China Hog Industry News

[Mustang Sally Farm]

Thursday, June 16, 2011
Higher Pork Prices Fuel Inflation
CHINA - Rising pork prices since May are fuelling concerns about consumer price inflation.


Since early May, pork prices in China have kept rising mainly due to the cyclical live-pig supply shortage and higher costs for pig feed caused by rising grain prices, according to official sources.

"My family has to add around 130 yuan (CNY; US$20) extra to the monthly budget due to rising food prices, especially pork," said Zhang Liang, a resident in Jinan, capital of east Shangdong Province.

All across the country, pork prices have soared in recent months.

Pork is the most widely consumed and affordable meat in China, and its price weighs heavily on the consumer prices index (CPI).

Statistics from the China Animal Agriculture Association (CAAA) show that in 2009, pork accounted for 65 per cent of the meat consumed by Chinese.

China still faces upward pressure on prices in the near future, said Sheng Laiyun, a spokesperson for the National Bureau of Statistics (NBS), at a press conference earlier this week.

According to the new figures published by the NBS, China's CPI, the main gauge of inflation, rose 5.5 per cent year-on-year in May, 0.2 percentage points higher than in April and hitting a 34-month high.

Sheng said that the rising CPI is due to the rises in food prices – pork and egg prices in particular.

"The price of live pigs was CNY18.8 per kilogram recently, surpassing the historical high in 2008," said Zhang Jianming, a farmer with 4,000 pigs in the city of Dongying in Shangdong.

A string of upsurges has been seen in China's pork market since early June 2010. During the past four weeks, pork prices have been surging to their highest level since 2008, according to Xinhua's statistical data.

Analysts with the Shandong provincial livestock information centre suggest that high pig feed prices caused by rising grain prices are partly to blame.

Feng Yonghui, an expert with ZhongKeYiHeng, an institute of agriculture information and technology in Beijing, said the recent price of live pigs is about CNY17.52 per kilogram with an year-on-year increase of about 87 per cent, while average pork prices have reached CNY26.97 per kilogram, an increase of around 79 per cent.

However, pig farmers say they are hesitant about increasing their pig numbers.

"Although we can gain about CNY600 from a live pig, no one wants to take the risk of raising more pigs since the market is unstable," said Wang Shoujing, a pig farmer from Tancheng County in the city of Linyi in Shangdong. "Besides, the cost of the piglets is also high," he added.

Last year's pig epidemics are also partly to blame for the inefficient supply of live pigs.

"A total of 1,000 pigs died from swine fever on my farm," Wang said.

A shortage of pigs and rising feed prices will remain as problems in the short term, and pork prices will probably remain high for sometime, Feng said.

The entire live pigs supply cycle needs about 12 months, thus the supply shortage will linger for a while, Feng explained.

Yao Minpu, director of the Swine Industry Association of the CAAA, believes that corn prices will keep rising, which may also boost pork prices since corn is the main feed for pigs.

Li Tiegang, a professor with School of Economics of Shandong University, said: "Pork prices account for a large proportion of China's food prices, which take up to 30 per cent of the CPI, so high pork prices will definitely lift the CPI."

Li Mingliang, an analyst at Haitong Securities, added: "An increase of 20 per cent in pork prices will drive up the CPI by 0.6 percentage points."

[Mustang Sally Farm]

Friday, June 24, 2011
NDRC: Inflation Under Control Despite Concern
CHINA - Inflation in June may exceed last month's 34-month high but will be under control in the second half of the year, the nation's top planning agency said, despite concern over rising pork prices and a drop in grain production following drought and flooding.


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"If the pork supply does not increase, the situation may even become worse" 
Yuan Mingsong, deputy director at the department of market supervision with the Ministry of Commerce
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The National Development and Reform Commission (NDRC) said on Wednesday that the consumer price index (CPI), a major gauge for inflation, could reach a new high in June, after it hit 5.5 per cent in May.

However, in the second half of the year the CPI is likely to taper off from its peak, the NDRC said in a statement released on its website.

The government set an inflation target of 4 per cent for this year. But after the CPI rose, on average, by 5.2 per cent in the first five months, there were concerns over whether the target could be met and if the world's second-largest economy could avoid a hard landing.

According to the NDRC, the high inflation rate in 2011 was mainly due to the rapid increase in consumer prices in the second half of 2010.

The CPI figure might rise to 6 per cent in June, mainly pushed up by soaring pork prices, Ba Shusong, a senior economist at the State Council Development Research Center, which advises the government, said.

Sun Chi, an economist at Nomura Securities, said that retail pork prices are likely to rise sharply this month, and it is possible that the CPI might exceed 6 per cent year-on-year in June.

In the second week of June, average pork prices in 34 major cities increased 80 per cent year-on-year to 17.62 yuan ($2.73) per kilogram. The price surge pushed up food prices in general, which account for about 30 per cent of the CPI basket, the NDRC said.

Pork prices are likely to rise throughout the year, Yuan Mingsong, deputy director at the department of market supervision with the Ministry of Commerce, told China Daily.

If the pork supply does not increase, the situation may even become worse, he said.

Relatively lower pork prices at the beginning of this year led many farms to reduce the number of pigs being raised, which decreased supply. An increase in the price of animal feed also put upward pressure on pork prices, according to Zhu Wenzhao, director of the Shanghai Agricultural Products Central Wholesale Market Management Co Ltd, which provides 30 per cent of wholesale pork in Shanghai.

The drought earlier this year and the ongoing floods in southern China may also affect agricultural production, the NDRC said.

Because of bad weather, wheat production in Shandong province is predicted to decrease by 30 per cent this year, Zhao Kang, a government official from the Shandong Administration of Grain, said.

Shandong is a key wheat producer and accounts for more than 30 per cent of the national crop.

The government has introduced a number of measures to combat inflation.

The People's Bank of China, the central bank, raised the reserve requirement ratio for commercial banks, the amount they have to set aside, by 50 basis points on 14 June. The hike was the sixth this year.

Although the economy slowed down slightly recently, economists said there is no evidence of a possible hard landing.

"We expect price pressures will ease later in the year, but in the very near term headline measures of inflation are above Beijing's comfort level, with risks skewed to the upside," Brian Jackson, a senior economist with the Royal Bank of Canada, said.

A report from UBS Securities also said that the latest economic figures don't support a hard landing.

"We don't think there are enough valid economic reasons to suspend interest rate hikes at this juncture, and therefore, continue to expect a rate hike of 25 basis points in June, and another one in July or August," the report said.

Reconstruction in Japan after the earthquake and tsunami is expected to increase the country's imports from China, which will contribute to the growth of China's GDP, said Jing Ulrich, JP Morgan's managing director and chairman of global markets for China.

[Mustang Sally Farm]

Wednesday, June 29, 2011
Pork Prices Continue to Rise; Producers' Shares Slide
CHINA - In China nowadays, it appears to be pigs rather than bulls that touch the nerves of the markets.


Pork prices kept their bull run in the week ended June 26 with an increase of 4.5 per cent week-on-week, according to the Ministry of Commerce (MOC) on Tuesday.

Pork prices soared 40.4 per cent year-on-year and helped drive up the inflation rate to a 34-month high in May.

Since early May pork prices in China have continued rising mainly due to the cyclical live-pig supply shortage and higher costs for pig feed caused by rising grain prices.

Pork is the most widely consumed and affordable meat in China, and its price weighs heavily on the consumer price index (CPI).

The MOC data showed that during the week ended 26 June, meat prices rose from the previous week with pork up 4.5 per cent, beef up 0.9 per cent, chicken up 0.6 per cent and mutton up 0.4 per cent.

Heavy rains and floods in the south pushed up the average wholesale prices of 18 staple vegetables by 2.3 per cent as a whole, with the wholesale price of cabbage and Chinese cabbage up 20.3 per cent and 17.9 per cent from previous week.

Slide in pork producer's shares
China Yurun Food Group Ltd dropped in Hong Kong trading, extending the company stock's record 20 per cent plunge on Monday.

That came as short selling surged amid speculation that the research firm Muddy Waters LLC will issue a negative report on the pork producer.

Zhu Yicai, Yurun chairman, attributed the slump on Monday to "hedge funds and market rumors" and wasn't aware that any organization plans to issue a report on Yurun, according to Titus Wu, an analyst at the research firm DBS Vickers Hong Kong Ltd., who was on a 30-minute conference call with the company.

The briefing wasn't open to journalists and Yurun hasn't returned at least five calls and e-mailed requests for comment.

"We take pains to keep our research activities confidential, and a widespread market rumor would either represent a significant failure on our part or is false," Carson Block, a Muddy Waters founder, said in an e-mail.

Yurun fell as much as 8.7 per cent, declining for a fourth day in a row, after short-selling affected 21.8 million of its shares on Monday, four times as many as were affected on June 21, according to Bloomberg data.

"The concerns are still based on rumors - a lot has not even been verified," Renee Tai, a Hong Kong-based analyst for Samsung Securities Co, who recommends buying Yurun's stock, said in a phone interview on Wednesday.

"From the fundamental point of view, everything's chugging along nicely. We're not seeing any sort of surprises. Even the margin pressures are within expectations."

Mr Zhu, Yurun chairman, said he plans to buy back shares in the company, which is based in Nanjing, Jiangsu province, according to Tai, Nicholas Wang, an analyst with Daiwa Institute of Research Ltd, and notes to clients from Wu at DBS Vickers and CCB International Securities Ltd.

Mr Wu downgraded Yurun to "hold" from "buy" in a note to clients on Tuesday, citing bad publicity.

"We maintain our forecast of 35 per cent core earnings growth this year, excluding government grants and negative goodwill," Mr Wu said. Still, he said "the chairman was still unable to clarify and explain questions about the breakdown of government grants and the size of the pig farming belonging to Yurun Group".

Yurun said it has worked with reputable international firms since going public, and that Goldman Sachs Group Inc sponsored its 2005 initial offering and KPMG audited its accounts, analysts who attended the call on Monday, including those from DBS Vickers, CCB, Kim Eng Securities Ltd and Citigroup Inc, said in notes to clients.

Yurun's gross profit margin underwent a "slight decrease" in the first five months of the year, according to a filing to Hong Kong's stock exchange on Monday.

The company's sales meanwhile rose "significantly" in the period up to 31 May compared with 2010 largely because of higher hog prices and a greater slaughtering volume, it said.

The price of marbled pork in China rose as much as 4.3 per cent to 28.20 yuan ($4.35) a kilogram in the 10 days from 11 to 20 June compared with the previous 10 days, the National Bureau of Statistics said on Friday. Prices for pork thigh rose 4.1 per cent to 29.05 yuan a kilogram.

[Mustang Sally Farm]

Monday, July 11, 2011
Pork Prices Predicted to Stabilise as Inventory Rises
CHINA - A senior government official in charge of animal husbandry with the Ministry of Agriculture has predicted that pork prices will gradually stabilise in July or August as farmers increase their live pig stocks.


The public has been engaged in heated discussions online regarding pork prices recently with some saying that they are "crazily" high and cannot afford the meat.

Data from the National Bureau of Statistics showed pork prices in June surged 57.1 per cent year- on-year, contributing about 21 per cent to the nation's inflation as the Consumer Price Index (CPI) in the month jumped 6.4 per cent, the highest level in three years.

The price has also climbed by a whopping 11.4 per cent from May as the price growth accelerated by 8.8 per centage points. Pork in Beijing on Sunday rose to 36 yuan (5.5 US dollars) per kilo.

Wang Zhicai, director of animal husbandry under the ministry, said the high pork price was primarily due to the surging cost of raising pigs. "Feed-stuff and corn prices reached 2.18 yuan per kilo on average in the first half of the year, that's up 10.7 per cent from a year ago," Mr Wang said said.

"To raise a pig until it grows to 100 kilos, the cost is 1,350 yuan, and that's 23.3 per cent more than last year," Mr Wang said.

In the first six months, 4.8 per cent less live pigs were sold on the market, Mr Wang said.

"More farmers are choosing to work in cities, that means the number of individual breeders of live pigs is also going down, which has an effect on market supplies," Mr Wang said.

According to data collected from 420 trade markets, pork prices in June shot up 66.5 per cent year-on-year, while the price of live pigs grew 81.9 per cent to reach 17.54 yuan per kilo.

Mr Wang said prices of live pigs are now at a relatively high level and that price increases of live pigs will be limited in the coming months.

He predicated price growth of pigs will gradually ease, but as pig-raising costs are high, pig prices will remain at a high level.

In order to stabilize the meat market, local governments should implement the central government's guidelines in rewarding major pig-raising counties and stepping up support for the construction of standardized pig farms, Mr Wang said.

Mr Wang urged local governments to provide assistance in addressing the needs for finance and land use from the pig-raising industry. Wang said experts from Beijing will be sent to villages to give pig-raising training to farmers.

Mr Wang said his department will also strengthen the monitoring of pig output and market changes in order to prevent big fluctuations of pig prices.

[Mustang Sally Farm]

Monday, July 18, 2011
Producers Concerned as Pork Prices Surge
CHINA - Chinese pig farmers said they were concerned about the recent surge in pork prices, citing fears that the current boom might prompt vast profit-driven expansion and lead to price plunge.


Latest statistics show China's pork prices surged 57 percent year-on-year in June, stoking inflation worries while setting pork suppliers fidgeting upon the potential shake-up in the industry.

Shang Yudong, a pig farmer in Central China's Henan province, said this year's price hike was evocative of the year 2008, when a soaring pork price fueled an unfettered production expansion, resulting in a glutted market and flagging prices in 2009 and 2010.

"If history is any guide, a price plunge is always after a price surge, and that's why many farmers have not been super excited about this year's windfall," said Mr Shang.

Mr Shang said if a similar price fall should occur, much of the profit he earned from this year's higher prices would be wiped out.

Yin Zhongquan, who owns a pig farm in Southwest China's Sichuan province, said it had been difficult for pig farmers to keep much wealth after all these years of rise and fall of pork prices.

"The alternation of profit-making and loss-making years is a common complaint among pig farmers. Instead of extravagant profits, we now pray more for a stable price and a reasonable profit," said Mr Yin.

Fragile industry
China leads the world in the volume of pork produced and consumed every year. The pork has been an essential ingredient in famous Chinese cuisines from stuffed steamed buns to Mu Shu Pork.

Yet despite the huge consumption, China's pork is largely supplied by small family farms, which has been one contributer and victim to the price fluctuations.

"About 60 per cent of Chinese pig farms are small ones that produce fewer than 50 hogs each every year," said Li Binglong, professor at China Agricultural University.

The small farmers, lacking market information, were easily tempted into overproduction in boom times but usually lacked the ability to tide over difficult times when the prices were pulled down, said Li.

According to a report by the Ministry of Agriculture, during the past two years when pork prices had been low, over half of the country's pig farmers reported losses, and many either closed farms or butchered their sow pigs to reduce production.

The result was that a 4.8 per cent decline in the live pig.

[Mustang Sally Farm]

Friday, July 29, 2011
Pork Prices Cooling as China Boosts Pig Farming
CHINA - Pork prices finally subsided last week after a month-long rally that drove China's consumer prices to a three-year high in June. The retreat came with a notice from the State Council, or China's cabinet, which stressed a new round of macro-control over pork costs.


Wholesale pork price edged down 0.2 per cent from a week earlier to 26.11 yuan (US$4) per kilo between 18-24 July in China's 36 cities that are being monitored, the Ministry of Commerce said yesterday.

ShanghaiDaily.com reports that the State Council also initiated a campaign to stabilise market supply and retail price of pork.

"Local governments should support pig farming by improving their production environment and epidemic prevention to ensure stable pork supply," the State Council said in the notice.

It called for continued incentives, for example a 100 yuan subsidy for each breeding sow a year, to stimulate pork production.

Soaring pork prices contributed the most to China's inflation in June, which hit a three-year high of 6.4 per cent. Last month, pork prices climbed 57.1 per cent from a year earlier, or 11.4 per cent month on month.

The current round of rising pork prices was triggered by a low market supply, Yao Jian, a ministry spokesman, said earlier. He expected the market can adjust the supply and demand automatically as rising prices lured more players into the market.

It is reported that some property developers have entered the pig business to pursue high profits as the real estate market is reeling from the government's tightening policies.

[Mustang Sally Farm]

Friday, August 05, 2011
Farm Prices Fall While Raw Materials Rise
CHINA - Farm produce prices monitored by MOFCOM fell last week, while prices of raw materials continued to rise.


The Chinese Ministry of Commerces said that the growth period for vegetables is shorter in summer and the amount of vegetables available in market is on the increase.

The average price of 18 vegetables fell by 3.1 per cent compared to the previous week, 1.6 percentage points more than the growth rate of last week.

The average wholesale price of eight main categories of aquatic products began to fall by 0.1 per cent, of which small cutlass fish, large cutlass fish and silver carp saw a 1.4 per cent, 0.8 per cent and 0.5 per cent price decrease respectively.

The prices of grain and oil saw a slight rise.

The prices of soybean oil remained unchanged, peanut oil and rapeseed oil increased by 0.6 per cent and 0.2 per cent respectively, and the prices of rice and flour both rose by 0.2 per cent.

The wholesale price of meat saw a slight change.

The price of pork dropped by 0.5 per cent, 0.3 percentage points higher than the decline of last week, while beef, lamb and chicken rose by 0.5 per cent, 0.4 per cent and 0.3 per cent respectively, 0.1, 0.6 and 0.1 percentage points lower than the decline of the previous week.

The high summer temperature has lead to a drop in the output of eggs, and the retail price of eggs rose by 0.8 per cent.

[Mustang Sally Farm]

Wednesday, August 10, 2011
China's Pork Price Rises Hit Autumn Custom
CHINA - Monday, 8 August, marked the first day of autumn, according to the Chinese lunar calendar, a time when people traditionally try to boost their weight ahead of the coming winter.


Yet, the special dishes that people traditionally enjoy at this time of year have been taken off the menu in some homes because of the high price of pork.

"I wanted to cook many dishes for my family tonight, but pork is just too expensive," complained Yu Yan, 50, who runs a small restaurant in Chaoyang district.

"The cost of celebrating the tradition is too high now. I've had to reduce the amount of pork I buy."

Li Qiu, the first day of autumn according to the lunar calendar, which fell on 8 August this year, is the day when residents in North China start tieqiubiao, a custom dating back to the Jin Dynasty (1115-1234) that involves storing fat for the winter.

Usually this means eating more meat, especially zhouzi, or pork thigh, which is thought to help people replenish the energy and weight they lose in summer.

"The hot and humid weather saps residents of their energy and makes them weak, so the start of autumn is the right time to eat meat," said Chen Wenjun, a saleswoman at Chaoyang district's Daoxiangcun, a Chinese store established as early as 1895.

She said that even though meat prices are soaring customers are still flocking to her store for the traditional foods.

A 360-gram box of zhouzi specially made for Li Qiu is now 38 yuan ($6) at Daoxiangcun, a rise of 6 yuan compared with last year.

For some the rising prices are too much.

"I've given up buying zhouzi, as it's too expensive," said Zhang Xue, 30, a resident who has enjoyed eating meat from Daoxiangcun since she was a child.

Meanwhile, at Tianfuhao, another famous food store, the price of zhouzi has risen to 64 yuan for 500 grams.

"It's probably fair to say this is the highest price since the store was established," said a salesman who did not want to be identified. "Customers spent 54 yuan buying the same food last year, which means a year-on-year rise of 18.5 per cent."

China Daily talked to six customers buying meat in the two Beijing stores. All complained about the rapidly increasing price of pork and only one insisted on buying zhouzi.

"It's my habit when the lunar autumn starts," said Liu Yan, a 40-year-old accountant at a State-owned enterprise. "The taste of pork made by traditional brands is more delicious and convenient than home cooking."

However, the ancient tradition also faces a challenge from the decision by many young Chinese to opt for healthier diets.

Kou Fei, 24, an employee at an educational company, insisted she can get all the nutrition she needs from vegetables and fruits.

[Mustang Sally Farm]

Thursday, August 18, 2011
China to Import More Pork
CHINA - The central government is thought to be considering importing more pork in order to bring food inflation under control.


China is expected to import more pork in the future if the domestic price of the country's staple meat continues to rise, experts said.

An official source reports that China's consumer price index, an important gauge of inflation, increased 6.5 per cent in July above what it had been a year ago, according to the National Bureau of Statistics.

The inflation rate, driven primarily by increasing food costs, is at its highest point in 37 months. A big contributor to that increase has been the price of pork, which was nearly 57 per cent higher in July than it had been a year ago, according to official figures.

Wang Jimin, deputy director of the Chinese Academy of Agricultural Sciences' agricultural economics and development institute, said: "The central government may consider importing more pork in the future, especially when the country has been harmed by long-term increases in pork prices.

"The country will continue to see high pork prices in the next few months of the year. Those will eventually be in line with the prices found in overseas markets."

Mr Wang said foreign meat suppliers will enjoy a heyday in China when domestic pork costs more than imported pork.

He said: "That's possible but it's hard to predict now when that will exactly happen."

Statistics from the US Department of Agriculture showed that US exporters sent 192,500 tons of pork and pork-related products to the Chinese mainland in the eight months leading up to February 2011. Those had a total value of $169 million. Over the same period, another 63,600 tons of the products were exported to Hong Kong, and most of that was then re-exported to the Chinese mainland, according to the US Department of Agriculture.

The amount of pork from the United States is expected to increase throughout the summer and possibly into next year, the agricultural department said.

Analysts blame the stubborn rise in pork prices in part on the shortage now seen in the domestic meat supply. That, they say, has been the result of many farmers' current reluctance to raise pigs.

An increasing number of rural residents are choosing not to cultivate their fields amid the rapid urbanisation occurring around them.

Mr Wang added: "Farmers now are not willing to spend their time and money raising pigs, which is a rather dirty and hard job compared with working in cities."

Making matters worse has been the spread of various severe pig diseases, which have dented farmers' incomes and forced many of them to give up raising pigs, said Liang Haoyi, a researcher at the China Animal Agriculture Association.

In July, the Chinese government introduced a series of fiscal policies meant to drive down pork prices and ease worries about inflation.

One of them will result in 2.5 billion yuan (CNY; US$391 million) being invested into large-scale pig farms this year. Beneficiaries of the policy will receive a CNY100 subsidy for each of the pigs they raise and CNY800 in compensation for every pig that dies from disease or other external causes.

Mr Liang added: "There is still a long way to go if new large-scale pig farms are going to provide the country's meat supply, since many of them now don't have much experience in raising pigs."

Mr Wang has other ideas. He added: "More subsidies should be given to lower-income earners to support their meat consumption."

[Mustang Sally Farm]

Chinese Seek Deal for British Pigs
UK & CHINA - British pigs are still the tops, particularly with the Chinese who are looking to buy new breeding stock.
 

A Chinese delegation has just paid a visit to the UK looking to buy 1,000 pigs for an integrated operation.

The visit came about following the BPA's presence on the BPEX stand at the China International Meat Industry Exhibition jointly funded by BPEX and UKTI.

BPEX Director Mick Sloyan, who hosted a dinner for the visitors, said: "British breeding stock is still prized the world over.

"The Chinese are bringing their agriculture up-to-date at a tremendous rate and British pigs use less feed, therefore produce much less manure and they also need less land. This will in turn reduce the environmental impact quite markedly."

BPA Export Promoter, Chris Jackson, said: "They were specifically looking for pedigree Large White and pedigree Landrace pigs.

"It was a very successful visit and we took the delegation all around the country. We are looking forward to doing business with them."

[Mustang Sally Farm]

Thursday, September 01, 2011
Shandong Issues New Pork Quality Rules
CHINA - East China's Shandong province issued new rules that require all pig abattoirs to keep records of animal's source, circulation and consumption information to guarantee its safety, according to the Shandong Provincial Commerce Department.


Under the new rules that will be implemented on 1 October, abattoirs should establish a well-functioned system to recall unsafe products.

Once plants discover any health issues, they should stop production, inform distributors, who should then recall the product and inform the public immediately.

Abattoirs caught injecting water or other unsafe materials into pork will be fined 10,000 yuan to 20,000 yuan ($1,565 to $3,130). Their products and equipment will also be confiscated. In serious cases, the related producers and sellers will be investigated for criminal acts in accordance with the law.

[Mustang Sally Farm]

Monday, September 19, 2011
China Pork Imports Set to Hit Record
CHINA - According to analysts, the country's pork imports are likely to hit a record this year, but the surge will have limited influence on rising prices.


"China imported about 400,000 tons of pork and pork offal in the first five months of this year, up 43 per cent year-on-year, and imports will probably hit a record 1 million tons this year," said Ma Chuang, deputy secretary-general of the China Animal Agriculture Association.

An earlier report from the Netherlands-based Rabobank Group indicated that the potential gap between pork supply and demand would be between 2 and 2.5 million tons in 2012. The import volume of pork and pork offal will be 1.1 to 1.4 million tons this year, which will be between 25 per cent and 60 per cent higher than 2010's figure.

China's pork prices, a key driver of inflation, rose 0.7 per cent in the week ending 11 September from the previous week, hitting a new record, data from the Ministry of Commerce showed on Wednesday. It was the fifth consecutive weekly rise in pork prices, according to Reuters.

"The imports of pork and pork offal will not have an actual influence on surging domestic prices because imports only account for a very small share of China's huge pork consumption, and it is not practical to turn to imports to curb the price," said Huang Guiheng, a manager in the research department of Bric Global Agricultural Consultant Ltd, a domestic market research firm.

The price of pork will continue to be high in the foreseeable future owing to the rising cost of labor, corn and feed and the risks inherent in the industry, such as stock mortality. Mr Guiheng said prices will begin to decline "around the second quarter of next year, with supplies increasing from July onwards."

However, Mr Chuang said the central government will not rely on imports to regulate the price surge, although there is no limit on imports. He expects pork prices to have a "soft landing" as the market regulates itself and "steadiness and sustainability are key factors for livestock production."

China's imports of pork and pork offal reached their peak in 2008 with a volume of 910,000 tons. In 2010, the country imported 900,000 tons of pork, with Denmark being the major supplier, followed by the United States, Canada and France.

About 700,000 tons of the imports comprised offal including pigs' heads, knuckles and haslet (a form of meatloaf) which are not eaten in Western countries but are common in the diets of Asian countries.

"In the first five months of this year, more than half of China's pork imports came from the US," he said.

The cumulative volume of US pork imports was more than 91,000 tons during the first seven months of this year, a five-fold increase from 14,900 tons in the same period last year, according to report in the China Business News, citing the United States Department of Agriculture (USDA). China is the fifth-largest market for US pork exports.

The country has been a net importer of pork and pork offal since 2007 and net imports will maintain their momentum over the long term, a factor that will further benefit producers in Western countries.

"China's surging demand for pork and pork offal implies an optimal export scenario because pork offal is not eaten in Western countries and is not allowed to be processed into animal feed," said Mr Chuang, who suggested European and US pork producers should supply pork to their local markets and export offal to Asian countries

Moreover, farmers overseas can profit from pork offal exports and save money on disposing of the surplus, he added.

In general, it costs $40 for US farmers to dispose of a ton of chicken's feet, which are not eaten in the US but are popular in Asia, if they were not exported.

Pork offal accounts for about 12 or 13 per cent of US pork production.

US pork exports are forecast to rise 4 per cent to $5.2 billion in 2012 because of robust demand, particularly from Japan, South Korea, and China, according to the USDA.

Although imports of pork and pork offal accounted for less than 2 per cent of China's pork consumption in 2010 - approximately 50.7 million tons - but still had a negative effect on domestic pig breeding and production.

"Imports of pork and pork offal usually come in large volumes and with higher quality but at a cheaper price, which is damaging the domestic industry," Mr Chuang said.

Another problem is the quality of pork offal, as there are no health and safety standards on these products in the US and Europe.

[Mustang Sally Farm]

Monday, October 03, 2011
China Bans Clenbuterol Tablets
CHINA - China has banned the production, sale and use of clenbuterol tablets, which are often illegally added to pig feed, the food and drug authority said on Friday (30 September).


Clenbuterol, an additive known as 'lean meat powder', has been used by some farmers to speed up muscle building and fat-burning, resulting in leaner pork, according to an official source.

The decision was made after a consideration of the risks and potential danger of the drug's excessive use, said the State Food and Drug Administration (SFDA).

Existing clenbuterol tablets will be destroyed under the supervision of local food and drug departments.

Compound clenbuterol, as well as aerosol and powdered forms of the drug, do not fall under the ban, as they are considered safe to use as prescription drugs under a doctor's guidance, said the SFDA.

The SFDA also added that all clenbuterol supplies involved in the food safety violations were produced by underground drug factories and did not come from licensed pharmaceutical manufacturers.

Zhang Jianpeng, director of the pneumology department of the General Hospital of Armed Police Forces, told China Daily that clenbuterol tablets can cause serious negative effects to people's lungs if abused for a lengthy period.

"The drug's basic function is to relieve a cough and mainly treat bronchial asthma but if it's overdosed by patients, especially children, it will cause side effects," he said, adding the clenbuterol tablets also can be used as a stimulant that is harmful to people's health.

The ban will not affect bronchial asthma patients who are receiving the tablet form of the drug because they can replace the clenbuterol with other medicines that are safer, such as salbutamol and terbutaline, according to the SFDA.

A total of 989 people involved in the manufacture and sale of clenbuterol were arrested as of the end of August, according to the Ministry of Public Security.

In March, China Central Television reported that pork tainted with clenbuterol had been found in products made by Henan Shuanghui Investment and Development Co Ltd, a prominent pork producer in China. The company later admitted to the violation and apologised to the public.

[Mustang Sally Farm]

Wednesday, October 12, 2011
China's Farm Produce Prices Up Slightly Last Week
CHINA - China's prices for most farm produce continued to rise in the week ending 9 October, while that of pork remained flat compared to the previous week, the Ministry of Commerce (MOC) said in a report unveiled yesterday.


The prices of mutton, beef and chicken rose 0.5 per cent, 0.3 per cent and 0.2 per cent, respectively, week-on-week, according to the report.

Compared to the previous week, the retail prices of rice and flour climbed 0.2 per cent, and the prices of colza oil and soybean oil rose slightly by 0.1 per cent.

Due to a larger supply, the retail prices of eggs dipped 0.3 per cent from last week, down 0.5 per cent compared to the end of September, and the wholesale prices of eight aquatic products fell by 1.1 per cent week-on-week.

Food prices account for about one third in the calculation of China's consumer price index (CPI), a major gauge of inflation, which hit 6.2 per cent in August.

The National Bureau of Statistics will release the September CPI on 14 October. Many institutions anticipate the figure will remain over 6 per cent.

[Mustang Sally Farm]

Monday, October 17, 2011
Wal-Mart China CEO Quits Amid Pork Scandal
CHINA - The head of Wal-Mart Stores Inc's China business has resigned citing personal reasons, after the world's largest retailer ran into trouble with Chinese authorities leading to store closures and employee detentions.


The departure of China CEO Ed Chan, along with Senior Vice-President of Human Resources Clara Wong, is another setback for Wal-Mart which is facing stiff competition from local firms in the strategically important market, according to China Daily.

The company, which recently celebrated its 15th anniversary in China, closed more than a dozen stores in central China last week following allegations they sold regular pork as organic pork over the past two years.

Authorities in Chongqing have arrested two Walmart China employees and detained 37 others over the incident.

Both resignations announced on Monday were for personal reasons and had "no correlation" with the investigations in Chongqing, Walmart Asia spokesman Anthony Rose said.

"We have used the last few days to put in place corrective actions in our stores," Mr Rose said, adding that the stores would reopen by 25 October.

This is the second round of top-management resignations at Walmart China in less than five months. In May, its chief financial officer and chief operating officer resigned "to explore other opportunities", the company had said.

"It's really hard to say whether this (Monday's resignations) is a consequence of that (pork scandal) ," said Torsten Stocker, a China retail analyst with Monitor Group.

"It might be, but I think at the end of the day, it is still not clear what really happened in Chongqing," he said.

"Obviously what happened in Chongqing is impacting their business in Chongqing and presumably ought to be having some impact on the grand overall business. Any type of leadership change like this, it's never a good thing."

Struggle in China
After entering China in 1996, Wal-Mart's expansion gathered steam in 2007 when it bought a 35 per cent stake in Taiwanese hypermarket chain Trust-Mart. It has 353 stores in the Chinese mainland.

Wal-Mart's market share in hypermarkets was 11.2 per cent in 2010, in second place after China's Sun Art, but spending for the expansion has weighed on its profitability.

Wal-Mart's problem is that it is trying to compete with domestic chains on price, said Shaun Rein, managing director at Shanghai-based China Market Research Group.

"If your strategy is 'cheaper than Chinese companies', you are never going to win the market," Mr Rein said.

"But that is what Wal-Mart is trying to do. The strategy is all wrong since the very beginning, and that is why it has never been profitable here."

Wal-Mart competes with French hypermarket chain Carrefour, Britain's Tesco, Germany's Metro AG, China's Sun Art and China Resources Enterprise.

China's hypermarket sector is forecast to grow at a compounded annual rate of 10.1 per cent between 2010 and 2015, according to Euromonitor. But price competition is particularly tough in that segment.

Walmart Asia CEO Scott Price, who will also serve as interim China head, said China was a strong market for the group.

"China is a very important market for Wal-Mart and China's 12th five-year plan will provide strong opportunities to the retail industry," Mr Price said in a statement on Monday.

Last week, European luxury group Gucci said it had replaced two managers in southern China after former workers at a store released an open letter alleging employee abuse.

"Walmart's problems are similar to other rivals, particularly the foreign operators, including competition for staff," said Alex Wong, a director at Ample Finance Group.

"A relatively high (staff) turnover rate suggested that it has some problem with its incentive plan in recruiting and retaining sales people," Mr Wong said.