this,” said Xiao Tong, a vendor who has been selling pork for nearly 20 years in Beijing. “Every day the price rises more.” She said even her longtime clients, such as local restaurants and construction companies, are trimming purchases.
Chenjun Pan, a senior analyst at Rabobank in Hong Kong, said storage levels of frozen pork seem to have also fallen in recent months.
China’s pork imports rose more than 60% in the second quarter, but foreign supplies have been constrained or are more expensive. Beijing levied new tariffs totaling 50% on pork from the U.S. last year and in June suspended pork imports from Canada.
Pork prices have been a concern for Beijing because of its importance in the local diet. Chinese consumers eat an average of about 67 pounds a person each year, while per-capita consumption in the U.S. is around 51 pounds a year, according to data from the Organisation for Economic Co-operation and Development .
Source: Wall Street Journal By Lucy Craymer
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