Pinoyagribusiness

China Restricts EU Pork Due to H1N1 Fears
GLOBAL - The European Union's health chief said today that China had slapped restrictions on pork imports from four member states over swine flu concerns - a move she slammed as protectionist.



"We've had restrictions by China on the import of pork from several European Union member states because of H1N1 found in two farms in Northern Ireland," Androulla Vassiliou, EU health and food safety commissioner, told reporters.

"This will be of great concern to the EU because it's interpreted as being protectionism," she said on the second day of a visit to Beijing.

China announced the measure - which affects Denmark, France, Italy and Spain - on Friday, she added.

Yahoo! Finance reports that Beijing has required additional testing on all pork meat from these countries, and the disinfection of all containers, which means additional costs for exporters.

Pork imports from Northern Ireland are already subject to Chinese restrictions, officials said.

Officials at the Chinese commerce and agriculture ministries, as well as the food safety watchdog AQSIQ, were not immediately available for comment.

"Last May we had a joint declaration by the World Health Organization and the Food and Agriculture Organisation... saying very clearly that consumption of pork does not transmit the H1N1 virus," Ms Vassiliou said.

"So there is no point in restricting trade in pork."

Ms Vassiliou said she had conveyed the European Union's concerns on Tuesday to China's vice-minister of agriculture.

She said she would also ask the head of AQSIQ - the General Administration of Quality Supervision, Inspection and Quarantine - to lift the restrictions.

Nations around the world have warned against trade protectionism, especially as the global financial crisis takes its toll.

China and the United States have recently been involved in a dispute after Washington imposed tariffs on Chinese-made tyre imports -- a move that prompted Beijing to lodge a complaint with the World Trade Organization.

Beijing has labelled the US action a "clear trade protectionist move."


 

China Denies Imposing Restrictions on EU Imports
CHINA - China has never placed any restriction on pork imports from the European Union (EU), and its demand for health certificate from the EU imported pork was needed to prevent the spread of A/H1N1 flu, said Yu Taiwei, head of China's quality watchdog's food safety export and import bureau yesterday.



General Administration of Quality Supervision, Inspection and Quarantine launched on 18 September a measure requiring an additional testing on all pork meat from five countries including Denmark, France, Italy and Spain.

The EU's health Commissioner Androulla Vassiliou was reported Wednesday as having interpreted China's requirement for strengthening inspection on A/H1N1 virus as "being protectionism".

"We still allow these countries to export pork to China, but only ask for a more intensified inspection," said Mr Yu.

Every country should guarantee the quality securities of its export products, which is its responsibility, according to Mr Yu.

China is a major consumer of meat products. It imported 1.84 million tons last year. The country has also become the world's leading meat producer, whose pork output stood at 44.59 million tons in 2008.

China revamps design code for pig slaughterhouses
[25 September 2009] A new code of design for pig slaughterhouses was recently released by China’s Ministry of Housing and Urban-Rural Development and AQSIQ. Effective from October 1, the new code has put on a requirement for traceability, chilling facilities for carcass and offal as well as harmless disposal technology. Administrated by the Ministry of Finance, the modified regulation is aimed at lifting standards for slaughter and portioning by combining the related regulation on food hygiene from China, EU, Singapore and Hong Kong.

Chinese Swine Team Increases Interest in US DDGS
US - A team of nine large-scale hog producers traveled to the United States from China this week to gain practical experience and expand their knowledge in order to improve production efficiency and reduce disease challenges through a US Grains Council-sponsored program.



The team was also educated on the inclusion of US distiller’s dried grains with solubles (DDGS) in swine rations. Jason Yan, USGC technical program director in China, who traveled with the group, said, “The program definitely increased the interest and understanding in using DDGS in swine rations.”

This was immediately evident, as upon returning to China, the Council reports two companies represented on the team expressed interest in arranging future purchases of DDGS from the United States. One company imported 10,000 metric tons to-date, contributing to China’s 250,000 to 300,000 tons projected for import in 2009.

The team attended the Leman Swine Production and Veterinary Conference in St. Paul, Minnesota, followed by a training program at the University of Minnesota. Over the course of their travels, the team also traveled to North Carolina to visit large swine farms and meet with veterinarians, adding to their repertoire of US feed grains and swine management experience to take to their respective operations.

Monday, October 05, 2009Print This Page
China a Promising Market for Food Safety Products?
CHINA - China’s demand for food safety products is forecast to grow 15 per cent per annum through 2013 to 13 billion yuan (US $2 billion), according to a new 252-page Freedonia industry study, entitled Food Safety Products in China.



The study notes that growth will be largely fueled by food and beverage output in processed food, beverage and dairy segments, which are more intensive users of these products. A greater focus on food safety and supply chain security by larger food processing firms in China will also boost growth.

Recent growth is partly in response to enhanced government regulation, in particular the Food Safety Law introduced in 2009. However, the study says that consumer concerns in both domestic and export food markets following a series of food safety scares involving Chinese food will also prompt spending on food safety products by those involved in the various production aspects of the food industry.

Outbreak of PRRS in Parts of China Reported
CHINA - China's agriculture ministry has announced that an epidemic of swine disease that killed more than 80,000 pigs in 2007 has emerged in parts of the country.



An outbreak of pathogenic blue-eared pig disease, also known as porcine reproductive and respiratory syndrome (PRRS), has appeared in five areas of China, the ministry said in a statement posted on the central government website.

But the overall swine disease situation in China was stable, the ministry said on Friday, compared with 2007, when blue-eared pig illness killed over 80,000 pigs, led to the culling of 235,000 others and set pork prices rocketing.

"So far this year, the overall swine disease situation in China remains stable, and in particular, the scope of highly pathogenic blue-eared pig disease has significantly shrunk," the statement said.

Channelnewsasia.com reports that until 20 October, just under 3,300 pigs had died from the disease and 7,724 had been culled.

28 October 2009] UK-based swine genetic company JSR will inaugurate its first satellite nucleus farm in China in December this year. The farm, which will have about 1000 GGP sows, is a joint venture between JSR and its swine breeding partner in central China. According to Dr Grant Walling, the move is aimed at shifting JSR from an export business to pig breeding in China where it sees growing demand for quality pig breeder and to fulfill its commitment to foster a long term business relationship with Chinese customers

China to Lift H1N1-Related Ban on US Pork
US - With prodding from the Obama administration, China announced on 29 October that it will lift its ban on US pork imports, a move hailed by the National Pork Producers Council.



The Asian nation implemented the ban on US pork in late April in the wake of an outbreak in humans of novel H1N1 influenza, which the media misnamed “swine” flu.

“This is good news for US pork producers, who have been suffering through an economic crisis for the past two years,” said NPPC President Don Butler. “China is, by far, the largest potential money-making opportunity for the US pork industry.”

The US pork industry shipped nearly 400,000 metric tons of pork worth nearly $690 million to China in 2008, making it the No. 3 destination for US pork. This year, due mostly to the H1N1-related ban, US pork exports to China through August were down by 50 per cent over the same period last year.

“A Chinese market reasonably open to US pork would single-handedly put a huge dent in the US-China trade imbalance,” Mr Butler said.

China’s announcement came at the conclusion of the US-China Joint Commission on Commerce and Trade meeting in Hangzhou, China. The bilateral forum was held to resolve trade issues between the countries. US Trade Representative Ron Kirk, Agriculture Secretary Tom Vilsack and Commerce Secretary Gary Locke attended the meeting. Re-opening the Chinese market to US pork was at the top of their agenda.

“China’s intent to remove its H1N1-related ban on US pork marks an important step forward in cooperation between the countries on agriculture issues,” said Secretary Vilsack.

“NPPC would like to thank the Obama administration, particularly Secretary Vilsack and Ambassador Kirk, and Congress for pressing China to re-open its market to US pork,” said Mr Butler. “And we would ask that they continue to work with the Chinese government on other trade issues that are hampering our pork exports to China.”

Among those issues are China’s ban on US pork produced with ractopamine, an FDA-approved feed additive that improves efficiency in pork production, and the subsidies China provides its domestic pork producers. The Chinese pork industry also derives significant benefits from an exemption from corporate income taxes and a partial exemption from the country’s value-added tax.

New PRRS outbreak in China
[3 November 2009] China's Ministry of Agriculture has announced that an outbreak of pathogenic blue-ear disease, also known as porcine reproductive and respiratory syndrome (PRRS), has reemerged in five provinces of China this year, resulting in 7667 infected pig, 3278 deaths and 7724 culled as of October 20. But the overall swine disease situation in China remains stable, said a statement of the ministry, compared with 2007, when blue ear disease killed over 80,000 pigs, and led to the culling of 235,000 others and set pork prices rocketing.

New PRRS outbreak in China
[3 November 2009] China's Ministry of Agriculture has announced that an outbreak of pathogenic blue-ear disease, also known as porcine reproductive and respiratory syndrome (PRRS), has reemerged in five provinces of China this year, resulting in 7667 infected pig, 3278 deaths and 7724 culled as of October 20. But the overall swine disease situation in China remains stable, said a statement of the ministry, compared with 2007, when blue ear disease killed over 80,000 pigs, and led to the culling of 235,000 others and set pork prices rocketing.

Wednesday, November 11, 2009Print This Page
Zhongpin Reports Record Results for Q3 2009
CHINA - Zhongpin Inc., a leading meat and food processing company in China, has reported higher revenues, net income, and diluted earnings per share for the third quarter of 2009.



Zhongpin also reduced its guidance for the full year 2009 because, even though Zhongpin's sales volume in the third quarter 2009 achieved a record high, pork prices in China are currently not increasing.

According to the company, revenues increased 26.7 per cent in the third quarter 2009 compared to $194.9million from $153.8 million in the third quarter 2008. The company's net income also rose by 30.7 per cent, that is, from $10.1 million to $13.2 million in 2009. Diluted earnings per share increased 29.4 percent to $0.44 from $0.34.

The trend for hog and pork prices during the third quarter 2009 turned upward in July and early August, then stabilized at those somewhat higher levels through September. Prior guidance for the year 2009 has been reduced to account for stable, but not increasing, pork prices and for the higher average number of common shares outstanding because Zhongpin issued 4,600,000 additional common shares on 15 October 2009.

The company announced that it has started to construct three cold storage processing firms and distribution centers adjacent to three of its food processing plants in Henan province. Each center will add approximately 20,000 square meters of space; processing is expected to begin in the second quarter of 2010. Initially, about 40 per cent of the capacity will handle Zhongpin's pork and agriculture products, with the remaining 60 per cent used to provide storage, processing, and allocation services for other food producers. Total cost for all three centers will be approximately $13.6 million.

Construction of two new pork processing plants in Tianjin, which began in April 2009, continued during the quarter. The production lines for chilled and frozen pork products and prepared meat products, with a total of 136,000 metric tons of capacity, are expected to come in line in the first and third quarters of 2010, respectively.

Construction of a new pork processing plant in Changge, with 36,000 metric tons of capacity, is in progress and is expected to come on line in the fourth quarter 2009.

Construction of one premium food oil plant in Changge, with 20,000 tons of capacity, is going on. It is expected to take shape in the second quarter 2010.


 

CP invests heavily in China’s pig industry
[13 November 2009] Thailand’s CP Group, has kicked off a high profile expansion plan to consolidate its position in the feed arena and foster a new growth point in China. According to the plan, CP will invest CNY 4 billion (USD 588 million) in three respective complexes in the provinces of Hebei, Anhui and Shandong, aiming to have a total capacity of 2 million commercial pigs per year. The complexes consist of breeder farms, commercial farms and slaughterhouses. The first one, located in Qinhuangdao, north China’s Hebei province, will commence operation of a 1200 GGP farm next year and the whole project is expected to turn out 1 million commercial pigs per year by 2015.

Chinese to Install Pig Feed Intake Data System
CHINA - Chinese feed company Shanghai Xinnong Feed will install an automatic data collection system related to feed intake at their research farm located in Xinchang, Nanhui District, Shanghai City, China.



The so-called Feed Intake Recording Equipment (Fire), manufactured by Osborne Industries, from Kansas, USA, will be used to test the performance of various feed rations and feed ingredients, and the genetic capabilities of breeding pigs, according to Vetsweb.

Shanghai Xinnong is a feed company that focuses on the research, development, manufacturing and marketing of complete feeds, multi-premixes and concentrated feeds for large pig farms in China. Located in Shanghai, Shanghai Xinnong has been supplying feed to farms within Shanghai and the surrounding provinces for more than ten years.

Continuing their expansion in the feed industry, “Shanghai Xinnong plans to select the best performance breeding pigs, using the system to optimise their genetic selection programme”, says Zhang Yi Zao, farm director of Shanghai Xinnong Breeding Pig Farm.

The system is bound to be installed by the end of November. The system automates data collection of feed intake, the weight of each meal an animal consumes, and the weight of each animal. Each feeder is equipped with an antenna which reads the individual Radio Frequency Identification (RFID) tag, thus identifying each individual animal. The information collected by the feeders is then sent to the on-farm computer programme database.

Monday, November 23, 2009Print This Page
Pork 'Safe to Eat' Despite Infection Found in Pigs
CHINA - Health experts have assured consumers that Chinese pork is still safe despite reports of pigs being infected with the deadly A/H1N1 flu.



Swine at a slaughterhouse in Heilongjiang province tested positive for the virus last Thursday, the Ministry of Agriculture revealed over the weekend.

Four positive samples were discovered at the abattoir in Shuangcheng by a local flu laboratory, China News Service quoted a ministry statement as saying.

Officials suggested the cause of infection could have been the animals' close contact with humans during transportation.

Gene sequence analysis showed the virus suffered by the pigs is a 99-per cent match with the human H1N1 strain. No mutation was found, the government statement said.

It is the first such infection in China, although there have already been reports in 13 other countries and regions, Beijing Times reported yesterday.

However, experts with the World Health Organization (WHO) insisted well-prepared pork is still safe to eat because the virus cannot survive temperatures of 70°C and above.

China consumed more than 46 million tons of pork last year, around half of the world's total.

Since the outbreak of H1N1 in April, prevention and monitoring of swine has been a priority for the government. The virus was originally known as "swine flu" before it was renamed to dispel any links with pigs.

The information office of the Ministry of Agriculture was unable to comment yesterday, but in a statement last week officials said authorities across China had checked about 87 million pigs, but no influenza virus had been detected.

Meanwhile, four patients in North Carolina in the United States tested positive over the weekend for a new H1N1 strain that is resistant to oseltamivir, or Tamiflu, AP reported.

Tamiflu is one of two flu medicines being used in the fight against H1N1 and health officials have been watching for signs of the virus mutating, making the drugs ineffective.

More than 50 resistant cases have been reported since April, including 21 in the US. Almost all in the US were isolated, officials with the US Centers for Disease Control and Prevention (CDC) said.

London-based BBC reported five Tamiflu-resistant cases in Wales last week.

The Norwegian Institute of Public Health also said it had detected mutations in three positive samples. The viruses were isolated from the country's first two fatal cases and one other patient.

Norwegian scientists have analysed samples from more than 70 patients, but only in three have mutations been detected. This suggests the mutation is not widespread, say scientists.

Laboratories in Brazil, Japan, Mexico, Ukraine and the US have all detected similar mutations, with the earliest being in April.

Although information is incomplete, the mutations were detected in fatal, as well as mild cases. Experts said the significance of the finding is unclear.

As of Friday, the virus had killed 6,770 people worldwide since April, with 520 deaths in the past week, according to figures released by the WHO yesterday.

Monday, November 23, 2009Print This Page
Pigs Get ID Chips in Southwest China
CHINA - Starting Friday, pigs in southwest China from have started having two identity chips fixed on their back legs detailing where they were butchered, examined and sold.



Forty-five markets in downtown Chengdu, capital of Sichuan Province, have started to sell pork with ID chips, said a spokesman with the city's food and drug administration on Friday.

Two plastic rings containing the chips with information on where the pig was bred are fixed around the pig's hind limbs before it is sold off to a slaughterhouse.

Additional information is added to the chips as the pig gets slaughtered, inspected and sold to the end market.

The chip is scanned when each piece of pork is sold so that the customer can have a receipt with a code that links to an entry that records the slaughter, inspection and sale of the pork in a city database.

Every seller is required to scan the ID chip when they purchase meat so that the system logs how much pork they have in stock. Meanwhile, their electronic scales are linked to the market system to keep track of how much pork they sell.

"The amount of pork sold must not exceed that of pork purchased. That way we make sure no pork comes from illegal channels," the spokesman said.

The customer can inquire about the pork by phone, text message or on the administration's website to ensure that it was safely bred, butchered, stored and transported, as well as properly examined.

Pork seller Wu Bo welcomed the policy. "Customers can now buy without hesitation. With the chips, they can eat without worry," Wu said. "If anything goes wrong with the quality, we know who to blame."

The city government and seller pays for every identity chip, which costs two yuan (29 US cents), the spokesman said. "The cost is too small to affect the pork price."

The chips are tightly fixed and are almost impossible to take off without breaking them, the spokesman said in response to questions on whether the identity chips can be swapped.

Each of the pigs sold in Chengdu will get ID chips by the end of next April, the spokesman added.

China Approves First GM 'Phytase' Corn
CHINA - The authorities have given approval to the world's first genetically modified (GM) phytase maize to Origin Agritech.



Origin Agritech Limited, a biotech company based in Beijing, has received the Biosafety Certificate from the Chinese Ministry of Agriculture as a final approval for commercial approval of the world's first genetically modified phytase corn.

The International Service for the Acquisition of Agri-Biotech Applications (ISAAA) reports that the transgenic corn is the product of a seven-year study by the Chinese Academy of Agricultural Sciences.

Phytase is used as an additive in animal feed to degrade phytic acid, the storage form of phosphorus in plant feed ingredients. Phytase can increase phosphorus absorption in animals by as much as 60 per cent. With the transgenic crop, there is no need to purchase phytase and corn separately. The use of phytase corn should also reduce phosphate pollution caused by animal waste and excessive fertiliser use, according to the report.

Phytase, as an additive for animal feed, is mandatory in Europe, South-east Asia, South Korea, Japan and other regions for environmental purposes.

Gengchen Han, Origin's Chairman, said: "With this landmark seed approval, we are not only own the first GM corn seed product in China, but we are actively leading the new genetically modified generation of agricultural products for China, and will continue to do so for the future."

Genetically modified seed products in China must undergo five separate stages of approval beginning with a phase one laboratory approval to the final receipt of the Biosafety Certificate in phase five.

Currently, this GM seed approval process is restricted only to domestic seed producers such as Origin Agritech, according to ISAAA.

China Lifts Bans on US, Canada, Mexico Pork
CHINA - China had lifted import bans on pork products from the United States, Canada and Mexico, the country's top quarantine authorities said Tuesday.



The bans were lifted on the basis of risk assessment, the General Administration of Quality Supervision, Inspection and Quarantine said in a statement on its website.

In April and May, China imposed bans on pigs and pork imports from Mexico, Canada's Alberta Province and some regions of the United States, as an emergency response to the A/H1N1 flu.

Diseased Meat Shop Closed in Tongzhou
CHINA - A butcher shop selling diseased meat in Daxingzhuang village, Tongzhou district was shut down by local government on Monday following a public tip-off.



The Tongzhou administration for industry and commerce shut the meat shop in response to a call from the public that claimed nearby pig farms were selling animals that had died from illness to the butchery, the Beijing News reported yesterday.

A press officer surnamed Shen from the administration told METRO yesterday that the case is being investigated by the Tongzhou district inspection and quarantine bureau.

The paper also revealed that the butcher was selling diseased meat to shops at a local wholesale market.

"Some citizens from rural Tongzhou brought meat from the wholesale market. And some products, especially the meat, are not fresh," a 55-year-old housewife surnamed Zhou who lives in an urbanized area of Tongzhou district said yesterday.

"I suggest residents go to a supermarket or other large stores to buy meat," Ms Zhou said.

As much as one ton of pork and processed meats were sold daily from the butchery - made up of three private residences in the south part of the village - to the wholesale market, according to the paper.

The paper reported more than 20 dead pigs lay on the ground in front of the butchery, with some animals carrying strange spots or green marks on their skin.

"All the dead pigs will be skinned so our customers don't notice the unusual marks," a butcher told undercover reporters from the Beijing News.

Another employee of the shop said they brought the pigs at 1 yuan per kg and sold them at four times more.

However, when questioned as to the location of the pig farms, the employee refused to comment.

The manager of the butcher told the Beijing News that he sold meat in Beijing and also in other cities. He admitted that some pigs had died from disease while others died during the cold weather.


 

China's pork prices recover
[7 December 2009] China´s pork producers suffered badly in the first half of 2009 from a combination of oversupply, weak demand and the H1N1 influenza (swine flu) outbreak. Since the second half of the year,a rapid rise in pork prices has re-energised the sector. The recovery was started by government intervention to buy up frozen pork supplies to help support prices. This has come along with a fall in pig numbers as farmers reduce their herds. Together, this saw prices climb by almost 20% from June to September.

Zhongpin Receives Government Cash Subsidies
CHINA - Zhongpin Inc. has reported that it has received two payments totaling RMB 21.4 million (about $3.1 million) in cash subsidies from the Chinese government.



Zhongpin has recently received a subsidy cash payment of RMB 20 million (about $ 2.9 million) from the Chinese government to help support the development of its new plant in Tianjin. The new plant, which is under construction, will produce chilled and frozen pork and is expected to be completed in the first quarter 2010. When all the construction phases are completed in 2010, the new Tianjin plant will have a total annual capacity of 100,000 metric tons for chilled and frozen pork products.

Zhongpin also recently received a subsidy cash payment of RMB 1.4 million (about $ 204,700) to help support its new premium food oil plant currently under construction in Changge in the Henan province.

China's policies in 2009 have encouraged meat processing companies to further modernize and improve products and processes. As Zhongpin previously announced, China's National Development and Reform Commission approved subsidies on 2009 for Zhongpin's three new pork processing projects, one project in Tianjin and two projects in Changge.

Zhongpin has been an industry leader in modernising meat production by selecting, integrating, and applying the most modern industrial process engineering, quality assurance, biological validation, cold-chain logistics, and information technology systems. As a result, Zhongpin has the highest level of food quality and safety in every step of its entire process -- from farm to fork.

Mr. Xianfu Zhu, Chairman and CEO of Zhongpin, said, "We have embraced and adopted every modern technology available to produce our food products with the highest product quality and safety.

"We were very grateful to receive the RMB 21.4 million subsidies from the Chinese government to help support our expansion, which helps us provide the safest and most-popular protein for China's citizens.

"I believe the cash subsidies we have received and will receive from the government, not only help us as we expand our business, but also provide a tangible indicator of the respect we have earned with the government and our customers. We have worked very diligently to lead the way, because we believe that our innovation is in the absolute best interests of our customers and our investors.

"As the meat processing industry consolidates in China, we believe that Zhongpin will thrive as the safest and one of the largest and most profitable suppliers."

China to Focus on Animal Epidemic Control
CHINA - At a high-level meeting on animal disease last week, the Vice Agriculture Minister stressed the need for increased efforts to control African swine fever, A H1N1 flu, and zoonotic diseases such as brucellosis and tuberculosis.



From 24 to 25 February, the National Workshop on Animal Epidemic Control and Prevention, and Health Supervision was held in Beijing.

Vice Agricultural Minister Gao Hongbin attended the meeting and delivered an important speech. The Vice Minister fully acknowledged the accomplishment of veterinary service in year 2009, analysed the current situation in animal epidemic prevention and animal health supervision, and raised requirement for the work in year 2010.

Vice Minister Gao remarked that this year the Ministry had identified very ambitious goals for veterinary service. Therefore, the situation for animal epidemic control and prevention will be ever more challenging this year, with more arduous tasks, and deserves our full attention.

The Vice Minister required that agencies responsible for animal epidemic control and prevention, and animal health supervision should work together on infrastructure construction, improve technological capacity of agencies at various levels, strengthen the build-up of staff force, enhance working capacity, and establish and perfect the accountability system of animal epidemic control and prevention to cover all the possible fields.

The Vice Minister also stressed that efforts against three types of diseases should be highlighted this year: African swine fever, influenza A H1N1 and zoonotic diseases such as brucellosis and tuberculosis.

China Buries FMD Pig Carcasses
CHINA - Rotting carcasses of animals that had died as the result of foot and mouth disease (FMD) animals have been buried t prevent pollution of rivers in suburban Foshan.



Authorities buried more than 40 pig carcasses on 4 March after the rotting remains were found in Sihui of Guangdong province, amid fears of an outbreak of foot-and-mouth disease in the city, according to an official source.

The carcasses were discovered under a bridge at a riverbank, said Xian Shidong, an official from the city's animal husbandry and veterinary department.

He said: "Special personnel were immediately sent to the scene to dispose of the pigs after local residents reported the find. The carcasses were also treated and the area sterilised to prevent any spread of disease."

He refuted reports of an outbreak of foot-and-mouth disease in Sihui. The carcasses could have originated from outside the city, he said.

A total of 8,382 pigs were culled after a foot-and-mouth disease outbreak in the province early this month, Xinhua News Agency reported.

The National Foot-and-Mouth Disease Reference Laboratory also confirmed the outbreak, said Yu Yedong, deputy director of Guangdong's animal husbandry and veterinary bureau.

Mr Xian said his department has required operators of major pig farms and other pig farmers to vaccinate their livestock against the disease earlier this year.

He said: "Relevant departments are now investigating the source of the swine carcasses."

A local farmer, who wanted to be known by his family name Chen, said the pig bodies could have been left under the city's Magang bridge for three days.

Sihui, which is under the jurisdiction of Zhaoqing city in the western part of Guangdong, is a major pig-raising base in the southern province that borders the Hong Kong and Macao special administrative regions.

Earlier this week, more than 100 pig carcasses were also found within a 500 kilometre-long section of Gaofeng River. The remains severely polluted the water in Sanshui district of Foshan city.

Gaofeng River itself flows into Beijiang River, one of the major tributaries of the Pearl River. At least 20 pig farms are said to be located along both banks of the Gaofeng River.

He Weiquan, director of the animal epidemic prevention station under Sanshui's bureau of agriculture, said the agricultural department and local environmental protection agency as well as neighborhood and village committees are now taking measures to clean the affected areas and investigate the source of the pig carcasses.

Du Zehong, director of nearby Xinan town's animal epidemic prevention station, said the pigs might have died because of inclement and fluctuating weather in the past months.

Mr Du said: "Many pigs were reported to have contracted respiratory diseases under the cold and moist weather in the past two months and they died after failing to receive timely treatment."

Wu Dachang, a local lawyer, said those who dumped the pig carcasses into rivers and along riverbanks have broken laws and regulations.

"Their actions have polluted the local environment and threatened public health," Wu told China Daily on 4 March.

Agricultural and relevant departments in Guangdong are doing what they can to prevent and fight the disease, Mr Yu said.

.

Pamper pigs for better taste
[9 March 2010] Pigs in Zhengzhou, capital of Henan province in cetral China will get a day of rest, pats and music before they visit the slaughterhouse - all this to improve their taste. An official in Zhengzhou said after a long trip, the pigs are tired when they reach the slaughterhouse and the rest will ensure the pork has the best taste and will prevent water-logged pork entering the market. The rules, posted on the Zhengzhou commerce commission's website, state that people who do not follow the rules will be severely punished.

Pig price drops in Guangdong
[10 March 2010] The price of live pig has fallen to about CNY 10/kg (USD 1.5) this week in Guangzhou, capital of south China’s Guangdong province, following an outbreak of foot-and-mouth disease. The city's price for live pig was about CNY 13/kg (USD1.9) in January. A local slaughterhouse worker said many pork traders had reduced the size of their orders because pork had become unmarketable in recent weeks. "Many residents have avoided or reduced consumption of pork after the foot-and-mouth disease outbreak," said the worker. An outbreak involving 1,474 pigs was reported in Guangzhou's Baiyun district at the end of last month. The outbreak led to the culling of 8,382 pigs in the district.

National Hog Price Weak to Stable
CHINA - Live hog farm prices averaged 9.82 RMB/kg nationally on 10 March, 0.04 RMB/kg higher than the day before. Among 13 major provinces reporting, prices climbed in six and fell in seven.



Hog prices in North-East China averaged 8.66 RMB/kg, 0.28 RMB/kg lower than the day before; 10.04 in North China, 0.20 higher than the prior day; 9.74 in East China, 0.06 higher; 10.42 in Middle China, 0.32 higher; 10.52 in South China, 0.08 higher; 9.60 in South-West China, 0.54 lower.

Hog prices continued to climb slightly in Middle and East Coastal Regions, vibrated and went down in North-East and South-West Regions, according to the Devine Farmer Site.

In general, national hog prices continue to fluctuate and because of diseases and a long term bearish market, producers are sending high numbers to market.

At present the markets is seeing producers make a loss, but the outlook is for an up turn in the market as producers become less willing to sell.

Hog prices are expected to continue gently fluctuate.

Pig Farm Prices in Major Provinces in China
(RMB/kg LW) 
Region Province 10 March 9 March Daily Change Weekly Change
South-West Sichuan 9.60 10.14 -0.54 0.52
South Guangdong 11.02 10.52 0.52 0.58
Guangxi 10.04 10.38 -0.36 0.24
East Jiangsu 9.12 9.14 -0.02 -0.2
Anhui 10.04 9.74 0.30 0.32
Jiangxi 10.80 9.50 1.30 0.50
Middle Hunan 10.08 10.02 0.06 0.12
Hubei 10.38 10.80 -0.42 0.62
North Henan 9.94 9.76 0.18 0.28
Shandong 9.10 9.14 -0.04 -0.18
Hebei 9.72 9.54 0.18 0.00
North-East Liaoning 8.96 9.14 -0.18 -0.22
Jilin 8.46 8.78 -0.30 -0.76
National Avg. 9.82 9.78 0.04 0.04

Pork Price Plunge in China Persists
CHINA - Since 14 February, national pork prices have continued to drop.



The current post-hip tip pork meat and streaky pork prices have gone down by 12 per cent and 14 per cent, respectively.

According to the agricultural products price monitoring system of Xinhua News Agency, meat and egg prices fell on 27 March compared with the previous day. Vegetables, edible oil and aquatic product prices have seen slight fluctuations. Fruit prices are mainly steady, but a little bit up. Refined grains and dairy prices remain stable.

Throughout all of China's 31 provinces, pork prices have dropped since 14 February.

Friday, April 16, 2010Print This Page
Latest Pig Prices from China
CHINA - The latest prices for live pigs, corn and soybean meal have just been published.



The latest prices as they appear in the Chinese magazine, Pork Industry Science, are:

  Live pigs (RMB/kg) Corn (RMB/kg) Soybean Meal (RMB/kg)
Beijing 10.1 1.83 3.18
Tianjin 9.8 1.82 3.07
Hebei 9.6 1.84 3.13
Heilongjiang 9.2 1.67 3.27
Jilin 9.2 1.69 3.2
Liaoning 9.2 1.75 3.1
Shandong 9.3 1.85 3.15
Jiangsu 10.4 2.04 3.25
Anhui     3.3
Zhejiang 10.8 2 3.14
Shanghai 10.3 2.1 3.14
Henan 9.3 1.91 3.15
Fujian 10.6 2.06 3.1
Guangdong 11.2 2.02 3.15
Hubei 10 2.06 3.4
Hunan 10.2     
Jiangxi 10.2   3.45
Sichuan 9.35   3.51


 

Thursday, April 22, 2010Print This Page
Pig Production Down for 10th Consecutive Week
CHINA - The parity between pigs and grain has been lower than the breakeven point for pig production for 10 straight weeks due to consistent drop of pork prices, according to the National Development and Reform Commission (NDRC).

A survey by the NDRC showed that prices of pigs, piglets and pork had respectively slumped by 14 weeks, 15 weeks and 13 weeks running. On 7 April, the parity between pigs and grain dipped to five to one, the 10th straight week for the parity below breakeven point of six to one.

Pig prices have begun to rise recently boosted by the government's reserve policy, according to TMCnet.com. The price on 14 April gained 1.2 per cent than that a week earlier, the first price rise in the past four months. However, pig production is still suffering losses.

China may look to Australia to meet food demands
[29 April 2010] With demand for meat rising among Chinese consumers, it is likely that China may set up large pork and chicken operations in Australia. Paul Meggison and Roy Robertson, speakers at the Australasian Milling Conference in Melbourne last week, said they believed China would turn to investment in Australia as domestic factors such as land shortage, forced the country's authorities to reassess national food production operations. Dr Meggison, the general manager of Ausfarm Nutrition Products, said China would need a huge increase in stockfeed as its meat industry expanded.

China accepts US pork shipments
[18 May 2010] China has confirmed that it will accept shipments of US pork produced on or after May 1, although the USDA's Foreign Agricultural Service is hoping to adjust the product eligibility date to March 24, 2010 — the date specified in the original agreement to reopen China's market to US pork and pork products. The U.S. pork industry exported nearly 400,000 metric tonnes of pork worth nearly USD 690 million to China and Hong Kong in 2008, making it the No. 3 destination for US pork. Last year, pork exports to China and Hong Kong were down by 38%, falling to just under USD 427 million.

China reopens to Irish pork.
[3 June 2010] China has fully reopened its market to Irish pork imports, ending a ban since the dioxin scare in December 2008, announced Minister for Agriculture Brendan Smith. The announcement followed meetings in Beijing between Mr Smith and his Chinese counterpart Han Changfu together with Wang Yong, the minister of the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ). Mr Smith said he expected the pork trade with China to hit EUR 20 million immediately, double that when the market was closed to Irish exporters in 2008. During the meetings Mr Smith also pressed for the opening of the Chinese market to Irish beef and other meat products. In the case of beef, he emphasized his commitment to fulfilling China’s requirements for the resumption of this trade. Irish statistics show that their pork exports to China accounted for 25% of the world’s total in 2008.

Study: Pandemic Virus Enters Pigs, Swaps Genes
HONG KONG - The H1N1 flu virus has been spreading quietly in pigs in Hong Kong and swapping genes with other viruses, and researchers said the findings support calls for tighter disease surveillance in pigs before new bugs can emerge and infect people.



The finding, published in Science today, is important as it supports the theory that flu viruses infecting swine can swap genes with other viruses that are in pigs, including more dangerous bugs like the H5N1 or H9N2 bird flu viruses.

Malik Peiris, an influenza expert who worked on the study, said the discovery underlines the importance of disease surveillance in pigs.

"It demonstrates the pandemic virus can easily go back to pigs. Once it does so, it can reassort with other pig viruses and give rise to potentially unexpected consequences," said Peiris, a microbiology professor at the University of Hong Kong.

Citing Reuters, Malaysia's The Star Online reports that Dr Peiris and colleagues, including Guan Yi at the University of Hong Kong, have found pandemic H1N1 viruses in nasal swabs taken from apparently healthy pigs at a Hong Kong abattoir during routine checks since October 2009.

"From genetic analysis, what it suggests is each of those viruses we found in pigs all came from humans," Dr Peiris said in a telephone interview.

"It is not surprising because the pandemic virus emerged from pigs, so it is not surprising that it goes back to pigs."

Pandemic virus swaps genes in pigs
A sample isolated from Hong Kong pigs in January 2010 carried genes from three viruses - the pandemic H1N1, a European "avian like" H1N1 and a so-called "triple reassortant" virus containing bits of human, pig and bird flu viruses which was first discovered in North America in 1998.

"This suggests that the pig is a place where the pandemic virus might actually change and reassort and get new properties possibly," Dr Peiris said.

"The pandemic virus in humans has been extremely stable. It hasn't changed at all even though people were concerned it might reassort and mix with human viruses ... but it seems that it can mix with other flu viruses (in a pig)."

Genetic research has suggested that H1N1, first identified in people in April 2009, had in fact been circulating for at least a decade and probably in pigs. Despite tight controls on herd to protect them from people, little checking is done globally to see whether food herds are infected and if so, with what viruses.

Studies in the past year have turned up pigs in Canada and other countries infected with the pandemic H1N1 virus, evidently carried to the animals by people.

"I must emphasise the point that it doesn't mean that pork is dangerous to eat at all (if well cooked). What it means is it is important to carry out systematic surveillance in pigs so we know what is going on in pigs in regard to influenza viruses in general and the pandemic virus in particular," Dr Peiris said.

Pigs are the reservoir of many human, bird and swine viruses and experts often refer to them as an ideal mixing vessel for new, and possibly more dangerous pathogens.

Asked if there was a possibility of the H1N1 getting mixed up with the H5N1, Dr Peiris said: "That is certainly a possibility, that's why we need to keep track.

"If it is quite able to readily reassort and pick up genes from pig viruses, you might have other combinations of genes that can arise. Unless we are alert to it, we potentially could have a virus that is ... more virulent coming back to humans."

Although H5N1 is a mostly avian virus, it causes more severe illness in people than seasonal flu and kills 60 per cent of the people it infects. It has infected 499 people and killed 295 of them since re-emerging in 2003.

The World Health Organisation said early in June that the H1N1 pandemic was not yet over although its most intense activity has passed in many parts of the world.

VIV China to Reflect Growth Perspectives
CHINA - The 'Grand International Edition' of VIV China will be held in Beijing on 6 to 8 September 2010. The international world of suppliers and buyers active in China will come together at the NCIEC, located near the international airport.


More than 250 national and international exhibitors at VIV China 2010 will represent their solutions within the Feed-to-Meat chain. The organizers expect a strong representation of buyers from all over China.

Chances and challenges
It is a well-known fact that China currently is front runner in the world in the field of growth opportunities for the animal production and processing industry. The country has huge potential for expanding its domestic agro-food industry as well as the production of the systems needed to support the industry. Rising living standards not only lead to a greater consumption of meat and therefore the demand for feed, but also result in a greater diversity of meat consumption, which, in turn, has an impact on the types of feed produced. While pig and poultry feeds dominate production, highest growth rates are being recorded for production of dairy and aqua feeds. This growth in demand for meat, and consequently feed, will present China with increasing challenges. According to the Rabobank, there are already large regional variations in the availability of feed ingredients and, as demand rises, the country will have to look to importing more cheaply, processing more efficiently, or finding alternatives. Ruwan Berculo, project manager for VIV Asia Pacific added: "The Chinese economy is growing rapidly, with an increasing focus on the private sector. Chinese entrepreneurs are ambitious, impulsive and rapid decision-makers. The Chinese economy is a Power House, driven by innovations. Now is the time to invest in your Chinese network."

Graded eggs
The market for graded eggs in China is also expanding rapidly. The ongoing urbanisation results in more graded eggs in the supermarkets. Providing such a top quality eggs required is a niche in the market for the Chinese egg industry. At the largest VIV China 2010 booth, Moba will focus on the wide range of egg grading and packing machines, from 1,600 to 180,000 eggs per hour.

Country pavilions
Many countries will be represented by a country pavilion at VIV China 2010. A large Dutch delegation has joined forces for the Dutch pavilion. The Dutch pavilion is a cooperation between the VIV organisers and the Dutch Ministry of Agriculture, Nature and Food Quality. The Holland Pavilion will have a special focus on trade and matchmaking possibilities. Korea, France and the Illinois Department of Agriculture from the US are also hosting country pavilions.

Exclusive hospitality programme
In cooperation with the Orient Explorer Group – a travel agency with specific expertise in the Asian region – the VIV organisers provide a support system for travel bookings, accommodation and visa arrangements. This aim being to ensure a stress free stay for the VIV China guests.

Wens Starts a Trial on Changing Sow Feeding Method
CHINA - Huanan Poultry Equipment Co.,Ltd., a daughter company of Wens Food Group, started a close cooperation with Nedap by introducing Velos ESF into a farm of Wens Group in Shiba. Seventeen feed stations started operating in March 2010.

There were 3,200 sows in the farm by the end of 2009. Wens decided to expand the farm size by introducing 800 gilts into a new production line which would be used as a trial farm for feeding sows in group-housing condition with Nedap Velos ESF. Currently, there are over 60 farms with similar number of sows in Wens Group.


The Shiba farm is equipped with 17 feed stations and four heat detection units. Sows inseminated at same week are kept together in a static group during gestation. Four feed stations are installed together with heat detectors, one feed station is used as a separate training station, and each feed station would take care of 40 sows in a same pen. Sows are kept in one of the four pens with feed stations and heat detectors from three to four days after insemination until four weeks of pregnancy. After four weeks of insemination, sows would be kept in pens with feed stations only for the rest 12 weeks of gestation and then moved to farrowing house. In August 2010, the first batch of sows will be farrowing.


Wens Food Group takes this trial project very seriously, because the shift of sow feeding method from individual crates to group-housing with ESF is influential to production level of Wens. Huanan Poultry Equipment Co.,Ltd. will ensure the success of this shift with its strong technical force.

Prices of Pork Stoking Inflation Fears
CHINA - Pork prices are on the rise again, putting pressure on inflation, the official Xinhua News Agency reported Saturday, 7 August.



Prices of pork, which accounts for around 3 percent of China's Consumer Price Index (CPI), grew by 0.1 per cent Saturday compared to a day earlier and by around 17 per cent compared to June. The increase in food prices, which accounts for about a third of the index, has been blamed on bad weather.

According to the National Bureau of Statistics (NBS), China's CPI rose 2.9 per cent compared to the same time last year. The index rose a year-on-year 3.1 per cent in May, 2.8 per cent in April and 2.4 per cent in March.

The National Development and Reform Commission (NDRC), the country's top economic planner, predicted that the CPI would maintain 3 per cent for the rest of the year and would drop in October.

NBS said China's producer price index (PPI), measuring industrial products prices, increased 6.4 per cent in June and 6 per cent in the first half.

"PPI hit a record high in the second quarter and started declining. The CPI will peak in the third quarter," said Li Huiyong, chief macro-economy analyst with Shanghai-based Shenyin Wanguo Securities.

In November 2008, a 4 trillion yuan ($590.93 billion) stimulus package was introduced in order to boost China's economy, which also spurred huge credit expansion.

According to the People's Bank of China (PBC), the country's central bank, China's foreign reserves jumped to $2.4 trillion last year, further increasing the country's inflation pressures. In addition, China has increased wheat reserves this year, a move to secure the country's food and is viewed as increasing inflation pressures by surging wheat demand.

China's gross domestic product grew by 11.9 per cent in the first quarter this year, and by 11.1 per cent for the first half of the year, according to the NBS. Meanwhile, the country's purchasing managers' index fell to 51.2 from 52.1 in June, which indicated economic slowdown.

"Slowing growth and rising inflation is a policy puzzle for the government," Bloomberg quoted Tom Orlik, an economist for Stone &McCarthy Research Associates. "I believe China will be more concerned with growth, especially given the uncertain state of affairs in the global economy."

"We will try to make monetary policy more flexible and maintain a balance between the objective of rapid economic growth and controlling inflation," the PBC said Thursday.

No Sign of A/H1N1 Virus in HK Pigs from May-July
HONG KONG - Hong Kong's Center for Food Safety (CFS) Friday (6 August) announced that no A/H1N1 influenza viruses nor any reassortant of viruses were detected in samples from pigs taken during May to July.



The results reported were under a regular influenza virus surveillance programme conducted by the University of Hong Kong at the Sheung Shui Slaughterhouse.

A spokesman for the CFS said that the CFS would continue to monitor reports of the program and make announcements on a regular basis.

"Results will be announced immediately if there are significant public health impacts such as gene re-assortment of viruses," he said, adding that given the wide transmission of the pandemic H1N1 virus in humans, detection of the virus in pigs would not be a surprise.

It was expected that positive findings may appear from time to time in the future, he said.

The CFS has been liaising closely with the Mainland authorities on any abnormal situation in the Mainland farms supplying live pigs to Hong Kong and farm inspection would be stepped up when necessary.

Under the surveillance programme, the CFS has been helping the HKU researchers by collecting blood, tracheal and nasal swabs from pigs at the Sheung Shui Slaughterhouse twice a month.

China Opens Doors to More Danish Crown Imports
DENMARK - A new agreement between Denmark and China opens up for exports of processed foods such as sausages and tinned products from Danish Crown.



This represents an opening for increasing sales to one of the group’s most important markets, explained Asger Krogsgaard, a member of the Board of Directors of Danish Crown and Chairman of the Company Board of the Danish Agriculture and Food Council.

Together with HRH Prince Henrik and the Danish Minister for Food, Henrik Høegh, and others, he has spearheaded a Danish export drive which is just now drawing to a close in Shanghai.

"It is an important agreement and a key step towards strengthening our trading relations with China. With the new agreement, we can look forward to selling processed products alongside our very considerable exports of by-products," said Asger Krogsgaard.

At present, Danish Crown sells mainly by-products such as ears, toes and intestines to China. Volumes have been increasing, and China has in recent years become our fourth-largest market, measured in terms of weight. At the same time, a new class of wealthy consumers is emerging in China and creating a demand for food of a quality found in the West.

"Thanks to our high food safety standards, we have already been present in the market for a number of years, and this will be our springboard for future sales of high-quality products. The consumers are there, and they are calling for quality Western-style foods combined with high food safety," Mr Krogsgaard said.

A/H1N1 Flu Breaks Out in Swine; Issue Resolved
TAIWAN - The Taiwanese veterinary authorities have reportted an outbreak of A/H1N1 influenza in the country, affecting swine herds.



The World Organisation for Animal Health received an immediate notification yesterday, 7 September. According to the report, the outbreak occured on 2 September in T'ai-Tung.

A total of four cases were identified, while 4000 of the animals showed signs of susceptibility to the disease.

The farmer reported pigs with signs of parakeratosis to the prefecture animal disease control competent authority, a zinc deficiency was suspected. Samples were collected and sent to the Animal Health Research Institute for diagnosis. Samples were also subjected to swine influenza virus test including pandemic influenza A/H1N1 virus test under the routine active and passive surveillance programme. Positive results in virus isolation, RRT-PCR and gene sequencing were obtained on 2 September 2010, which demonstrated that pigs were infected by the pandemic influenza A/H1N1 virus.

Movement control was implemented and disinfection and cleaning of the index farm have been conducted and completed. Follow-up tests were conducted and negative results in RRT-PCR and virus isolation were obtained on 6 September 2010.

Six pig farms within 3km radius around the index farm have been investigated and monitored. No clinical evidence of infection was found.

Although the issue has been resolved, the cause of the outbreak remains unidentified.

SFI holds groundbreaking ceremony for IPF in Jilin
[10 September 2010] SATS Ltd’s subsidiary, Singapore Food Industries Pte Ltd and its JV partners held a groundbreaking ceremony yesterday morning for the first breeder farm of the integrated pig farm project (IPF) in Yongji County, Jilin Province, China. A more than 100,000 square metres site at Yangmu Gou in Yongji County has been selected for the first pig breeder farm which is part of phase one of the IPF development involving the start-up of breeder and model finisher farms for 100,000 pigs annually and a slaughterhouse. First mooted by the Jilin City Government, the IPF will consist of an integrated end-to-end supply chain, from feed mill and breeding to slaughtering and processing. To be developed over approximately six years with an eventual production of 1 million pigs annually, the IPF aims to be recognised as the first FMD-free zone in China.

Forecast for Chinese Pork Prices to Increase Again
CHINA - Pork prices in August were steady, following a rapid rise in June and July but further rises are forecast in the coming months.



In August, China's pork market was steady, with no noticeable increases in price, according to an analysis by Frbiz.com, one of China's B2B search platforms. This steadiness was mainly due to the consumer atmosphere in the second quarter being influenced by fast rising prices in June and July, which were caused by pig diseases and China's southern floods decreasing pork supply.

The first week of this month, China's pork prices were at a record high. The national pork average wholesale price reached RMB17.21 per kilo – a year-on-year increase of almost eight per cent. Breeding stock numbers fell in July by 3.7 per cent year-on-year. In July, breeding stock was 44 million head, down 2.2 per cent year on year.

In September, after the beginning of autumn, the weather gets colder, which is the pork sales season. The Mid-Autumn festival and National Day holiday stimulate pork demand, and therefore the market demand of pork will increase. Plus, feed and raw materials like corn, wheat and so on will also maintain high operations and also stimulate a rise in pork prices. Therefore, in late September and October, pork prices may start a new rising price trend.

This year's high point will be close to the 2009 high level. As pork prices continue to rise, farmers begin to reduce the market availability rate of the livestock, therefore, the supply in such a tight situation may continue into the late fourth quarter. China's demand may exceed supply at the height of the pork season. According to the situation in August, the average wholesale price of pork was RMB17.00 per kilo, and the first week of this month, the price even reached RMB17.21. According to the current situation, Frbiz forecasts that this year's whoelsale pork price could reach RMB19 but will not exceed the RMB23 level seen in 2008.

PCV2: Genetic Variation and Newly Emerging Genotypes in China
Researchers at Harbin PCV2 have discovered that porcine circovirus type 2 (PCV2) found in China is constantly undergoing genetic variation. Furthermore, both the predominant strain and the Cap protein (the main structural protein of PCV2) have changed over recent years.


Chang M. Liu and colleagues at the Harbin Veterinary Research Institute of Chinese Academy of Agricultural Sciences have published a paper on genetic variation and newly emerging genotypes of PCV2 in China in Virology Journal.

Porcine circovirus type 2 (PCV2), the causative agent of post-weaning multisystemic wasting syndrome (PMWS), is a serious economic problem for the swine industry in China, they explain. In this study, they investigated the genetic variation of PCV2 in China using strains isolated from 2004-2008. Viruses were isolated from samples collected from pigs with multi-systemic lesions and clinical signs of PMWS from different regions of China, and the genomes of these viruses were sequenced. The assembled sequences were used to define the genotypes of these strains; PCR-RFLP methodology was used to distinguish isolates and capture ELISA was used to demonstrate the antigenic changes resulted from ORF2 gene mutation of the isolates.

Results
The researchers identified 19 PCV2 isolates, including four newly emerging PCV2 mutant strains. The 19 isolates were designated into three genotypes (PCV2a, PCV2b and PCV2d). PCV2d represented a novel genotype and a shift from PCV2a to PCV2b as the predominant genotype in China was identified.

This is the first report of 1766 nt PCV2 harbouring a base deletion at other new different positions.

Amino acid sequence analysis identified two novel ORF2 mutations (resulting in ORF2 sequences 705 and 708nt in length) in three deletion strains (1766 nt) and one strain with a genome 1767 nt in length.

This is the first finding of two amino acids elongation of the ORF2-encoded Cap protein in PCV2 strains anywhere in the world. The isolates were distinguished into different genotypes by PCR-RFLP methodology and antigenic changes were present in Cap protein of mutation isolates by capture ELISA.

Conclusions
The Harbin scientists say their study provides evidence that PCV2 is undergoing constant genetic variation and that the predominant strain in China as well as the antigenic situation has changed in recent years. Furthermore, the PCR-RFLP method presented here may be useful for the differential identification of PCV2 strains in future studies.

Reference
Long J. Guo, Yue H. Lu, Yan W. Wei, Li P. Huang and Chang M. Liu. 2010. Porcine circovirus type 2 (PCV2): genetic variation and newly emerging genotypes in China. Virology Journal, 7:273. doi:10.1186/1743-422X-7-273

Hunan Dakang launches IPO
[5 November 2010] Dakang Animal Husbandry Co Ltd, a major pig producer in China’s southern province of Hunan, has initiated an IPO. The company expected to issue some 26 million shares, which will account for less than 25% of the company’s total share capital. The fund will be used to build an integrated pork production project that consists of compartment farming units for 300,000 pigs per year and a slaughterhouse with an annual capacity of 400,000 pigs. The company produced 163,000 slaughter pigs in 2009 and registered a Compound Annual Growth Rate (CAGR) of 66% for revenue and a CAGR of 61% for net profit during 2007-2009. Dakang showed greater performance this year with the first-half revenue increasing by 53% year-on-year to CNY 197 million (USD 29.6 million).

PCV Vaccine Developed in Henan
CHINA - A vaccine against porcine circovirus (PCV) has been successfully developed in Henan Province.



The vaccine has been granted the National Registration Certificate for New Veterinary Drug and the production approval document number as well as the approval to be marketed as a national-level new veterinary drug of the second category from the Ministry of Agriculture (MOA), according to an official source.

This is the first major result of the Project of R&D on New Diagnostic Technology and New Vaccines for Major Swine Diseases, a key specialized project on science and technology of the Province during the Eleventh Five-Year Plan period implemented by Luoyang Pu-Like Bio-Engineering Company Limited.

According to the introduction, this PCV vaccine independently developed by China could create direct economic benefits of over one billion yuan and reduce the loss from the disease by over 36 billion yuan during the four years' protection period, and help the swine industry save vaccination expenses of three billion yuan each year.

PCVD is globally recognized as a major disease that jeopardizes the swine industry, and also one of the three major diseases that do harm to China's swine industry.

Yang Hanchun, Director and Chief Scientist of the national research office for disease control in the modern swine industry and Professor of China Agricultural University said: "PCVD is one of the major diseases that affect China’s swine industry; and effective vaccination is crucial to control the spread of PCV."

Further Concentration of Farms in Five-Year Plan
CHINA - The proportion of standardised large-scale animal production is set to increase by 10 to 15 percentage points during the 12th Five-Year Plan period.



At the National Meeting on Establishment of Standardized Demonstration Farms for Livestock and Poultry Production held in Yichang, Hubei Province last week, the Ministry of Agriculture (MOA) stated that by 2015, the proportion of large-scale production of major animals would be raised by 10 to 15 percentage points and the number of standardised farms would account for 50 per cent of the total of large-scale farms; productivity of those standardized large-scale farms would be improved; the animal waste would be treated to reach the standards for discharge or utilized as a resource; and the quality and safety of animal products would be substantially upgraded.

To carry out the nationwide activity on establishment of standardised demonstration farms for livestock and poultry production launched by MOA early this year, the state has invested three billion yuan to support establishment and transformation of standardised pig and dairy cattle farms/farming areas and it has also allocated 500 million yuan of specialised funds to help the farms/farmers that apply standardised farming practices by offering rewards instead of subsidies.

All the local authorities have been working hard to develop this programme into an image or a brand through well-organised implementation, increased financial input, enhanced technical guidance and advocacy for active participation of farms/farmers, ushering in a new climax for development of standardised large-scale animal production. So far, MOA has release the first list of 1276 standardised demonstration farms and granted them the plates for such an honour.

China Sells Stockpiled Pork, Sugar to Cut Prices
CHINA - China's government is trying to cool double-digit food price rises by releasing stockpiled pork and sugar to boost supplies in markets, the Commerce Ministry said Tuesday.



The move comes after food prices jumped 10.1 per cent in October over a year earlier due to shortages of some goods, reports The Star. Overall inflation rose to a 25-month high of 4.4 per cent, prompting concern Beijing might tighten economic controls and further slow China's growth.

The government is releasing stored frozen pork and sugar into the market to help "stabilize prices," said Commerce Ministry spokesman Yao Jian at a regular briefing.

Inflation is especially sensitive in a society where poor families spend up to half their incomes on food. Rising incomes have helped to offset price hikes, but inflation erodes the value of savings and undercuts economic gains that help support the ruling Communist Party's claim to power.

Mr Yao said the government also is taking steps to increase vegetable production, though he gave no details of that or the pork sales. Pork is China's staple meat and prices are closely watched to ensure poor families can afford it.

The jump in food costs came as Beijing is trying to steer China's rapid growth to a more manageable level and restore normal economic conditions following its stimulus-fueled rebound from the global crisis.

Inflation so far is confined to food but analysts have warned that stimulus money and a flood of bank lending coursing through the economy might add to pressure for prices to rise in other sectors.

Some analysts say food price inflation has passed its peak and should decline but Chinese media say the cost of some basic goods is still rising strongly.

The price of sugar rose 1 per cent in the first week of November over a week earlier, meat and eggs by 0.8 per cent and cooking oil by 0.5 per cent, according to the official Xinhua News Agency.

A government spokesman said last week Beijing "needs to do more" to keep inflation under its 3 per cent target for the year.

The government maintains stockpiles of grain, frozen pork and some other staples in case of shortages. It released stockpiled pork in 2008 after shortages caused China's last spike in inflation.

Hunan knocks a hole in Asean pork market
[18 November 2010] More uncooked pork products from China are expected to land in Asean countries.  Taking the lead is Yiyang Meat Joint Processing Plant in China’s southern province of Hunan that shipped some 100,000 tonnes of chilled pork worth of USD 47,800 to Malaysia in November this year. The plant completed registration at the Department of Veterinary Services (DVS) in Malaysia and has become the first of its kind among its Chinese counterparts. Since China-Asean FTA took effect this year, Hunan has restarted exporting frozen porket to Singapore. The province, a major pig producing region in China, kicked off exports of frozen pork to the Philippines in April.

Hebei Hongdu to export pork to Singapore and Russia
[7 December 2010] Hongdu Group in China’s northern province of Hebei has commenced production at its newly established slaughter facility in Qinhuangdao, northeastern China’s Liaoning province. The plant is designed to handle 2 million pigs per year. Cost CNY 80 million (USD 12 million), the facility will produce 150,000 tonnes of fresh carcass per year and generate annual sales of CNY 2.6 billion (USD 388 million). The Group has targeted part of its output for export to Singapore and Russia.

Chinese pork consumption levels, but numbers increase 30 Nov 2010
People in China on average do not eat more pork, but the increasing population will take total consumption to about 52 million tonnes in 2020.

The average rate of consumption of pig meat per person in China may not increase above the present level between 2010 and 2020, said Dr. Ma Cheung, Vice-Secretary General of the Chin Animal Agriculture Association at the 2nd Chinese European Pig Summit in Hannover, Germany.
 
But the growth rate of 60-70 million people per year forecast for China’s human population over this period would still take the total annual amount consumed to about 52 million tonnes by 2020.
 
Very small farms
Herd productivity is an issue for Chinese pig farmers, said Dr. Ma. Out of the 65 million farms producing pigs in China, about 62 million are extremely small.
 
But even changing the annual production of each smallholder by a single pig would mean 62 million pigs being added to or taken from the national total.
 
Restrictions on production
Livestock production in China faces an increase of restrictions aimed at protecting the environment, Dr. Ma reported.
 
Most Chinese pork at present is produced in the East of the country, but a move to more northern areas could be considered in order to gain better access to land and grain.
 
Genetic improvement
New initiatives have been launched to improve China’s pig breeding resources, said Dr. Wang Lixian, Head of the Swine Science Division at the Chinese Academy of Agricultural Sciences.
 
After rather slow progress in the last 10 years, the decision was taken in 2009 to re-launch the national swine genetic improvement program and in 2010 an expert group was formed to work with selected nucleus herds.
 
The plan is to focus on 50 nucleus farms with about 50,000 purebred sows for the 2010-2012 period and to double these numbers between 2013 and 2016.
 
 

Danish Breeding Pig Farm Set up in China
CHINA - Danish-owned Scandinavian Farms has started construction of a new pig breeding farm in Jiangsu province.


The first steps towards building a big Danish-owned pig breeding farm was made on 11 December in the Jiangsu province. The project is the first large-scale Danish investment in Chinese agriculture and is based on the concept 'Safe pork' and 'farm–to–table' principles, for which Danish pig production is world-known.

According to the Ministry of Foreign Affairs of Denmark in Beijing, the ground-breaking ceremony of the project on 11 December was attended by Party Secretary from Lianyugang, Mr Tang, Mayor in Guanyun, Mr Yin, and Vice Secretary of China Agricultural and Animal Husbandry Association, Mr Ma, together with representatives from the Danish Embassy, management from Scandinavian Farms Ltd. and Scandinavian Farms Pig Breeding Technology Ltd.

Scandinavian Farms Ltd. is a Danish-owned project development company within food and agriculture, which is established in China and based on competitive technology and know-how from Denmark.

Scandinavian Farms is owned by the two founders, Peter N. Rasmussen and Martin Hjort Jensen, together with a group of Danish investors from leading companies within agricultural technology and the feed industry. The subsidiary company, Scandinavian Pig Breeding Technology, which is going to run the breeding farm, is owned by Danish pig producers.

In 2009, the Industrialisation Fund for Developing Countries (IFU) under the Danish Foreign Ministry joined in the project, which is considered to be a good business opportunity, because the project activities will create local employment and income in Jiangsu province.

The local authorities in Jiangsu focus on developing and optimising agriculture in the province, and therefore, it already has a more mechanised agriculture compared to other Chinese provinces.

The project in Jiangsu is the first of its kind and will clear the way for several other projects in the future from which both China and Denmark can benefit.

Farm Produce Prices Rise on Holiday Demand
CHINA - The prices of Chinese farm produce edged higher last week, boosted by New Year holiday demand, the Ministry of Commerce said Wednesday.


Low temperatures and freezing rain in some parts of China also pushed up prices, the ministry said in a statement posted on its website.

During the week of 27 December to 2 January, the wholesale prices of 18 staple vegetables rose, with the price of balsam pear, cucumber and beans up 8.2 per cent, 6 per cent and 3.7 per cent, respectively.

The price of meat rose slightly, with pork prices up 0.8 per cent. Mutton prices rose 0.8 per cent and chicken prices rose 0.4 per cent.

Peanut and soybean oil prices increased 0.3 per cent. Colza oil prices edged 0.2 per cent higher.

Bucking the trend, the price of producer goods fell slightly last week, after rising for three consecutive weeks. The prices of iron ore and copper ore fell 1.1 per cent and 0.5 per cent, respectively.

Food prices have a one-third weighting in the calculation of China's consumer price index (CPI), the major gauge of inflation. China's CPI hit a 28-month high of 5.1 per cent in the year to November.

Pig Feet and Ears Included in Import Ban
CHINA - Pork bi-products from Germany are atop the Chinese government's list of newly banned imports, a senior German agricultural ministry official said yesterday.


A pork vendor at a traditional market in Huaibei City, Anhui Province organizes animal bi-products in her stall in this 2009 file photo. China banned the import of German pork products including pig feet and ears Tuesday. [Photo:CFP]"Most of the pork imported into China was pork bi-products such as pig's ears and pig's feet," the spokesperson for Germany's Federal Ministry of Food, Agriculture and Consumer Protection told the Global Times by phone on Thursday.

The Berlin-based official, speaking on condition of anonymity, said agricultural officials there had met with staff from several embassies in the German capital to detail precautionary measures taken to prevent more dioxin from entering the food chain.

The poisonous chemical entered the German food chain via contaminated fats that are a key ingredient in animal feeds fed to pigs and chickens.

China's food-quality regulators, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), announced a ban on pork and egg products from Germany Tuesday.

As of press time Thursday, AQSIQ declined to disclose further details about what products will be banned specifically or whether consumers should refrain from eating German products already in circulation.

AQSIQ's request for a faxed list of interview questions also went unanswered Thursday.

China's ban was sparked by a worldwide food scare starting last week that later spread to South Korea. Wednesday, officials in Hong Kong said all German pork products would be held for inspection and released to the market only after food safety officials were satisfied they were safe for consumption.

A German embassy official in Beijing told the Global Times Thursday that short-term exposure to trace amounts of the chemical in pork is not a health risk.

German exports of pork to Chinese mainland in 2009 stood at some 7,000 tons, valued at 5.9 million euros ($7.75 million), while global German pork exports were 2.2 million tons worth 4.4b euros ($5.78 billion), according to the German agricultural ministry.

An official at imported food retailer Jenny Lou's told the Global Times the Beijing-based chain sells products from Germany - including pork sausages - but was not aware of any plan to remove the items from store shelves.

Officials from grocers Walmart and Carrefour declined to confirm whether any products on their store shelves would be included in the ban.

Shenzhen-based Nogogo Trading Company, an importer in China of German sausages, said it was business as usual Thursday.

"I don't know anything about a ban on pork products," Ren Ya, a sales manager with Shenzhen Nogogo Trading Company, told the Global Times Thursday.

Attempt to Solve Pig Waste Problem Shows Results
TAIWAN - Taiwan has been experimenting with a simple solution to the perennial problems of pollution, smell and excessive water use on pig farms: train the pigs to use a toilet.


After some encouraging results the government now wants all the island's pig farms to adopt the practice as it looks to burnish its green credentials, offering cash to farmers and pushing the benefits such as less watery manure that can be sold at higher prices.

"To use the pig waste as manure is a very good approach within the spirit of green energy, much better than just letting it go to waste and pollute river water," Stephen Shen, Taiwan's "environment minister", told Reuters Television.

"And I think that can help us a lot in decreasing CO2 emissions and fighting global warming."

The "toilet" consists of a series of iron bars installed about 20 cm above the floor in the corner of the pen. Pigs step between the bars to go about their business, with the waste collected in a single, easy to clean spot.

If all the around six million pigs in Taiwan - one for every four people - used such toilets, the government estimates the around 180 million litres of water used per day in cleaning would fall by half.

The "environment ministry" has helpfully published three suggestion on how to toilet-train pigs: put some faeces in the cage as pigs will follow the smell; clean the rest of the pen so "the pigs are not misled to defecate outside the toilet" and let the pigs "become familiar with the new environment."

Chang Chung-Tou, general manager of Long Kow Foods Enterprise, a pig farm with toilets in the western Taiwan county of Yunlin, says not only does he get more for his manure, but his potty-trained porkers live longer.

"Because we don't need to flush the whole cage with water, the pigs are also less likely to catch colds. That helped us to raise the survival rate of our pigs from 70 to 90 per cent," Mr Chang told Reuters Television in an interview at the farm.

He said he has been able to increase income from the less-diluted, and therefore better quality, manure he sells to other farmers as fertiliser to more than NT$250,000 ($8,636) a year from NT$50,000.

If that is not incentive enough for others, the government will also help.

"As long as farmers are willing to try, we would give them financial aid," said "environment minister" Shen.

China battles pork meat laced with a poisonous drug 27 Jan 2011
There have been reports of consumers in China becoming ill and ending up hospitalised with stomach pains and heart palpitations after consuming pork laced with Clenbuterol.

Clenbuterol, in China is also known as "lean meat powder," and is banned in the country. However, animal feed is sometimes mixed with this dangerous drug because some farmers want to profit on the market – as it is used in animal feed because it can decrease a pig's body fat to a thin layer, which makes the meat appear leaner and while it also makes skin pinker – making the meat look fresher for a longer period.
 
Clenbuterol-treated pork requested from pig farmers
Because of the effects on pork meat, it has made some Chinese meat suppliers request Clenbuterol-treated pork from pig farmers. With using Clenbuterol fat burning and muscle growth happens rapidly, which is why some see it as an ideal a feed additive. Though there have been reports in China of the drug entering the food supply, exactly how much food tainted with this drug is not known currently – the Chinese government will not state how many cases of contaminated meat or related illness occur annually.
 
Pork meat mostly affected
It seems that tainted pork is a major concern in the country as Clenbuterol-tainted pork is considered to be one of China's largest food threats as reports have mostly involved this meat.
 
"It's really a big problem in China," said Pan Chenjun, a senior industry analyst with Rabobank. "It's not reported frequently so people sometimes think it's not a big issue but actually it's quite widespread."
 
Despite strict Chinese laws against "Clenbuterol" which carry a prison term for offenders who produce or sell tainted food products, there are often cases where a fine or a bribe can get the offender out of a tight spot.
 
Clenbuterol – quick info:
Clenbuterol is approved for use in some countries via presciption as a bronchodilator for asthma patients.
In instances is has also been used as a performance-enhancing drug in sports – with cases where athletes have been suspended from respective sports.
In some parts of the world Clenbuterol is used for the treatment of allergic respiratory disease in horses.
In September 2006 more than 330 people in Shanghai were reported to have been poisoned by eating pork contaminated by Clenbuterol that had been fed to the animals to keep their meat lean – as it increases the rate at which body fat is metabolised.
 
 
 
Source: washingtonpost.com

Tuesday, February 01, 2011Print This Page
Animal Husbandry Makes Significant Progress
CHINA - During the Eleventh Five-Year Plan period, animal husbandry has made significant achievements in ensuring effective supplies of meat, eggs and milk and improving quality and safety of feed and animal products.


In addition, safety and improvement of ecosystems were achieved as well as steady and sustained momentum of development in general, according to the Ministry of Agriculture.

Regarding sustained growth of animal production, it is expected that the production of meat, eggs and milk would be 78.50 million tons, 27.60 million tons, and 37.40 million tons, respectively, or an increase of 13.1 per cent, 13.2 per cent and 31 per cent, respectively, compared with 2005. Effective supplies for markets have been ensured. Currently, the country's per-capita availability of meat is 58.8kg, which is higher than the world average, and that of eggs is 20.7kg, which is higher than developed countries.

On the development of large-scale and standardised animal farming, it is expected that in 2010, large-scale pig farms with over 50 head sold and dairy cow farms with population of more than 20 animals would be 66 per cent and 47 per cent of the total, respectively, or an increase of 29 and 20 percentage points, respectively, compared with 2005. The share of mechanised milking accounts for 87 per cent or 47 percentage points higher than 2005. More feed manufacturing enterprises have been concentrated. Grassland animal husbandry has improved its production practices. For example, now there are over 40 million animals under shelter feeding instead of natural grazing.

On improved animal breeding systems, it is said that to implement the state animal reproduction and breeding programmes, the central and local governments have invested more than five billion yuan in total in rebuilding or expanding seed stock and poultry farms, resources preservation farms and quality testing centres for seed stock and poultry. Up to now, on the basis of these farms and centres, reproduction and breeding systems for quality breeds have come into being.

On the quality and safety of feed and raw milk, the statement says that in 2010, the acceptance rate of feed products from spot-check is up to 93 per cent or four percentage points higher than that of 2005. No clenbuterol has been found for five consecutive years, and the acceptance rate of animal products from regular inspection is over 99 per cent. The Ministry of Agriculture (MOA) has organized to implement the national safety supervision plan of raw milk and carried out blanket inspection of raw milk purchasing stations and key areas. Thanks to such efforts, the acceptance rate of raw milk from melamine inspections has been 100 per cent for tow consecutive years.

Remarkable achievements in preservation and improvement of grassland ecosystems, it is stated. The central government has spent a total of 16.482 billion yuan on preserving grassland ecosystems or an increase of 51.4 per cent compared with the Tenth Five-Year Plan period. To introduce systems for protecting basic grassland, balanced development of grassland and livestock as well as for grazing ban, rest and rotation grazing, we have vigorously implemented major projects for improving grassland ecosystems and herdsmen life such as projects of grass for grazing, control of sand storm sources and grassland management in Beijing and Tianjin areas, and resettlement of nomadic herdsmen.

During the Eleventh Five-Year Plan period, animal husbandry has made significant achievements in five aspects as follows: first, establishment of policy framework for supporting animal production; second, setting up of regulation mechanisms for stabilized industrial development; third, qualitative leap made in animal production practices; fourth, further improved control systems for quality and safety of animal products; and fifth, important breakthrough in protection and development of grassland.

Wednesday, March 23, 2011
Pig Farmers Using Garbage as Feed
CHINA - They live next to a mountain of free pig food and never have to worry about the rocketing CPI, which may be making other pig farmers feel the pinch. They just get free or almost free food for their herd of thousands.


They live by garbage landfills, which are the source of food for their pigs.

Dozens of farming families, living around the garbage landfills in Shuige village in Nanjing's Jiangning district, East China's Jiangsu province, have been making their living by raising pigs with garbage collected from the landfills, according to a report by Xinhua News Agency on Wednesday.

The farmers collect leftovers from the landfills and mix them with some pig feed. About 90 families in the village raise an estimated 8,000 to 10,000 pigs each year.

"We can collect hundreds of kilograms (of the leftovers) every day. Only two families in our village feed their pigs with restaurant leftovers, and the others just collect pig food from the garbage landfills," said a woman whose family raises dozens of the animal each year.

Wang Caifu, whose family is currently raising 22 pigs, said he earned 30,000 yuan ($4,600) last year by selling pigs, and the number of animals his family raised was the lowest in the village.

"Collecting garbage to feed pigs costs nothing. There is no better job than raising pigs here," said Mr Wang.

A man who came to the village to work as a pig farmer from Lianyungang, also in Jiangsu, said he can earn about 500 yuan by selling each pig fed with garbage. But according to industry insiders, one pig fed entirely with feed can bring only about 100 yuan in profit in 2010.

"Garbage brings a lot of germs and may also contain heavy metal and pesticide remains," said Liu Tiezheng, a researcher with Jiangsu Academy of Agricultural Sciences, adding that the meat safety of those pigs can hardly be guaranteed.

Wang Dajin, an official with Nanjing city management bureau, said they considered banning local pig farmers from collecting garbage at the landfills to feed pigs - which is technically illegal - but abandoned that plan after farmers blocked roads several times in protest.

Chen Lixia, from Jiangning's forestry bureau, said they have asked the pig farmers around the garbage landfills to promise not to feed the animals with garbage, but whether they kept that promise was hard to say.

Wednesday, April 06, 2011
Who Can Guarantee China's Pork is Safe?
CHINA - Detection of the toxic additive clenbuterol in pig feed has once again undermined Chinese consumers' confidence in the country's food producers.


The Chinese government is serious about the scandal. The Ministry of Agriculture (MOA) announced that it will cooperate with eight ministries and commissions to launch a one-year crackdown on illegal additives in pig feed which have proven to be toxic to humans.

In big cities, like Chengdu and Nanjing, contaminated products from the food company suspected to be involved in the scandal have been soon moved off the shelves in supermarkets.

Some provinces have ordered that slaughterhouses should check their products everyday to avoid unsafe meat to be sold to the public.

Wan Long, Chief Executive Officer with the Henan-based Shuanghui Group, China's largest meat producer involved in the clenbuterol event, apologized last week.

Wan admitted the company's mistake and disclosed at a meeting that the scandal had so far cost the company more than 12.1 billion yuan (about US$1.85 billion).

The government hopes that all these efforts would produce some results in saving consumers' confidence.

Pork is the most popular meat in China. Each year more than 600 million pigs are harvested, according to Wang Zongli, vice director of the husbandry office in the Ministry of Agriculture.

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

Clenbuterol, a poisonous chemical that can reduce a pig's body fat to produce lean meat, was found in meat products from Jiyuan Shuanghui Food Co., Ltd last month.

Experts said that the chemical is very harmful to people's health, as it might cause cancer and other diseases.

Li Peitang from Dayi County of southwest China's Sichuan Province has been raising pigs for more than 10 years, and now owns a pig farm with 3,000 hogs, making 1 to 2 million yuan a year.


Clenbuterol is very cheap and using it can reduce a pig's fat by 10 per cent, Li says.

"Lean pork fetches 1.6 yuan higher per kilogram than fattier cuts," he said.

"The scandal will hit the meat industry hard," said Qiao Yufeng, vice chairman of the CAAA.

In 2008, melamine-tainted milk powder killed at least six infants and sickened 300,000 across the country, which deeply eroded consumers' faith in the integrity of China's dairy industry.

Experts and many ordinary Chinese have pinned their hope on stepped government monitoring and revised regulations to ensure safe production of food in the country.

A netizen nicknamed sdcharles has blogged, "Where have all the people in charge of supervision gone? Only after the problem has come to light do they start doing something. Why shouldn't they all be fired?"

While Zheng Fengtian, a professor with the the School of Agricultural Economics and Rural Development at Renmin University of China said, "It's ridiculous that Shuanghui didn't check for loopholes in supervision. Rather, it talked about feeding pigs. Is it shifting public attention?"

Professor Zheng believes that the widespread use of clenbuterol is just one of many problems with the country's meat industry. "Antibiotics are fed to pigs to stop them from getting sick, while growth hormones are added to quicken their growth."

According to a central government circular issued last October, various governmental departments were given specific responsibilities to strengthen monitoring and regulations to stop clenbuterol and other toxic substances being used in meat production.

However, Qiao Yufeng notes that the departments might shift their responsibilities so they can escape blame should something bad arise.

Professor Zheng suggests tightening supervision at the last stage in the supply chain before the products reach the market.

"Disqualified products have no market. This will force producers to behave," he said.

While Li Peitang, the farmer, said that most of the problems concerning meat quality existed at the feeding stage.

"We should ensure the safety of feed so as to tackle the problems from the beginning."

Mr Qiao said that the general public and mass media could play an important role in supervision. "They have always been the whistle-blowers. It is a strong force for social supervision."

Meanwhile, Shao Yunkai, a media officer with the Consumers' Association in Heilongjiang Province, cautioned consumers to be sensible.

"With the improvement of people's living standard, consumers paid more attention to health," he said. Lean pork with less fat was considered to more healthy.'However, he said, "fat meat has its nutrition as well, and blindness of consumers in their choices might give opportunity to the immoral producers."

Monday, April 11, 2011
China Vows to Tighten up on Food Safety
CHINA - The Agriculture Ministry has vowed to enhance supervision on animal products following the recent pork contamination scandal.


China vows to intensify supervision on quality and safety of animal products in the wake of pork contamination scandal, said Ministry of Agriculture (MOA) yesterday (10 April).

Vice Agricultural Minister Gao Hongbin said that it is imperative to crack down on illegal food additives such as clenbuterol and enhance quality supervision during the process of slaughter, sale, transport and stock in major pig-breeding areas, according to a statement on MOA web site.

Minister Gao called on local pig-producers to promote mass breeding in the industry's standardised drive as part of efforts to transform the development mode of animal breeding.

He also noted that local authorities should take precautions against imported animal diseases.

Clenbuterol is fed to pigs to stop them from accumulating fat. It is banned as pig feed in China because it is poisonous to humans.

Shuanghui Group's subsidiary in Jiyuan City, Henan Province, was exposed to public that it had used pork tainted with the fat-burning drug, clenbuterol, in its products on 15 March.

Monday, April 18, 2011
Chief Vet Confirms Need for Modernisation
CHINA - The country's Chief Veterinary Officer has emphasised the tasks on development of the animal husbandry and veterinary services.


On 9 April, the first training course for the heads of animal husbandry bureaux of the rotational training programme for the heads of bureaus from major counties in terms of crop production, animal husbandry and fisheries was opened at the branch of the Central Agricultural Officials Education and Training Center at China Agricultural University. Yu Kangzhen, Chief Veterinary Officer of China, attended the opening ceremony and delivered a keynote presentation.

Mr Yu said that accelerating development of modern agriculture and transformation of the pattern of agricultural development was a major task in terms of the work on agriculture and rural economy during the Twelfth Five-Year Plan period. The key to transformation of the pattern of agricultural development was great efforts in development of specialised, standardised, large-scale and intensive agricultural production and operation.

Therefore, he said, it was necessary to give high priority to expansion of standardised large-scale animal farming in the process to transform the development pattern of animal husbandry; work hard at formulation of standards, demonstration, mechanism innovation and publicity; make breakthrough in difficult issues, such as manure disposal, farming records management and biosafety disposal of animals dying of diseases; and effectively strengthen the capacity for market supply of animal products, reduce the incidence of major animal diseases and improve the quality and safety of animal products.

Mr Yu stressed that it was important to intensify the efforts in animal health and veterinary administration during the Twelfth Five-Year Plan period.

He put forward the following priorities:

first, carry out effective prevention and control of major animal diseases to ensure no reemergence of major animal diseases, effective containment of further spread of zoonoses, timely prevention and control of exotic diseases and decisive response to animal disease emergencies


second, strengthen the supervision on safety of animals and animal products, especially intensify the disease inspection on farm and at the slaughterhouse to ensure no spread of animal diseases and enhance veterinary drug safety control and residue monitoring to prevent substandard animal products from being marketed, and


third, facilitate innovation in veterinary systems and mechanisms by improving the systems for veterinary administration, animal health supervision, prevention and control of animal diseases and some other aspects, accelerating development of the system for official veterinarians and licensed veterinarians, implementing the second-phase plan for the animal disease prevention system, and improving animal disease prevention institutions at the township and regional levels this year.

Thursday, May 05, 2011Print This Page
Pork Price Fixing Alleged in Hong Kong
HONG KONG - Pork buyers allege that pork importers are fixing prices and manipulating the market manipulation.


The pork buyers' union has called on the government to open a live hog market to prevent monopolies from controlling pork prices, according to an official source.

The union, consisting of buyers and meat shops, yesterday (4 May) accused suppliers of jointly manipulating fresh hog supplies in order to reap huge profits.

Since 2007, live pigs have been imported daily from the mainland by three authorized suppliers: Ng Fung Hong Limited, Guangnan Hong Limited and Hong Kong Agriculture Special Zone Limited.

From January 2010 to March 2011, the average wholesale price of live pigs surged 40 per cent from HK$1,044 to HK$1,412 for 100 catties, causing retail fresh pork prices to jump from HK$28 a catty to HK$38, the union announced. [1 catty = 500g]

The union revealed that the price of wholesale live pigs on the mainland has been fixed at HK$1,200 for 100 catties, but the average wholesale price in Hong Kong stands at around HK$1,400, showing the suppliers are hustling big gains with large commissions and lower expenditures on staff.

Buyers alleged that the price hike was because of unstable supplies of live pigs transported to Hong Kong and the recent pork price fluctuations should be attributed to the 'three days normal and four days less' import pattern adopted by the suppliers and their artificial 'price-boosting' activities.

Kwan Kwok-wah, vice-chairman of the union, said: "We observed an abnormal practice of live pig supplies in the last six months. Sometimes, they import less and we have to bid higher because of limited supply. When the price gets higher, they import more the next day."

Because of unpredictable supplies of live pigs the following day, bidders are inclined to secure more stocks at higher prices, thus creating a sense of uncertainty in the market, explained Joe Chan Chi-wang, a member of the union.

Ng Kwok-ming, another member of the union, said: "Three suppliers act like they have some kind of prior agreement. Once one company imports less, the other two will follow suit."

Vice-Chairman Kwan asked: "Day-on-day differences are around 800 live pigs, how can that be possible?"

According to statistics of the Food and Environmental Hygiene Department, the average numbers of daily imported live pigs varied from 4,512 in January to 3,726 in February, the lowest figure in the past 12 months. The number rose to 3,942 in April.

The union said Hong Kong at least needs 4,600 to 4,800 pigs a day to meet the demand and to stabilize bidding price at HK$1,200 for 100 catties.

If the shortage continues, the union expects the retail pork price to increase to HK$42 a catty.

The union called upon the Ministry of Commerce to open the market to all Hong Kong buyers to obtain live pigs directly from mainland suppliers to ensure a stable supply.

Mr Kwan said some meat shop owners are experiencing difficulties at the moment. Raising retail prices will drive away customers; alternatively the shop owners are simply unable to afford the increased wholesale price, he said.

A meat shop owner, Mr Lee, said he has lost 20 per cent of his business in the last three months.

"More customers have opted to buy chilled or frozen meat because it is cheaper," he said, adding he is considering quitting his business.

On 4 May, a spokesman for the Food and Environmental Hygiene Department, however, responded that the import of live pigs maintained "sufficient", at about 4,000, during recent months.

The spokesman said the Ministry of Commerce had granted import licenses to two more suppliers in 2007, as a move to open the market, in addition to Ng Fung Hong, the original sole authorised supplier.

The spokesman added that food prices are formulated by the market and the price of live pigs is affected by soaring global food prices, increased demand for internal consumption on the mainland as well as the exchange rate of renminbi.

However, the government will assist the trade in enlarging the food supply channel in order to maintain reasonable food prices, the spokesman added.

US Pork Exports to China on the Rise
US exports of pork and pork variety meats to China have grown rapidly since summer 2010 and are expected to continue rising through 2011, according to Michael Woolsey and Jianping Zhang in the latest GAIN Report from the USDA Foreign Agricultural Service.

Following China's lifting of its H1N1 ban on US pork in May 2010, the United States quickly returned as China's top source for imported pork. Further sales gains this year will be supported by weak local pork production and strong consumer demand.

US Pork Exports to China Surge
Fuelled by a strong economy and consumer demand, along with a continued slide in Chinese pork production, US exports of pork and pork variety meats to China have grown rapidly since summer 2010 and are expected to continue rising through 2011. These sales jumped to more than 10,000 metric tons per month beginning in July 2010 and have continued at or above this level into the first quarter of 2011.

Overall, US exports to China reached 192,500 metric tons (valued at US$169 million) in the eight-month period ending February 2011. Exports to Hong Kong (most of which are re-exported to China) added another 63,600 tons ($92 million) to this total.

Traders expect sales to continue at or above this pace at least through the summer and possibly into next year due to a continued expected shortage in local supplies.

US Returns as China's Top Pork Supplier
Following China's lifting of its H1N1 ban on US pork in May 2010, the United States quickly returned as China's top source for imported pork. So far in 2011, the US has accounted for 59 per cent of China's pork and pork product imports. Prior to China's lifting of its US pork ban, the EU provided nearly 80 per cent of Chinas imports with Canada accounting for most of the remainder.

The US is expected to continue as China's top supplier as Chinese importers report pricing and availability for US pork is generally favourable over alternative sources.



China's pork imports rise with higher market prices
Source: China Customs and Ministry of Agriculture. Imports are from all sources and include variety meats
China Pork Production Slowly Recovering from Low Prices and Disease
Weak prices in the first half of 2010, followed by serious outbreaks of foot and mouth disease (FMD) and diarrhoea, resulted in sharp herd reductions among some backyard operators with reports of many quitting pig farming. FAS/Beijing has been told the 2010 FMD strain was not detected previously and is only recently being brought under control. The new virus strain was reportedly Burma 98. It is air-spread within 25km. Some farmers reportedly used vaccines for other types of FMD to control Burma 98 with unsatisfactory results, resulting in a spread of the disease to numerous provinces in 2010. Culling was extensive in some areas. For example, contacts in Xinjiang report that 100,000 pigs were culled in Kashgar alone. Contacts report that a new vaccine for Burma 98 virus strain was introduced early this year by the China FMD Reference Lab in Lanzhou and the early results look promising.

Meanwhile, the 2010 diarrhoea epidemic was particularly serious in southern China in the winter, which affected piglet survival. The impacts of this disease are reportedly diminishing as the weather continues to warm.

With the resultant lower hog inventory and continued strong consumer pork demand, live hog prices have surged from under 10 yuan (CNY; US$1.53) per kilogram in August 2010 to CNY14.7 ($2.26) per kilogram in March 2011.

The Ministry of Agriculture statistics report China's hog inventory slid to 445 million head in February 2011, down 2.7 per cent from the same period last year, while China’s sow inventory has fallen to 47.4 million head, down 3.3 per cent from the same month in 2010. Anecdotal evidence suggests these numbers are likely significantly lower. Hog producers in Henan and Shandong provinces are reporting the number of fattened pigs ready for slaughter is 20 per cent below the same period in 2010. These producers believe this number will gradually improve over the next six months.

The expectation that prices will continue at a high level has encouraged herd expansion in 2011. With strong demand for piglets and tight supplies, piglet prices have reached three-year highs, up 50 per cent so far in 2011 to CNY28 ($4.31) per kilogram in March. However, analysts and traders believe China's expansion could take up to two years before inventories reach levels achieved in early 2010. Expansion among backyard operators will be slow as rising wages for migrant workers in China's medium- and large-sized cities continue to dampen interest in small-scale pig farming. A shortage of factory workers has reportedly topped two million in the Pearl River Delta alone, driving wages higher nationwide. Small-scale operators are also being discouraged by fears of animal disease and high costs of feed. Corn prices in China are over CNY2,100 ($323) per ton, up 12 per cent from the same month last year.

Traders Report Brisk Sales Despite Higher Pork Prices
Retail pork prices are highest they have been since summer 2008, when pork prices nearly doubled following a serious outbreak of blue ear disease (PRRS) in 2007. The strong market is being fuelled by continued double-digit gains in China's economy. Despite attempts by the Chinese leadership to cool the economy, GDP growth in the first quarter of 2011 reached 9.7 per cent and near double-digit growth is likely for the remainder of 2011.

Bolstered by abundant supply and competitive prices, US variety meats have enjoyed particularly strong demand in China and this will continue through 2011. Traders report the majority of imports from the US are feet, head meat (ears, lips, cheek) and offals. Nearly all these products are used in sausage manufacturing and other processed meats.

Clenbuterol Findings Have Not Impacted Pork Sales so Far
In late March, CCTV broadcast an investigative report of hogs being fed with the banned steroid clenbuterol and purchased by Shuanghui, China's largest processed pork producer. The report sparked a recall of Shuanghui products, along with widespread follow-up media coverage of the clenbuterol problem and a reported crackdown on clenbuterol dealers nationwide. There have been a number of cases in the past decade of illness and fatalities caused by consuming pork with clenbuterol residues. However, there were no reports of illness from consuming Shuanghui pork associated with the current findings and retailers report little or no impact on pork sales following the media reports.

There is a long history of reported clenbuterol use among China's pig producers and eliminating the practice remains a difficult challenge for Ministry of Agriculture regulators who are responsible for feed safety. Reportedly, the steroid is especially prevalent among smaller-scale operators to create a leaner carcass to meet consumer preference for lean pork cuts. The premium for lean carcasses is typically higher when market prices are strong, offsetting the cost of clenbuterol and increasing farmer incentive to skirt the rules and add the substance to feed rations.

China Opens to Pork from Brazil
As China's demand for pork imports continues to rise, China recently expanded its sources of supply by opening to pork from Brazil. This market opening will begin with three pork facilities, with additional facilities added over time. China and Brazil are now finalising certification requirements and shipments are expected to commence in the third quarter of 2011.

Brazil is expected to become a significant competitor in the Chinese pork market as China seeks to diversify its overseas sources beyond the currently approved suppliers (Canada, the EU and the United States).

May 2011

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."

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.


--------------------------------------------------------------------------------
*
"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
--------------------------------------------------------------------------------
 

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.

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.

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.

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.

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.

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.

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.

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."

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."

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.

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.

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.

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.

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.

Wednesday, October 19, 2011
China's Farm Produce Prices Down
CHINA - Farm produce prices in China fell in the week ending 16 October compared to the previous week, the Ministry of Commerce (MOC) said in a report released yesterday.


The price of pork fell 1.2 per cent and beef was down 0.4 per cent.

The price of eggs continued to drop for a third week as supplies increased. The egg price was down 0.4 per cent from the previous week, and down 0.9 per cent in the past three weeks.

Eight kinds of sea products also saw an average price drop of 0.5 per cent.

Prices of rice and edible oil rose slightly, both up 0.2 per cent.

The general price decline of farm products is further decreasing the pressure on inflation, which began easing in July.

The country's consumer price index (CPI), a main gauge of inflation, climbed 6.1 per cent year-on-year in September from 6.2 per cent in August and 6.5 per cent in July, which was a 37-month high.

Despite the eases, inflation remains stubbornly high - far exceeding the government's full-year target of 4 per cent for 2011.

Sheng Laiyun, spokesman of the National Bureau of Statistics (NBS), said that the likelihood of CPI growth further dropping in the fourth quarter was very high.

The government has made controlling consumer prices a top priority this year by tightening monetary policies which included raising the benchmark interest rates three times and hiking banks' reserve requirement ratio six times since the start of the year.

NBS data showed that the economy expanded 9.1 per cent year-on-year in the third quarter, the slowest pace in two years.

The slowing economic growth and tight monetary polices all pointed to an inflation decrease, Mr Laiyun said at a press conference Tuesday in Beijing.

He said that a bumper harvest this year and declining international commodity prices would also ease price pressure in the coming months.

Friday, November 04, 2011
Pork Prices Driving Inflation in China
CHINA - The price of pork has risen so much in China that now it is the only driver of inflation in the country according to analysis by the Danish pig meat processor, Danish Crown.


The processor said that the Chinese middle class of 300-400 million people is growing, and with money in hand, they want more pork, not just pigs feet, heads and tails, as has typically been the export products to the country in the past.

The Chinese consumers' increasing demand for pork has increased prices on average by 30-40 per cent, and since the summer it has helped to push up inflation.

"In contrast to Denmark, when you have a very high proportion of household income spent on food, including pork, a price increase affects families' ability to buy other consumer goods. In fact, price increases in pork are so powerful that it has been seen as a very important factor behind the rising Chinese inflation. In this the way, pork has been a driver of inflation in China," said Soren Tinggaard, deputy director of Danish Crown.

In the past, Danish Crown's trade with China was in pig heads, a waste product, which mainly were sent for rendering. Today, heads are sold to China for a price that is twice as much as what they would be sold for in Europe. Since January, the price in China has increased by more than 100 per cent.

"The Chinese are very fond of pork. And when a country with so many people is looking for a specific product, you get a unique combination that has not been seen since we sold bacon to England in 1930," said Soren Tinggaard.

He estimates that China next year will be the second largest market for Danish Crown behind England.

Wednesday, November 16, 2011
'Lean Meat Powder' Found in China's Imported Pork
CHINA - China's top quality watchdog announced Tuesday that it had found banned additive clenbuterol, commonly known as "lean meat powder"in China, in some imported pork products this year.


The harmful substance was found in several batches of frozen pork products from the United States, Canada and Denmark in July this year, the General Administration of Quality Supervision, Inspection and Quarantine(AQSIQ) said in a document put on its official website.

r>
Clenbuterol helps to build muscle and is occasionally used as an illegal performance-enhancing drug by track and field athletes. China has banned it as a livestock feed additive as it can cause nausea, dizziness, headaches and heart palpitations in humans.

The unqualified products included frozen pig heads, feet and hearts. Among them, a batch of frozen ham leftovers from the United States was found both mildewy and containing clenbuterol, said the AQSIQ.

All of the tainted products have been returned or destroyed and have never been sold on the domestic market, it said.

In a separate report, the AQSIQ also reported that in August this year, a batch of frozen pig heads from Denmark were found containing salmonella, and Coca Cola China's imports of orange pulp and juice from Turkey was destroyed for poor packaging and illegal importing.

Thursday, December 01, 2011
China Hog Markets
CHINA - Ron Lane, Senior Consultant for Genesus China, writes, "China: it is the pork powerhouse of the world with over 51 per cent of the world’s population of pigs being raised within China."
 

Looking at the size of the breakdown of the inventory for October 2011-breeding stock was around 48.80 million and total on farm inventory was around 475.16 million (as compared to September 2011-breeding stock was around 48.1 million and total on farm inventory was around 465.57 million and to August at 47.86 million and total on farm inventory was about 461.42 million). This also shows growth since May 2011—breeding stock was around 47.1 million and total on farm inventory was about 453 million head). The 475.16 million head for October is up 3.65 per cent from last year while the October sow inventory is up 1.10 per cent from last year (year over year). During the past year, since September 2010, sow inventory had increased in September 2010, but decreased through October and November, a marginal increase in December and then slightly lower in January through to March 2011. A steady increase in sow inventory has occurred since March 2011.

Since mid-September, the average price of slaughter pigs has declined about 15 per cent to the current price of 16.39 RMB/kg liveweight (approx. $ 2.57 US/kg liveweight). If you look at year on year prices for November, 2011 versus November 2010, one can see that pig production in China is quite profit supportive with reasonable production.

Price Nov. 2011 Nov. 2010 % increase year-on-year
Pig price 16.84 RMB/kg ($2.64 US/kg) 13.18 RMB/kg ($2.07 US/kg) 27.8%
Pork price 28.08 RMB/kg ($4.40 US/kg) 20.7 RMB/kg ($3.24 US/kg) 35.7%
Piglet price 34.99 RMB/kg ($5.48 US/kg) 18.19 RMB/kg ($2.85 US/kg) 92.4%
Sow price 1,832 RMB/head 1431 RMB/head 28.0%

Profit margins continue to show good returns. Estimated profit margin for June 2011, was around 770 RMB/market pig -$119.10 US and was the peak price. Feed costs (mainly corn and soybean meal) continue to rise or be stable in some areas and the market price has shrunk since then. Profit margin for August was estimated to be 721 RMB/market pig -$112.83 US. Profit margin for October was estimated to be 659 RMB/market pig -$103.62 US. Profit margin for November is estimated to be 447 RMB/market pig -$ 70.06 US.

Price /profit predictions for 2012 include: pig price of 16.6 RMB/kg liveweight ($ 2.60 US/kg liveweight); average price of corn at 2,500 RMB/tonne ($ 391.85 US/tonne); pig and corn ratio of 6.93: 1 and average profit of 350 RMB/market pig ($ 54.86 US/ market pig).

Short term scenario:
Industry estimates that pig prices will not fall to much further for the next 3 months (through Spring Festival (23 January 2012) and many predict that the price will stabilize to around 18 RMB/kg liveweight ($2.82 US/kg liveweight). There are several recent trends to support this optimism.

Tight supply as small backyard farmers exit from the market and farming in general and relocate to the large urban centres to work. (China Ministry of Agriculture just released the next 5 year plan for agriculture development-12th Five-year Plan (2011-2015). It is estimated that 40 million rural labourers will leave farm jobs during this five years—many of them were former backyard pig farmers).


Relative higher feed cost will keep the market price at a high level.


Large farms are not able to keep up with the demand.


During the past year, a piglet diarrhea has caused high mortality (especially 10 day old pigs). Initially the disease was noted in the southern part of China. During December, 2010 to March 2011, the problem was prevalent. Many sows were rebred in the Spring of 2011. This has caused part of the decrease in the current price as the market pigs from the rebred sows are now coming to market (predicted large short-term slaughter). However, this increased supply may taper off over the next few months.


Because of the fear of the piglet diarrhea occurring again this December period, many farmers are selling their stock to avoid repeat losses.


Again, but more recently (July and August) in the North Central parts of China a similar problem has occurred as a wet July and August, lead to more farms having a high piglet death loss. This could cause lower pig supplies around the increased demand period just prior to Spring Festival (this could cause a spike in market pig prices).


Generally, the demand for pork increases during the winter months especially during the holidays surrounding Spring Festival.
What to watch for over the next few months!!!
In February, the pig and corn ratio was 7.12:1; was 7.07:1 for March and was 7.63:1 for May. In September, the ratio was 8.24:1. Now, in October, the ratio is closer to 7.45:1 per market pig. A pig to corn ratio of 6:1 is considered to be break even. With continued Government incentives and "now reasonable profit margins", pig expansion in China will continue.


The Consumer Price Index (CPI) continues to be quite interesting for the National Government. Previously, when the pork prices were gaining, this rapid increase in pork, gained the attention of the National Government as it greatly affects the CPI. The CPI is made up of about 30 per cent food found in the consumers’ basket. Pork is estimated to be about 1/3 of the food portion of the basket or in other words, about 10 per cent of CPI as a whole. Just to sense the impact that pork has on the CPI, reports show that food prices increased by 13.4 per cent in September versus one year ago. This has an impact of 4.05 per cent points. At the same time, pork rose by 43.5 per cent and this affects the overall CPI at a level of 1.24 per cent points. Now with around a 15 per cent drop in pork prices since mid- September, the CPI is also decreasing. Currently, inflation is around 5.5 per cent for October, 2011. This is a drop from the high of 6.5 per cent in July, 6.2 per cent in August and 6.1 per cent in September. CPI for November is estimated to drop further to 5.0 per cent.


Although China’s domestic supply of pork is showing growth, imports of pork are expected to rise by 8 per cent in 2012. This is mainly due to rising demand. An USDA report suggests that total meat production for China will be around 81.4 million tonnes (a 3 per cent rise year on year) for 2012. Pork output will reach 51.3 million tonnes, poultry will be around 18.7 million tonnes, beef will be around 5.70 million tonnes (note: beef consumption continues to decline) and sheep meat will be around 4.88 million tonnes for next year. Government incentives and/or subsidies to farmers contribute the most for this increase. However, demand will create pork imports to increase by about 8 per cent to 480,000 tonnes next year (not including pork by-products but this is only pork meat).


For the first 9 months of this year, China imported 870,000 tons of pork and pork by-products—mainly offals. This represents an increase of 44.6 per cent from a year ago. Total imports for 2011 will slightly exceed 1 million tons which surpasses the previous high of 910,000 tons imported in 2008.


Tight supplies this past summer created a “whole” in which major exporters such as the USA, Canada and Denmark were able to provide. Denmark last year provided about 40 per cent of the total imports. However, this year and for the first 9 months, about 60 per cent of the imports have been supplied by the USA.


In early April, China authorized three Brazilian pork producers for the first time to export pork into China and Hong Kong. The Brazilian export association (Abipecs) considers the Chinese market could consume 200,000 tonnes/year. Well, it finally happened! On November 24th, 2011, the Marfrig Group sent the first shipment to China of hams, shoulders, bellies and necks to Shanghai. In January 2012, Aurora Cooperative projects that it will initiate a sale of 10,000 tonnes. Brazil usually exports about 50,000 tonnes/month and thus, the 10,000 tonnes along with a continuous demand by China, could be as much as 20 per cent of the total export potential from Brazil. (pork producers will be excited!!). This milestone export by Brazil (first time to export to China and Hong Kong) also creates an expectation that China would be Brazil’s second largest importer of pork in the next year.


Clenbuterol created a scandal on 15 March when China’s largest meat producer, Shuanghui (Shineway Meats) sold pork that contained clenbuterol. Products were quickly removed from supermarket shelves as consumers saw another food contamination scandal similar to the 2008 melamine scare in the milk from most of the major milk processors in China. From this scare, Shuanghui has claimed total losses approaching 20 billion RMB (US$3.05 billion). As an update, the Provincial Higher Peoples’ Court in Henan (where the clenbuterol issue surfaced), recently prosecuted 114 people of which 113 received convictions-mainly prison terms, but one person received the death penalty (with a 2 year reprieve) and one person received a lifetime sentence. Several government officials also received prison terms.


According to the Ministry of Agriculture, scaled pig production (greater than 500+ finishers per year) now accounts for 34 per cent of the total output of pig production in China.


Feed Industry Development Plan for the 12th Five Year Plan (2011-2015) out-lines a large increase in feed output, emphasizes quality and safety standards, encourages efficient use of feed ingredients, attempts to standardize industry practices and wants to "accelerate" consolidation. At the end of 2015, the Ministry of Agriculture expects that 168 million tonnes of compound feed and 26 million tonnes of concentrated feed will be produced by the feed industry.
With notes from: the pigsite.com, asian-agribiz.com, MOA, NBS, soozhu.com and various China Ministries.

Genesus Global Market Report
Prices for week of 21 November 2011
Country Domestic price
(own currency) US$
(per pound liveweight)
USA (Iowa-Minnesota) 81.71¢
US$/lb carcass 60.46¢
Canada (Ontario) 1.57
C$/kg carcass 55.55¢
Mexico (DF) 23.03
MXP/kg liveweight 73.63¢
Brazil (south region) 2.71
BRR/kg liveweight 66.51¢
Russia 88
RUB/kg liveweight $1.27
China 16.42
RMB/kg liveweight $1.16
Spain 1.18
€/kg liveweight 71.41¢

Monday, November 28, 2011
TOPIGS Imports Top Genetics into China
CHINA - TOPIGS has successfully imported 1003 top breeding pigs to China. These animals originate from TOPIGS nucleus farms in Canada. The great grandparent pigs are the top of the TOPIGS breeding pyramid and have the highest SPF health status.
 

The imported pigs will be used to build up extra TOPIGS breeding capacity in China for the production of breeding pigs and they and their off spring will be distributed to clients around the country. In this way it is possible to comply to the growing demand of TOPIGS genetics in China were the robust and high productive genetics of TOPIGS are demanded more and more.

The imported breeding stock will be housed at the facilities of TOPIGS Huanshan. This is a joint venture company of TOPIGS and Huanshan Group. The farm of TOPIGS Huanshan is a modern farm with well equipped facilities. "This is an important step for pig breeding in China," says Jeffen Chen, manager of TOPIGS China. "With the imported breeding stock it is possible to provide fast growing professional pig industry with top shelf genetics, making it possible to produce at high level."

Huanshan is a corporation with permanent assets close to 10 million RMB, having 1800 staffs, a modern agricultural enterprise which has integrated businesses including feed production, husbandry and pigs slaughtering.

With a production of 1,100,000 crossbred gilts and 7 million doses of semen per year Dutch based TOPIGS is one of the biggest genetics suppliers in the world. In several countries, TOPIGS is either the market leader or one of the major suppliers. TOPIGS stands for progress in pigs. This means research, innovation and genetic improvement are the cornerstones of our company. By continuously improving our products, we enable our clients to achieve maximum results.

Friday, December 09, 2011
Call for Tougher Measures on Food Safety
CHINA - Vice-Premier Li Keqiang has called for "more forceful measures" to deal with food safety problems and crack down on food safety crimes.


In a written instruction forwarded to a recent national meeting attended by officials in charge of food safety offices, Li pushed for practical efforts to ensure food safety in a bid to boost consumer confidence and promote social harmony.

In a separate written instruction, Vice-Premier Hui Liangyu urged authorities to "resolutely guard against major food safety incidents" and strengthen law enforcement and regular supervision.

Food safety has become one of the most troubling issues since various scandals, such as tainted infant formula and cooking oil collected from sewers, have been exposed by the media.

To address food safety issues, authorities have requested the death sentence be applied in the most serious food crimes.

In the latest scandal, Henan province penalized 113 people, including 77 government employees, over chemically-tainted pork that was reported in March.

Thursday, December 15, 2011
IBM to Build Food-Safety System for Pork
CHINA - International Business Machines (IBM) Corp., the world’s largest computer-services company, won a contract to build a food-monitoring system in China as the nation toughens supervision of food safety after scandals.


The system for Shandong Commercial Group Co. will ensure the safety of pork products in the coastal province, Harriet Ip, a spokeswoman in Singapore for Armonk, New York-based IBM, said in an e-mail yesterday. Financial terms weren’t disclosed for the project, scheduled for completion in 2013, according to Bloomberg Businessweek.

The government in China, the world’s largest pork consumer, said this month it will revise laws to improve food safety after one person was sentenced to death and 77 others handed jail terms over meat harmed by an illegal additive. China has reported other food safety problems this year including toxic fish, tainted bean sprouts and Sichuan peppercorns dyed with a coloring agent.

"Food supply-chain management technology and services is a big market," IBM’s Ms Ip said in the e-mail. "Demand for food safety products in China is expected to increase 15 per cent per annum through 2013," when the market will reach 13 billion yuan ($2 billion), she said.

IBM said its project is part of a 195 million yuan cold- supply chain that Shandong province is building in line with China’s efforts to improve food safety. The contract forms a "very small portion" of the project, which will have full monitoring and tracing capabilities, from farms to warehouses and retailers, Ms Ip said.

Shandong Commercial has already tested IBM’s food- monitoring system at 6 slaughter houses, 6 warehouses and about 100 hypermarkets or supermarkets across the province, Ms Ip said.

Pork consumption in China may gain almost 10 per cent from last year to 57 million metric tons in 2015, Wang Yinji, deputy general manager at COFCO Ltd., the country’s largest grain trader, said last month.

State-owned Shandong Commercial’s main business interest is in retail, according to its website. The company also has operations in the pharmacy and real estate industries and employs more than 130,000 people, it said.

Tuesday, December 20, 2011
Mouldy Corn Hit Tianli's Business in Q4
CHINA - Tianli expects 2011 revenue and net income in the range of US$28.5 to $29.5 million and $8.2 to $8.8 million, respectively. Its fourth-quarter results were impacted by contamination of the feed supply although the company says contaminated feed was quickly mitigated by its monitoring procedures.


Tianli Agritech, Inc., a leading producer of breeder hogs and market hogs based in Wuhan City, China, has provided financial and operational updates.

The company say that, based on sales to 15 December, management expects full year results as follows: revenue, US$28.5 to $29.5 million; net income, $8.2 to $8.8 million and earnings per share (EPS), $0.81 to $0.87.

Revenues include the sales of breeder hogs, meat hogs and sales from the Company's on-going retail operations in cooperation with An-Puluo Foods whereby the Company sells refrigerated pork products to 45 supermarkets in greater Wuhan, including Wal-Mart and other major retailers.

Hanying Li, Chairwoman and CEO of Tianli, commented: "We have seen our sales trend nicely throughout the year. A combination of higher hog prices and an increase in the number of Tianli breeders and market hogs sold have produced impressive year over year growth for our Company.

"Retail sales and profits have added to our revenue and earnings streams as anticipated and we expect this segment of our business to grow meaningfully in 2012 as we introduce our Black Hog meat into our sales channels. We are excited at our growth prospects in 2012 and producing continued returns to shareholders," she said.

Tianli expects to report its fourth quarter and full year 2011 results in March 2012. The Company will provide additional details regarding its operations and financial outlook in coordination with the Company's earnings release and conference call.

Business update
In late November, the Company and a number of other farms in greater Wuhan received a shipment of tainted corn feed containing a mycotoxin mould. A number of hogs that consumed this feed were infected with the mould, which caused porcine diarrhoea. Approximately 10,000 of Tianli's hogs, consisting of a mix of sows, feeder pigs and piglets, with the majority being piglets, exhibited signs of the infection. A number of the infected hogs were disposed of while others were treated and are recovering. All of the infected hogs have been removed from the general population of hogs and currently, there are no other hogs exhibiting similar symptoms. The Company continues monitoring and tracking the health of its hogs on a daily basis.

This was Tianli's first purchase of corn sourced from the centre of China and upon discovering the mould, the Company took immediate action to isolate and contain the impact. Historically, Tianli has relied upon corn from Northeast China for its corn feed and it will strictly enforce this policy for the foreseeable future.

Ms Li said: "We have taken all the steps necessary to eliminate the threat posed by this shipment of tainted corn. Our managers and staff are always on guard against infected feedstocks and other contaminants and we regularly inspect all shipments and take all necessary precautions to avoid damage from infected supplies.

"While we employ the highest health standards across our entire operations, it is impossible to prevent all contaminations. Because we constantly monitor the health of our animals we were able to quickly contain the effects of this incident. The additional costs and lost revenues from the infected hogs will have a short-term impact on our operations and our financials. However, we will quickly replace the lost hogs and return to full production levels," concluded Ms Li.

Thursday, December 22, 2011
Taiwan Culls 1,000 Pigs in FMD Outbreak
TAIWAN - Taiwanese authorities said earlier today that they had slaughtered nearly 1,000 pigs following the island's worst outbreak of foot-and-mouth disease in more than 14 years.


The pigs were culled earlier this week at a farm in the southern city of Tainan after showing symptoms of the disease.

Altogether 983 out of the 2,667 pigs on the farm were culled and the rest were vaccinated, the Bureau of Animal and Plant Health Inspection and Quarantine said in a statement.

Chinese Meat Industry & Economy Continue to Grow
ANALYSIS - Is the Chinese bubble about to burst? For some time now out of the BRIC countries - Brazil, Russia, India and China - China's growth rate has been not only one of the most rapid, but it has also been dragging the rest of the world economies along behind it - shining as a beacon to the faltering economies in Europe and the US, writes Editor in Chief, Chris Harris.

As the Chinese economy has been maintaining this rapid growth, so there has been a shift in the make up of the population. The shift has seen a growth in wealth and a growth in a middle class. The population has been moving to an urban way of living and out of the countryside.

The dynamic change in population and culture has also seen a change in eating habits. As with all populations where wealth grows, meat and protein diets start to replace cereals and crops.

Meat consumption in China reached around 59kg per head in 2010.

The International Monetary Fund forecasts that China's economy that spiked at over 14 per cent growth about four years ago, has now settled to a growth rate of about nine per cent.

The forecast for next year is that it will continue to grow at nine per cent, but according to Forbes, this does not take into account a potential collapse in the European economies.

"China's economic growth has been very good for quite some years," says Forbes. "The consensus forecast now is that 2012 growth will be right in line with the country's long-term growth potential of about nine per cent per year. However, there are five key issues to consider:

Inflation fighting
Housing bubble
Export markets
Cronyism
Value of the Yuan."
On the back of this potential growth, the meat processing market is also developing and growing. It is being spurred on by new technology and the population is also changing the way it is eating meat.

More and more consumption is in the form of processed and pre-cooked products.

As the economy is growing by nine per cent, so the meat industry is virtually keeping pace with it.

An IBIS World report, published this month forecasts that the industry will develop at a rate of 8.3 per cent a year, reaching $82.38 billion in 2016.

Revenue from the meat processing industry in China this year is expected to have risen by 13 per cent year on year to $55.24 billion. On average, since 2006 the industry has seen a 22.5 per cent rise in value.

However, imports are also an important part of the Chinese industry and the IBIS World report shows that they are expected to reach $2.59 billion this year.

A lot will depend on how and whether the Chinese government can keep a cap on inflation. The latest figures show that inflation was running at 4.2 per cent in November, down from a July figure of 6.5 per cent.

If inflation is kept in check and the economy continues to expand, meat consumption is expected to increase and the meat processing industr develop - albeit at a slower place than over the past decade.


Chris Harris, Editor-in-Chief

Wednesday, December 28, 2011
China Bans Production and Sale of Ractopamine
CHINA - China's Ministry of Industry and Information Technology announced Friday, 23 December, that the country has banned the production and sale of ractopamine, a controversial feed additive used to promote lean meat growth in food animals.


The ban became effective on 5 December, according to a document posted on the ministry's website.

The order came after a major pork contamination scandal hit China this spring when the Shuanghui Group, China's largest meat-processing company, was found to be purchasing pigs that had been fed with adulterated pig feed, prompting a national crackdown on the use of what's called as "lean meat powder."

Yu Kangzhen, China's chief veterinary officer, said that "lean meat powder" includes around ten kinds of categories such as clenbuterol and ractopamine.

He said that US scholars first came to discover clenbuterol, a kind of poisonous feed additive, could boost output of animal's lean meat in the early 1980s. However, major markets, including the US and the EU, banned its use in late 1980s due to its dangerous side effects such as nausea, dizziness and headaches.

Later, US firms developed another kind of growth promoting chemical, ractopamine, which carries minor toxicity. Currently, ractopamine is still allowed to be used as a feed additive in only around 20 countries, such as the US, Canada, and Mexico.

The "lean meat powder" was first introduced to China in the early 1990s. It was not until 1998 that Chinese society started getting concerned over the chemical's toxic nature when the first human case of lung infection was reported in Guangdong province after consumption of pork contaminated with clenbuterol.

China later issued an order in 2002 to ban the use of "lean meat powders" including ractopamine, clenbuterol, and salbutamol in feed additives and drinking water for food animals.

Friday, December 30, 2011
Pork Price Manipulation; Six Jailed for Tainted Pork
CHINA - A Chongqing Municipality court Wednesday sentenced a gangster death for killing a person in an attempt to manipulate pork price in the city markets.


The Fifth Intermediate People's Court of Chongqing sentenced Zhou Zhijian, a member of a gang which had gained huge profits from coercive trading and pork market monopoly, to death for murder.

The court also sentenced ringleader Zhou Zuyun death with a two-year reprieve after convicting him of racketeering, monopolizing the pork market, and organizing a price-fixing cartel with other gangs.

Another 16 gang members were given prison terms ranging from 16 months to 19 years.

The verdict said Zhou Zuyun and his gang reaped profits of over 119 million yuan ($18.8 million) from coercive trading, racketeering and illegally hiking the rents of the farm markets that they had monopolized since 2004.

Mr Zuyun's price-fixing cartel manipulated prices, sales and purchases, pushing up pork prices in Chongqing.

The gang disrupted the economic and social order by the use of force and threats, the verdict said.

Six butchers jailed over chemical-tainted pork
Six butchers in east China's Jiangsu Province have received jail terms ranging from three-and-a-half to four years over a chemical-tainted pork scandal reported in March, court authorities said Wednesday.

The six were convicted of harming public safety by producing and selling pork tainted with clenbuterol, a carcinogenic chemical added to pig feed to produce leaner pork, the provincial higher people's court said in a press release.

It said their jail terms were handed down by a local court in Nanjing on 13 December and the ruling went into effect as of Tuesday, as none of them had appealed within the given two weeks.

The court ruling also included fines ranging from 40,000 to 50,000 yuan (US$6,340 - US$7,925) each.

The six butchers, who worked at a Nanjing slaughter house, admitted they had bought live pigs from central Henan Province, slaughtered and sold the pork earlier this year, even though they knew the pork had been tainted by clenbuterol, the document said.

Friday, January 06, 2012
China Hog Markets in January 2012
CHINA - Looking at the size of the breakdown of the inventory for November 2011-breeding stock was around 49.05 million and total on farm inventory was around 476.25 million (as compared to October 2011-breeding stock was around 48.80 million and total on farm inventory was around 475.16 million and to September at 48.1 million and total on farm inventory was about 465.57 million), writes Ron Lane, senior consultant for Genesus China.
 

This also shows growth since May 2011—breeding stock was around 47.1 million and total on farm inventory was about 453 million head). The 476.25 million head for November is up 2.82 per cent from last year while the November sow inventory is up 2.01 per cent from last year (year over year). A steady increase in sow inventory has occurred since March 2011.

For the week of 12 to 18 December, the national average market pig price was 16.39 RMB/kg ($ 2.59 US/kg) liveweight; the average piglet price was 27.42 RMB/kg ($ 4.34 US/kg) liveweight; the average corn price was 2.21 RMB/kg ($0.345 US/kg); the average soybean meal price was 3.21 RMB/kg ($0.508 US/kg); pig and corn ratio is 7.42:1 and the average pork price was 22.95 RMB/kg ($3.63US/kg). The average pork price is up 1.10 per cent from last week.

Profit margins continue to show good returns. Estimated profit margin for June 2011, was around 770 RMB/market pig -$119.10 US and was the peak price. Profit margin for August was estimated to be 721 RMB/market pig -$112.83 US. Profit margin for October was estimated to be 659 RMB/market pig -$103.62 US. Profit margin for November was estimated to be 447 RMB/market pig -$ 70.06 US. For December, the profit margin is estimated to be 520 RMB/market pig -$ 82.27 US.

Price Dec. 2011 Dec. 2010 % increase year-on-year
Pig price 17.03 RMB/kg ($2.69 US/kg) 13.32 RMB/kg ($2.11 US/kg) 27.9%
Pork price 26.76 RMB/kg ($4.23 US/kg) 21.2 RMB/kg ($3.35 US/kg) 26.2%
Piglet price 27.86 RMB/kg ($4.41 US/kg) 18.13 RMB/kg ($2.87 US/kg) 53.7%
Sow price 1,791 RMB/head ($283.34 US/head) 1430 RMB/head ($226.23 US/head 25.2%

Price /profit predictions for 2012 include: pig price of 16.6 RMB/kg liveweight ($ 2.60 US/kg liveweight); average price of corn at 2,500 RMB/tonne ($ 391.85 US/tonne); pig and corn ratio of 6.93: 1 and average profit of 350 RMB/market pig ($ 54.86 US/ market pig).

Short term scenario
Industry estimates that pig prices will not fall to much further for the next few months ( through Spring Festival (23 January 2012) and many predict that the price will stabilize to around 18 RMB/kg liveweight ($2.85 US/kg liveweight). There are several recent trends to support this optimism.

Tight supply as small backyard farmers exit from the market and farming in general and relocate to the large urban centres to work. (China Ministry of Agriculture just released the next 5 year plan for agriculture development-12th Five-year Plan (2011-2015). It is estimated that 40 million rural labourers will leave farm jobs during this five years—many of them were former backyard pig farmers).


Large farms are not able to keep up with the demand.


During the past year, a piglet diarrhea has caused high mortality (especially 10 day old pigs). Initially the disease was noted in the southern part of China. During December, 2010 to March 2011, the problem was prevalent. Many sows were rebred in the Spring of 2011. This has caused part of the decrease in the current price as the market pigs from the rebred sows are now coming to market (predicted large short-term slaughter). However, this increased supply may taper off over the next few months.


Because of the fear of the piglet diarrhea occurring again this December period, many farmers are selling their stock to avoid repeat losses.


Again, but more recently (July and August) in the North Central parts of China a similar problem has occurred as a wet July and August, lead to more farms having a high piglet death loss. This could cause lower pig supplies around the increased demand period just prior to Spring Festival (this could cause a spike in market pig prices).


The next month represents a "comparatively concentrated" holiday season starting with the Winter solstice (21 December), then Christmas (25 December), New Year (1 January) and the Chinese Lunar New Year ( 23 January). This puts pressure on supply.
What to watch for over the next few months!!!
In February, 2011, the pig and corn ratio was 7.12:1; was 7.07:1 for March and was 7.63:1 for May. In September, the ratio was 8.24:1 and in October, the ratio was lower to 7.45:1 per market pig. Now for November, 2011, a pig to corn ratio of 7.42:1 is shown. This is slightly lower than last month, but analyst believe that this ratio will be maintained at this level for the next while. A pig to corn ratio of 6:1 is considered to be break even. With continued Government incentives and "now reasonable profit margins", pig expansion in China will continue.


The Consumer Price Index (CPI) continues to be quite interesting for the National Government. Previously, when the pork prices were gaining, this rapid increase in pork, gained the attention of the National Government as it greatly affects the CPI. The CPI is made up of about 30 per cent food found in the consumers’ basket. Pork is estimated to be about 1/3 of the food portion of the basket or in other words, about 10 per cent of CPI as a whole. Just to sense the impact that pork has on the CPI, reports show that food prices increased by 13.4 per cent in September versus one year ago. This has an impact of 4.05 per cent points. At the same time, pork rose by 43.5 per cent and this affects the overall CPI at a level of 1.24 per cent points. Now with around a 15 per cent drop in pork prices since mid- September, the CPI is also decreasing. Currently, inflation is around 5.5 per cent for October, 2011. This is a drop from the high of 6.5 per cent in July, 6.2 per cent in August and 6.1 per cent in September. CPI for November was estimated to drop further to about 5.0 per cent. In reality, the measurement was 4.2 per cent. Food prices increased by 8.8 per cent in November compared with one year ago. Pork prices declined by 5.3 per cent from October 2011. "The pork I just bought cost 21 yuan ($3.30 US) a kilogram, a good deal less than the 30 yuan ($4.75 US) it cost about 4 months ago," said Yang Xia, a 62-year-old retired worker shopping in a Beijing supermarket.


Ministry of Agriculture said recently that total meat production for 2011 is expected to increase 0.3 per cent to 79.5 million tonnes (lower than last year's 3.6 per cent rise). Pork is almost two-thirds of China's total meat consumption. China produced 54.53 million tonnes of meat in the first nine months of the year, up 0.2 per cent (year over year). Pork production in the January-September period fell 0.6 per cent to 35.68 million tonnes.


Although China’s domestic supply of pork is showing growth, imports of pork are expected to rise by 8 per cent in 2012. This is mainly due to rising demand. An USDA report suggests that total meat production for China will be around 81.4 million tonnes (a 3 per cent rise year on year) for 2012. Pork output will reach 51.3 million tonnes, poultry will be around 18.7 million tonnes, beef will be around 5.70 million tonnes (note: beef consumption continues to decline) and sheep meat will be around 4.88 million tonnes for next year. Government incentives and/or subsidies to farmers contribute the most for this increase.


For the first 9 months of this year, China imported 870,000 tons of pork and pork by-products—mainly offals. This represents an increase of 44.6 per cent from a year ago. Total imports for 2011 will slightly exceed 1 million tonnes (could be between 1.1 and 1.4 tonnes) which surpasses the previous high of 910,000 tons imported in 2008. In September, import volume set a new record of 0.14 million tonnes. For 2012, China’s deficiency between pork supply and demand could be between 2 and 2.5 million tonnes (Rabobank report). Of this total, demand will cause pork meat imports to increase by about 8 per cent to 480,000 tonnes next year (not including pork by-products but this is only pork meat).


Sources fromChina’s Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) said that it had recently found Salmonella in some pig heads imported from Denmark. AQSIQ said it will destroy the contaminated pig heads. There have been a growing number of imports of unqualified pork variety meats during this time period.


In January 2012, Aurora Cooperative projects that it will initiate a sale of 10,000 tonnes of pork from Brazil. Brazil usually exports about 50,000 tonnes/month and thus, the 10,000 tonnes along with a continuous demand by China, could be as much as 20 per cent of the total export potential from Brazil. China would be Brazil’s second largest importer of pork in the next year.


China’s animal health industry is growing by an annual average of 25 per cent per year since 2005. In 2012, the industry will generate close to 40.2 billion RMB ($6.36 billion US). In the world, China is second to the USA for the production of animal health products. Growth will continue to rise as domestic livestock production increases and a national concern over the vaccination of such diseases as PRRS and Foot-and-Mouth, along with Swine and Avian influenza continues and mandatory vaccination is enforced.


The Delisi Group has introduced their latest creation in the cured meat production unit of their modern chilled pork and processed meat section in Shandong province. They have introduced a cured ham product called 'Paluosi'. "We expect the launch of our new product to be a good start for us to enter into the premium meat market," said Chairman, Zheng Heping. The cured ham is created using modern equipment from Italy. The ham is initially priced at 500 RMB/kg ($79.10 US/kg). This price is close to 20 per cent less than a similar imported product. Delisi Group will target high end hotels and foreign-invested supermarkets and is currently testing in markets in Beijing, Qingdao and Jinan.


According to the Ministry of Agriculture, scaled pig production (greater than 500+ finishers per year) now accounts for 34 per cent of the total output of pig production in China.
Genesus Global Market Report
Prices for week of 26 December 2011
Country Domestic price
(own currency) US$
(per pound liveweight)
USA (Iowa-Minnesota) 78.41¢
US$/lb carcass 58.02¢
Canada (Ontario) 1.51
C$/kg carcass 54.40¢
Mexico (DF) 26.28
MXP/kg liveweight 85.84¢
Brazil (south region) 2.78
BRR/kg liveweight 68.41¢
Russia 92
RUB/kg liveweight $1.31
China 17.10
RMB/kg liveweight $1.23
Spain 1.12
€/kg liveweight 66.60¢

Tuesday, January 10, 2012
OIE: Further FMD Cases in China
CHINA - A new outbreak of Foot and Mouth Disease (FMD) has been reported to the OIE by Dr Zhang Zhongqui, Director General , China Animal Disease Control Centre.


The new outbreak was reported to the OIE on the 09/01/2012.

The new outbreak occured at Badong, Enshi, Hubei and affected swine only.

Of the 71 pigs susceptible, there were 24 cases reported. The outbreak resulted in all 71 pigs being destroyed.

The source of the outbreak is still unknown.

Monday, January 16, 2012
Meat Safety Boosted for Spring Festival
CHINA - The government will redouble its efforts to weed out illegal meat processing in the coming months, especially during the Spring Festival, in the interest of food safety, officials said on Friday.


"The Spring Festival holiday (which begins on 23 January) usually sees increased meat consumption, but it is also a period of potential meat safety problems," Jiang Zengwei, vice-minister of commerce, said in a news conference held by six government departments including the Ministry of Commerce, the Ministry of Public Security and the Ministry of Agriculture.

The six departments began a 10-month campaign to crack down on illegal meat slaughtering and processing in October after the illegal pig feed additive clenbuterol was reportedly used by farmers in Henan province in March.

Mr Zengwei said that the authorities will increase their efforts to ensure meat safety during the Spring Festival because "meat is an essential part of people's diet, and meat safety is of great concern to the public."

Yu Kangzhen, chief veterinarian of the Ministry of Agriculture, said the slaughtering and processing are "the key to meat safety before it reaches consumers."

"The focus of the crackdown will lie on cleaning up illegal slaughterhouses and processors in rural and suburban areas, and areas with clusters of producers, where substandard meat, including water-injected meat and the meat of sick animals, is often found," Mr Zengwei said.

China has more than 18,000 slaughterhouses and processors, and the authorities will be stricter in examining and quarantining meat before it reaches the market, Jiang said.

The government will strictly regulate the approval of new slaughterhouses. Applications will be denied for companies that process fewer than 200,000 pigs or sheep, 50,000 cows or 20 million fowl annually, according to the 12th Five-Year Plan for the Food Industry, jointly published by the National Development and Reform Commission and the Ministry of Industry and Information Technology on Friday.

Meanwhile, large slaughterhouses and processing companies will be encouraged and 10 giant meat processing businesses with a market value higher than 10 billion yuan ($1.6 billion) will be built by 2015, under the plan.

Fu Shuangjian, vice-minister of the State Administration for Industry and Commerce, said the authority will improve the market access of meat suppliers while standardizing the qualification of processors.

The goal of weeding out illegal processing is to ensure that the meat supply in all cities comes from authorized processors by June 2012, and in all towns by the end of 2012, Mr Zengwei said.

Jiangsu province, where the pork additive scandal caused a sensation in March, has seized more than 6,400 kilograms of substandard pork since the campaign started in October, according to Sun Liancai, deputy head of the Jiangsu Administration for Industry and Commerce. In addition, the Guangxi Zhuang autonomous region seized more than 72,000 kg of problematic pork since July 2011, according to Xiong Jiajun, deputy head of the region's department of commerce.

The six government departments also encourage the public to report illegal meat producers to local or central supervising authorities through the telephone hotline:

Wednesday, January 18, 2012
Farm Produce Prices Rise for 8th Straight Week
CHINA - Farm produce prices rose for an eighth consecutive week last week, while the prices of producer goods remained unchanged, the Ministry of Commerce said Tuesday.


Meat prices rose last week, with prices of pork, mutton and beef up 0.8 per cent, 0.6 per cent and 0.5 per cent, respectively. Chicken prices went up 0.4 per cent.

Prices of edible oil and aquatic products also gained slightly last week. But egg prices fell 0.3 per cent from one week earlier, the statement said.

Food prices have a one-third weighting in the calculation of China's consumer price index (CPI), a major gauge of inflation. The CPI eased to 4.1 per cent in December, the slowest rise in 15 months.

The ministry said prices of major producer goods remained unchanged or even slid last week. Prices of cement and other building raw materials fell as many construction projects have been suspended for the Spring Festival, which will fall on 23 January.

Tuesday, January 24, 2012
FMD Breaks Out in Feeder Pigs
TAIWAN - The Taiwanese veterinary authorities have reported an outbreak of foot and mouth disease in feeder pigs in the Penghu Islands.


The World Organisation for Animal Health (OIE) received an immediate notification yesterday, 23 January. The outbreak was initially observed on 19 January and confirmed on 21 January. The outbreak took place at an animal quarantine house.

A total of 239 pigs were found susceptible to the outbreak, out of which 140 cases were reported. All 239 pigs were destroyed.

Some of the feeder pigs at the quarantine station, which were transported from Taiwan Island to Penghu Island, were found with vesicular lesions. The testing result of collected samples from National Laboratory showed positive reaction of RT-PCR tests confirming the serotype O of foot and mouth disease infection.

All the pigs were destroyed and cleaning and disinfection of the premises were completed. Clinical inspection and epidemiological investigation were conducted on the origin pig farm in Taiwan and surrounding farms that keep cloven-hoofed animals within 3-km radius of the index premise (a total of 1 cattle/goat/deer farm, 1 goat/pig farm, 1 deer farm, 5 goat farms and 7 cattle farms); the results showed the animals were in healthy condition and no clinical or epidemiological evidence of infection was found. Further tests of samples collected from the slaughtered feeder pigs are on-going.

The source of the outbreak remains inconclusive.

Wednesday, February 01, 2012
Tönnies Focus: Better Welfare & China Expansion
ANALYSIS - One of the largest pig processing company in Germany, Tönnies, has announced plans to expand in China and at home in Europe, it aims to raise pig welfare standards, writes Jackie Linden, senior editor.

Last week, the German magazine, WirtschaftsWoche (Economics Weekly), carried at interview with Clemens Tönnies, board chief of Germany's largest pig slaughterhouse, which has an annual turnover of €4.3 billion.

Mr Tönnies highlighted two important issues for the future of his company's business: the need for pig producers at home to improve further the rearing conditions for their animals and its plans for expansion in China. (He also stressed the need for his local football club, Schalke 04 – of which he is chairman – to increase revenue and reduce its debt burden.)

Speaking on the need to raise pig welfare, Mr Tönnies explained that his company has established a new staff position, directly under the board, which is entirely focused on animal welfare. The appointee is responsible for defining the ideal housing conditions for breeding and growing pigs and the company will go to farmers with these specifications, Mr Tönnies explained.

He added that Tönnies has a commitment from all major retail chains that endorses the increased costs associated with these higher standards.

"Then we will all work together to increase the standards", said Mr Tönnies.

The initial aim is to develop the characteristics of a model for the ideal house, a process he expects to take two years and to add around €20 to the cost of producing each pig. This will make pig meat a little more expensive but he says the extra cost is justified by saying that pig meat in Germany is rather too inexpensive.

Expansion in China
Mr Tönnies described his company's intention to undergo massive expansion in China after establishing a joint venture there. He wants to establish a nationwide network of large cutting plants across the country, supplying some of the pork from Germany.

He explained that, with this in mind, the company is already building a new packaging and frozen logistics centre at its headquarters in Rheda.

The aim of Tönnies's involvement in China is to restructure the meat supply chain. Currently, meat is distributed right across the country, mostly unrefrigerated, by moped by middle men. Tönnies wants to make the conditions more hygienic.

For each of the new cutting plants, the Chinese partner is expected to invest the equivalent of €60 to €70 million. Mr Tönnies explained that his company is still in talks with the joint venture partner over the ownership structure.

Appeal lodged over acquisition of Tummel
Finally in the interview, Mr Tönnies confirmed his company's intention to take over Münsterland butcher, Tummel. The Bundeskartellamt (national monopolies authority) halted the acquisition late last year, citing concerns that it would give the company too dominant a market position.

Mr Tönnies commented that his company's lawyers hold the view that this decision was incorrect and an appeal has been lodged at the Higher Regional Court of Düsseldorf.


Jackie Linden, Senior Editor

Friday, February 10, 2012
Third TOPIGS Import into China in Three Months
CHINA - TOPIGS has imported 550 more top breeding pigs into China. This is the third import in three months.

The pigs were imported from the TOPIGS high health SPF nucleus farms in Canada and were delivered to a feed company in Shanghai that has built a brand new breeding farm. These imported breeding pigs will become the top of an integrated pork production pyramid.

 TOPIGS is continuing to build up its presence in China, the world’s biggest market for breeding pigs. This third successful import in a row means that a total of 2050 TOPIGS breeding animals have been imported in three months.

The imported pigs came from SPF nucleus breeding farms in Europe and Canada and will provide China’s fast-growing professional pig industry with the genetics it needs to realise high-level production.

Monday, February 13, 2012
Govt to Wipe Out Substandard Slaughtering
CHINA - China is vowing to eliminate substandard meat processing in the country within the next few months as part of a campaign to ensure food is safe, officials said on Friday.


"Some small and medium-sized slaughterhouses and processors that have the proper authorization now fail to meet the standards for meat processing, and that has raised great potential risks for the country's meat supply," Jiang Zengwei, deputy minister of commerce, said at a news conference held by nine government departments, including the Ministry of Commerce, the Ministry of Agriculture and the Ministry of Environmental Protection.

The departments will begin a four-month campaign in March to improve standards at plants where pigs are slaughtered and processed. They will work to ensure the conditions at such places are sanitary, that proper quarantine measures are being taken and that the environment is being protected.

The campaign will look at the 18,150 authorized slaughterhouses and processors in China. Its goal will be to prevent water-injected meat, meat from sick animals or other substandard products from reaching the market, he said.

Mr Zengwei called on the ministry's local branches to use the campaign to clean up substandard slaughterhouses and processors, saying "they are the biggest obstacles to ensuring the safety of meat".

Meat slaughtering and processing that has not received official approvals is illegal in China, the only exception being that rural residents are allowed to slaughter their own livestock.

Pork makes up more than 60 per cent of the meat the Chinese eat every year, according to official figures.

Many in the public became concerned about meat safety after reports came out alleging that the illegal feed additive clenbuterol had been used by farmers in Henan province in March 2011.

Clenbuterol, better known as "lean meat powder", can cause pigs to build muscle and burn fat faster, resulting in leaner pork.

The drug can cause dizziness and heart palpitations among people who eat meat that has been treated with it, and China prohibits its use as an additive in pigs feed.

The growth of the slaughtering industry, meanwhile, has led to environmental pollution.

To meet the demand for meat in 2011, about 210 million pigs were slaughtered, producing 100 million tons of wastewater along the way, Li Ganjie, deputy minister of environmental protection, said at the conference.

"Starting this year, the ministry will use its website to blacklist slaughterhouses and processors that have been found to be violating the law, and it will also regulate the approval of new slaughterhouses in the future," Mr Zengwei said.

Liang Haoyi, a senior researcher at the China Animal Agriculture Association, said on Friday that the pig-farming and meat-slaughtering industries in China must ever contend with greater and greater obstacles as they try to protect the public's health.

"Government authorities should take measures to prevent sick animals from being sold for slaughter," he said. "And there is a need for harsher punishment to be imposed on those who trade sick animals."

Tuesday, February 14, 2012
VC, PE Firms Show Appetite for Food Industry
CHINA - As the Chinese become richer and pay more attention to the quality of food, venture-capital and private-equity companies have started to invest in the country's agricultural sector and cultivate food products' brands.


By the end of 2010, the average per capita consumption of pork by Chinese people came to 33.1 kg, an 85 per cent increase from 1990. The figure for dairy products, meanwhile, was 11.27 kg, 6.7 times greater than 10 years ago, according to a report by Southwest Securities Co Ltd.

The report said Chinese people are placing a greater priority on their health, which has directly influenced agriculture production and investment activities in the country.

Beijing Century Chestnut Ecological Agriculture Co Ltd, a company that provides eggs and chickens to large Chinese cities, raised 100 million yuan ($15.8 million) last year from a financial consortium led by DT Capital Partners and Tiantu Capital Co Ltd.

Chen Lihui, a financial consultant for the investment and a partner at SSG Capital Ltd, said institutional investors are putting money into Beijing Century Chestnut Ecological Agriculture because it has its own chicken breed and is setting up a comprehensive system to guarantee food safety, making it a brand that will be fairly easy to promote.

"Brands are now important because people are no longer satisfied with simply having enough to eat," Mr Lihui said. "More and more they want high-quality food. Having good brand recognition is also important if the company plans to raise money in the capital market."

He said the price of high-quality eggs is about 50 per cent more than ordinary ones, and he expressed confidence that such products will prove popular in the market.

He said Beijing Century Chestnut also plans to use the money raised to develop high-quality rice, grains and vegetables.

Kunwu Jiuding Capital Co Ltd, a domestic equity-investment company, is also putting 100 million yuan into a food company's rice business. Kunwu Jiuding said it plans to help build a strong brand for the company, which it declined to name.

"An increasing number of agricultural companies are setting up brands, but the costs of working with supermarkets and shops, as well as marketing activities can also be high," Liu Achang, an investment manager at Kunwu Jiuding, said.

He said he and his colleagues are discussing possible brands for the company Kunwu Jiuding has invested in.

A researcher at the strategic investment department of Beijing Xinfadi Agro Co Ltd, the largest wholesale market for farm produce in the capital city, said supermarkets and other retailers pay most attention to the branding of eggs, meat, and dairy products because such foods are more likely to give rise to troubles.

Recently the capital markets have witnessed a fairly large number of investments into the agriculture business. Since 2006, global investment firms such as KKR & Co LP, Carlyle Group and Blackstone Group have invested in the Chinese agriculture sector.

Blackstone led the pack, spending about $600 million on the China Shouguang Agricultural Product Logistic Park. Domestic investment institutions such as CDH Fund and Hony Capital have also made similar investments.

Wednesday, February 15, 2012
ERS Report Highlights Volatility of China’s Pork Industry
ANALYSIS - Growth of China's domestic pig meat industry is being held back by rising costs, disease outbreaks, animal waste disposal challenges and food safety concerns as well as more competitively priced imports, according to a new report from the USDA Economic Research Service. Senior editor, Jackie Linden, highlights the main points of the report.

With China’s emergence as a new source of potential demand for US pork exports, it is important for American farmers, business leaders and policy–makers to understand the volatile nature of the Chinese pork industry, according to a new report from the USDA Economic Research Service entitled China’s Volatile Pork Industry.

One of the key factors, says the report's authors, is the volatility of the Chinese market in terms of prices, inventories and pork output as the result of a number of market factors.

Policy interventions by the Chinese government have helped to consolidation in the domestic pork industry but they have not achieved market stabilisation, they say.

The ERS report continues that when pork prices are high locally, China imports more pork. And pork prices have risen along with production costs, disease outbreaks, environmental threats and food safety concerns, all of which have held back the expansion of China's own pig meat industry recently.

Interestingly, the average hog price in China has been above that in the US (in US-dollar terms) since 2007, and last year, the prices of all pig meat types, both muscle and offals, were significantly higher for Chinese product than imported products from the US.

Like other countries, Chinese pig producers have been hit by higher production costs in recent years, a situation exacerbated by the movement of the population to the towns and cities. The shortage of labour in the countryside has meant that many small backyard farms have given up pig production and the larger commercial units that have replaced them tend to use more expensive maize and compound feeds, rather than by-products and wastes, and labour costs have also risen.

Diseases have also impacted the Chinese pig meat market, says the report. It cites outbreaks of ‘blue ear’ disease (PRRS), foot-and-mouth disease (FMD), classical swine fever, pneumonia, Streptococcus suis, circovirus, parasites and erysipelas as common in China’s pig industry. News reports indicate that large losses attributed to disease periodically restrict the supply of pork, contributing to price surge although the effects are hard to quantify with precision.

Producing large quantities of pork in China entails additional costs, such as the environmental impacts of pig manure waste and food safety incidents, continues the report.

The dense population of pigs in some provinces strains the capacity of the land to supply feed for the animals and to absorb their waste. Chinese officials have begun promoting ‘ecological’ modes of production that use pig waste to feed fish or fertilise crops and use bacteria to break down the manure.

Food safety is also a major concern for Chinese consumers of pork. The media there have frequently reported on the pig industry's use of illegal feed additives, the slaughter of sick hogs, the pumping of potentially contaminated water into hogs prior to slaughter and the contamination of feed with heavy metals. Furthermore, Chinese consumers are becoming more wary of pork products that contain food additives.

Food safety concerns are contributing to changes in purchasing patterns that may make consumers more receptive to imported pork, continues the report. Traditionally, Chinese consumers preferred to purchase freshly slaughtered pork from small wet market vendors but food safety concerns have encouraged them to shift purchases to supermarkets, where pork is believed to be more sanitary and free of illegal feed additives.

The ERS report concludes with a warning to its target US audience that volatility in China's domestic market may result in similar volatility in export sales but the warning also applies to other countries eyeing China as a potential export market for pig meat.

China’s Volatile Pork Industry was written by Fred Gale and Daniel Marti, agricultural economists with USDA's Economic Research Service and Dinghuan Hu, a professor with the Institute of Agricultural Economics and Development at the Chinese Academy of Agricultural Sciences.

Wednesday, February 15, 2012
Chinese Pig Meat Imports up Sharply
CHINA - Imports of fresh and frozen pork were 134 per cent more last year than in 2010, reports AHDB in its European Market Survey, while pig offal imports were up 26 per cent. Increases were recorded for almost all the main exporting countries. Additional countries will have access to the Chinese market during 2012, including Brazil and more EU Member States.
 

China’s economy has grown at about eight per cent per year over the last two decades. Increasing incomes have led to a changing food consumption pattern, in particular, an increasing consumption of meat. Pork has historically been the primary animal protein source in Chinese diets, and its consumption level has increased significantly.


Similarly, Chinese pig production has increased over the past 20 years at an average rate of 2.1 per cent per year. However, at the same time, production costs have also risen, squeezing profit margins from many backyard producers despite relatively high pork prices. In 2011 pork production in China declined by three per cent as low prices through the first half of 2010 encouraged many smaller producers to exit the industry. In addition, producers were faced with unusually severe and persistent outbreaks of animal diseases, such as FMD, PRRS and pig epidemic diarrhoea in piglets in late 2010 and early 2011.

Imports of pig meat have risen dramatically to fill the resulting supply gap. Official trade figures indicate that Chinese imports of fresh and frozen pork were up 134 per cent compared with 2010. The average price of imports was up 65 per cent in renminbi terms due to a combination of rising prices and an increasing share of more expensive cuts.

In May 2010, the United States resumed exports to China following the lifting of trade restrictions on pig meat associated with A-H1N1 influenza. This enabled the US to account for over half of all pork imports in 2011, compared to just 15 per cent the year before. According to Chinese data, some of this rise came at the expense of Denmark, whose shipments declined by 17 per cent. However, this contradicts Danish trade figures which show increased shipments, albeit from a lower base. Other EU Member States shipped increased quantities, particularly Spain, France and Germany. Overall imports from the EU increased by 24 per cent compared with 2010 levels. Canada was the other major supplier of pork to China and its shipments increased by 27 per cent in 2011.

Similarly, the total volume of offal imports to China increased by 26 per cent compared with a year ago. This coincided with a 23 per cent increase in the renminbi unit price of offal imports. Again, the growth in offal imports was mainly made up of increased shipments from the US. This was partly offset by reduced volumes from Denmark and Canada, previously the two largest suppliers, although again this contradicts the trends recorded in those countries’ trade data.

Fuelled by increased prices, China’s pork producers have steadily expanded the herd size during 2011 and this will help boost pork output in 2012 according to the USDA forecast. In addition, production growth is also being supported by China’s decision in July 2011 to resume a 100 yuan (CNY; US$15.60) per sow subsidy and introduce other policies to encourage herd expansion. Nevertheless, imports are likely to continue to grow in 2012, fuelled by relatively strong economic growth and continued firm demand for pork. Additional countries will have access to the Chinese market during 2012, including Brazil and more EU Member States.

China’s Rising Pork Imports Linked to Domestic Market Fluctuations
Prices, hog inventories and pork output in China fluctuate from year to year in response to various factors, according to Fred Gale, Daniel Marti and Dinghuan Hu in a report entitled China's Volatile Pork Markets from USDA's Economic Research Service.



Abstract
With China’s emergence as a new source of potential demand for US pork exports, it is important for US farmers, business leaders, and policymakers to understand the volatile nature of China’s pork industry. Prices, hog inventories and pork output in China fluctuate from year to year in response to various factors that influence the market, and China’s imports of pork tend to rise when Chinese hog prices are high.

Extensive policy intervention by the Chinese government has contributed to consolidation in the country’s pork industry but has not stabilized the market. Imported pork is becoming more competitive in China as Chinese pork production costs rise and animal disease outbreaks, environmental threats, and food safety concerns constrain growth of China’s hog industry.

Introduction
China’s potential as a major pork importer presents opportunities for hog farmers, business leaders, and investors around the world. Articles and newsletters examining China’s effects on the global marketplace reflect buoyant optimism: "The long-run potential for US pork in China is enormous" (Hayes, 2010), and "The potential for further Chinese importation of pork is almost incomprehensible" (a hog industry observer quoted by Dyson (2008)). Announcements of pork sales to China can affect the US market. For example, in October 2009, the Wall Street Journal reported "China’s pledge to lift a ban on US pork drove prices of lean hogs to a three-month high on expectations of increased exports to the world’s largest pork consumer" (Cui and Waters, 2009).

As China begins to play a larger role in the world pork market, it is important for industry analysts, business leaders, and policymakers to understand the complex factors driving the Chinese hog/pork sector. China’s pork industry is constantly buffeted by a range of influences, including disease epidemics, feed prices, policy interventions, seasonal consumption patterns, demand for other meats, and macroeconomic factors. While much attention is focused on the upward trend in commodity prices, pork prices in China tend to rise and fall in multi-year cycles as the industry expands and contracts. The degree of volatility appears to have increased after record-high pork prices in 2007 prompted extensive government intervention and a surge in private investment accelerated structural change in the industry. Following a period of depressed prices in 2010, Chinese pork prices rose to new highs in 2011. China’s imports of pork fluctuated in a similar cyclical manner.

This report provides information on volatility in the Chinese pork industry. It reviews recent trends in China-Hong Kong pork imports and fluctuations in Chinese pork prices. It also analyzes the influences of rising feed costs, policy interventions, structural change, and disease epidemics on China’s pork industry. As increases in production costs, animal disease epidemics, animal waste disposal challenges, and food safety concerns limit the expansion of China’s domestic pork industry, the outlook for pork exports to China is favourable. However, volatility in China’s domestic market may result in similar volatility in export sales.

China’s Rising Pork Imports Linked to Domestic Market Fluctuations
China’s potential to affect the world pork market derives from the size and volatility of its domestic pork market. China accounts for nearly half of the world’s pork production and consumption. Its annual pork output is four to five times that of the United States and more than double that of the European Union. According to official Chinese statistics, China slaughters over 600 million hogs annually – one hog for every 2.2 Chinese people.

Historically, China has been a mostly self-sufficient pork economy. Mainland China traditionally imported modest amounts of pork offal and muscle meats and exported a similar amount of pork and live hogs to Hong Kong (a separate customs territory from mainland China). Some pork shipments from other countries to Hong Kong are re-exported to mainland China through ‘gray’ market channels, but the amount is unknown. While Hong Kong is a short distance from the country producing half of the world’s pork, most of the territory’s imports come from Europe, the United States, and Brazil. From 2000 to 2006, China and Hong Kong combined to import between 500,000 and 600,000 metric tons of pork and pork products annually. These amounts were a significant share of world pork trade but equated to less than one per cent of annual pork consumption in China-Hong Kong.

China and Hong Kong pork imports surged in 2007 when a shortfall in Chinese pork production led to record Chinese pork prices. That year, Hong Kong-China pork imports nearly doubled to just over one million metric tons (mmt), then rose to over 1.9mmt in 2008 (figure 1). According to the US Meat Export Federation, the 2008 total far surpassed the previous pork-import record of 1mmt set by Japan in 2005. In 2009, China-Hong Kong pork imports fell to about 1.5mmt – still nearly three times the pace of imports earlier in the decade – but rebounded to 1.8mmt in 2010. The 2010 import volume was equivalent to 3.6 per cent of China’s domestic pork output. The United States supplied about 20 per cent of China-Hong Kong pork imports in recent years.


For the US pork industry, China-Hong Kong has been one of the leading export markets since 2007. During the peak import period of 2008, US sales to the region accounted for over 18 per cent of US pork exports, about double the annual share exported to China-Hong Kong during 2000-2006.

Monthly statistics on mainland China’s pork trade reveal a link between imports and domestic pork prices (figure 2). High domestic prices during 2007-08 reflected short supplies in the Chinese market and prompted a surge in pork imports. The average domestic hog price in China doubled from about $.52 per pound in the first four months of 2007 to a peak of $1.08 per pound in April 2008. Monthly imports by mainland China grew rapidly as prices rose, reaching a peak of 119,000mt in June 2008, up from 15,000 to 30,000mt during 2004-06. Imports were boosted by a temporary cut in the country’s pork tariff and a state-owned company’s contract to purchase US pork to build up reserves ahead of the Olympic Games held in Beijing in August 2008.


After peaking in April 2008, Chinese pork prices fell until early 2009. China’s monthly pork imports also fell to under 40,000 mt during the first half of 2009. The decline in prices reached a low of $0.61 per pound in May 2009, about a year after the peak. A combination of factors helped drive down prices during this period: a build-up in production capacity that increased the domestic supply and a temporary decrease in demand due to concerns among Chinese consumers that the H1N1 influenza virus (swine flu) could be transmitted by eating pork. While no link between pork consumption and H1N1 transmission was scientifically established, Chinese authorities still banned imports of pork from North America to prevent the spread of the disease to China. The ban remained in place for the remainder of 2009 and stopped direct imports of US pork for nearly a year until June 2010.

Chinese pork prices began another run of monthly increases in the second half of 2010 and reached new highs during 2011, three years after the sharp increase in prices during 2007-08. With domestic pork prices rising, less expensive foreign pork was more competitive in the Chinese market. Chinese customs statistics revealed that China’s monthly pork imports during late 2010 and 2011 surpassed the record pace set in 2008, rising as high as 150,000mt during September 2011 (see figure 2). Imports from the United States accounted for most of the import growth during 2011.

Thursday, February 23, 2012
Pig Company Aims to Raise $300m from Local Bourse
HONG KONG - China Putian Food Holdings, a company engaged in pig farming, is seeking a listing in Hong Kong.


The Fujian-based firm is also a pork wholesaler and retailer. It raises 36,300 pigs annually, making up 20 per cent of the province's total output.

The Standard reports that next month, Putian aims to raise up to HK$300 million. The roadshow is scheduled next week.

Last year, companies in the staple food sector were the biggest beneficiaries of soaring inflation.

The price of pork surged by 45.5 per cent in August from the same period in 2010, easing from a 57 per cent gain in July.

Henan Chuying Agro-pastora Co, the first pig raiser to float shares in the mainland, forecast a 250 per cent jump in net profit last year.

Meanwhile, shares of bakery chain Christine International Holdings and Xiwang Special Steel start trading on the local bourse today. In the gray market, Christine closed at HK$1.63, slightly above the offer price of HK$1.6. Each investor may get one board lot of shares as the issue was 2.5 times oversubscribed.

But Xiwang was poorly received. In the gray market the shares traded 12.07 per cent below the offer price at HK$2.65. For each board lot of 2,000 shares, an investor would have made a paper loss of HK$320.

Separately, Canada's Sunshine Oilsands ends bookbuilding at noon today. It attracted HK$32.03 million margin orders, insufficient to cover its HK$469 million retail target.

But HSBC (0005) foresaw an upcoming warm IPO market as secondary volumes shows signs of a pick-up.

Wednesday, February 29, 2012
Brasil Foods Ships Pork to China
BRAZIL - Tomorrow, 1 March, BRF is to send the first shipment of pork to China. The product, frozen boneless pork shoulder, was processed at the company’s unit in Rio Verde (State of Goias), one of only three Brazilian meat processing plants authorized to export to China.


The product is to be traded under a joint venture set up recently by BRF and the Chinese company, Dah Chong Hong Limited (DCH), for distributing products on the Chinese market, processing meat at local plants, developing the Sadia brand and operating on the retail and food service markets in Continental China, Hong Kong and Macau.

At present, BRF is authorized to export only boneless pork to China, but the company is working on licensing plants in the State of Santa Catarina, which is also authorized to ship boned pork, since the region is considered free of foot-and-mouth disease and requires no vaccination.

China is the world’s biggest producer of pork, but is unable to satisfy local demand. Access to the Chinese market is a milestone for both BRF and Brazil, providing a promising outlook for Brazilian agribusiness.

BRF and DCH were reported to be discussing a possible partnership last May. In its first year, the deal is expected to trade 140 thousand metric tons of product, with revenues of around US$ 450 million and investments in working capital.

In the first project phase, BRF is to provide production capacity, technical support and marketing for the products to be marketed under the joint venture. DCH will provide the supply and distribution chain and facilities for processing, packaging and general support services.

Rising Prices and Costs for Chinese Pork
Rising prices in China’s domestic pork market were the main contributor to the country’s rising pork imports, write Fred Gale, Daniel Marti and Dinghuan Hu in a report entitled ‘China’s Volatile Pork Industry’ from the USDA Economic Research Service.



From 1991 to 2006, Chinese hog prices fluctuated within a relatively narrow range of $0.30 per pound to $0.50 per pound and were usually less than US prices (figure 3). After a sharp increase during 2007-08, however, Chinese hog prices have been significantly higher than US hog prices. While Chinese hog prices fell sharply after peaking in 2008, the average price during 2007-10 ($0.79 per pound) was more than double the average in 1991-2006 ($0.37 per pound). During 2011, prices rose as high as $1.40 per pound.

The shift in prices is an indication of the general improvement of prospects for US pork sales to China. To be cost-competitive in China, however, US pork must be comparable in cost or cheaper than Chinese pork after accounting for freight costs, tariffs (12-20 per cent), and value-added taxes (13-17 per cent). Overall, the authors estimate that prices in the Chinese market would have to be approximately 30 to 45 per cent higher than US prices for US pork to be cost–competitive in China.

US and Chinese consumers have complementary tastes that encourage pork trade between the two countries. US consumers prefer muscle meats, while Chinese consumers prefer offal and variety meats that have low value in the United States (Hayes and Clemens, 1997; Fabiosa et al., 2005). As a reflection of these differing preferences, price competitiveness varies for different cuts of pork. In 2011, the average US prices of livers, hearts, hocks, feet, kidneys and tails were less than half the prices of corresponding parts in a Beijing wholesale market (figure 4).

Prices of all cuts tend to rise and fall to reflect general changes in pork prices, and in 2011, the rise in Chinese hog prices drove the prices of both muscle meats and variety meats well above corresponding US prices. For example, the price of a lean carcass in Beijing was about $70 higher than the US carcass price of about $91 per 100lbs. A year earlier, carcass prices had been nearly equal in the two countries. In mid-2011, muscle meat prices were also relatively high in China. The Beijing price of hams was more than double the US price, the price of spare ribs was nearly 50 per cent higher, and the price of bellies was nearly 40 per cent higher. Variety meats constitute most of the US pork exported to China, but the widening difference in prices improves the prospects for US muscle meats to be competitive in China.

 


High pork prices in China likely stem from the rising costs of hog production in China. ERS analysis of data from China’s National Development and Reform Commission (NDRC) shows that average hog production costs, converted to US dollars, more than doubled from 2002 to 2009. Chinese hog production costs per pound of live weight rose from about $0.30 in 2002 to $0.71 in 2010 (figure 5). Feed is the largest of the hog production expenses in China, accounting for about 60 per cent of the total. Feed costs rose from $0.18 per pound in 2002 to $0.25 per pound in 2006. In 2010, the feed cost rose to $0.44 per pound, an increase of 77 per cent from 2006. The cost of a feeder pig more than doubled during 2002-10 as well.4 Estimates of hog production costs for 2011 were not available when this report was prepared but with corn prices rising, it is likely that feed costs rose further in 2011.

Labour and other expenses may have more of an impact on hog production costs than is indicated in figure 5. China’s vibrant labor market and an increase in school attendance have absorbed slack household labor that was traditionally used for small-scale ‘backyard’ hog production. According to industry reports, the number of rural households raising hogs has been in decline since 2007. And as these small-scale farms exit the industry, they are increasingly being replaced by larger commercial-scale farms operated by companies or farmers who specialize in raising hogs.5 Compared with small farms, commercial-scale farms have higher overhead costs for housing, equipment, and manure treatment; they purchase higher value breeds of feeder pigs; and they use paid laborers and technicians instead of relying on unpaid family labour. Commercial-scale farms purchase commercial feeds, while small-scale farms use inexpensive crop stalks, bran and hulls from grains, food scraps, and forages.


The increase in feed costs has pushed Chinese hog production costs above those of the United States. Based on data from China and US production cost surveys for 2009, US hog producers had significantly lower costs per pound of live hog weight ($0.57) than commercial-scale hog producers in China ($0.68) and ‘backyard’ producers in China ($0.70) (figure 6). The US cost advantage was mostly due to lower feed expenses and may be a reflection of a more efficient conversion of feed to meat as well as lower feed prices. Even the Chinese cost advantage in feeder pig prices observed in 2002 by Fabiosa et al. (2005) was reversed after the increase in feeder pig prices during 2007. The Chinese surveys may understate costs of commercial-scale producers by excluding very large 10,000-head farms that are becoming more common in China. These farms have overhead costs that may be comparable to the relatively high ‘other’ costs shown for US farms in figure 6.


Grain prices in China have been rising due to the scarcity of cropland and surging demand for grain by feed mills and industrial users. Chinese hog producers and feed mills pay much higher prices for corn than do their US counterparts, and in recent years, rising corn prices have pushed China’s feed expenses higher. Rising feed prices tend to push hog and pork prices upward as well.

While the Chinese pork industry still uses a wide variety of feeds, Chinese market analysts focus on the price of corn as an indicator of feed costs (see below, ‘Wide Variety of Feeds Used’). When high corn prices raise the cost of producing pork in China, industry members may take two approaches to alleviate the cost pressure on Chinese consumers: (1) import corn from the United States or other countries with lower corn prices to reduce the cost of producing pork in China, or (2) import pork produced in countries with lower feed costs. While pork production costs are also rising in the United States, US feed costs remain lower than in China because the United States has more abundant land, water and grain resources. Meeting Chinese demand for pork by producing hogs near sources of feed in the United States and then exporting pork to China is more cost-efficient than exporting large volumes of grain and oilseeds to produce pork in China (Hayes and Clemens, 1997).

The difference between corn costs in China and those in the United States varies from year to year. Corn prices have generally been rising and are higher in China, but surging US corn prices during 2007-08 and 2010-11 narrowed the gap. A comparison of the monthly average cash prices of corn in Guangdong Province and central Illinois during 2005-10 provides evidence of the cost differential (figure 7).6 The Guangdong corn price increased from about $150 per metric ton to over $300 in late 2010. The price of corn in central Illinois was consistently lower than the price in Guangdong, but the difference between the two fluctuated throughout the five-year period. In early 2010, the Illinois price was less than half the Guangdong price. The large price difference during mid-2010 stimulated China’s first significant corn imports from the United States since the 1990s. (As noted earlier, China’s pork imports were also robust during 2010.) US corn sales to China came to a standstill as US corn prices rose and the corn-price difference narrowed later in 2010. However, the Illinois corn price was still 20 percent below the Guangdong price in February 2011.


Wide Variety of Feeds Used
A standard Chinese hog feed ration includes about 60 per cent corn and 15 per cent soybean meal. However, the composition of feed can vary widely across farms. Moreover, feed formulations can vary dramatically by region, by farm size and over time. Chinese farmers have traditionally fed pigs locally available grains, wheat bran, rice hulls, crop residues, vines, potatoes, food scraps and byproducts from agricultural processors.

The composition of feed depends on the types of materials that are available locally at low cost. Farmers often mix these materials with commercial concentrate feeds that contain soymeal, other protein meals, amino acids, vitamins and trace elements. An increasing number of farmers use commercial formula feeds that include various combinations of the above items already mixed together. Based on interviews with farmers in Sichuan Province, the proportion of corn in hog feed ranges from 30 to 70 per cent, while the proportion of commercial concentrate feeds varies from 10 to 20 per cent. Commercial-scale farms account for an increasing share of hog production in China and tend to use a higher proportion of corn and commercial feeds than do smaller farms.

Cycles in China’s Pork Market
The sharp increase in pork prices during 2007 drew attention to the Chinese market’s volatility and cycles, highlight Fred Gale, Daniel Marti and Dinghuan Hu in a report entitled ‘China’s Volatile Pork Industry’ from the USDA Economic Research Service.



Fluctuations in prices and production, however, are not new to the industry. Cyclical patterns in the hog market were recognized in the United States during the 19th century and studied extensively by agricultural economists beginning in the early 20th century (Haas and Ezekiel, 1926). Chinese scholars and analysts have observed similar cyclical fluctuations in China (Liu and Wang 2009; 2010). Zhang (2010a) identified six periods of pork-price increases (1985, 1988, 1994, 1997, 2004, 2007). Several Chinese studies identified a series of four three– to four–year cycles in the hog sector between 1996 and 2009 (Han and Qin, 2007; Liu and Wang, 2009; Nie et al., 2009). The price increase during 2007 prompted Chinese officials to intervene extensively in the pork market to stabilise prices, which is discussed later in this report.

The well-known ‘cobweb model’ was developed in the 1930s to show how cycles in pork prices can result from the biological lag in supply response (Ezekiel, 1938; Coase and Fowler, 1935). In China, it takes 18 to 20 months to raise a new generation of gilts to breeding age, produce a crop of pigs and then raise those pigs to slaughter weight (Zhou, 2010). Thus, when an increase in pork prices prompts farmers to expand production, the corresponding increase in pork supply may take more than a year to enter the market. Conversely, when farmers slaughter sows during a downturn in the market, the sector’s ability to expand supply is constrained in future months.

Seasonal fluctuations in demand that correspond to major holidays also affect China’s pork market. Hog inventories build up in anticipation of peak demand before the Chinese New Year (usually late January or early February) and the mid-Autumn festival and National Day (mid-September to 1 October). In the months following these festival/holiday periods, demand, hog slaughter and pork prices often decline.

Cycles are evident in the ratio of hog price to corn price, an indicator of short-term profitability in the hog sector. A high ratio indicates that the output price (for hogs) is high relative to the price of the chief input (corn), which typically induces farms to build up hog inventories to increase production. Conversely, a low ratio signals financial losses, which prompt farms to decrease hog inventories.

China’s hog-corn price ratio has generally fluctuated around 6:1 (figure 8; see section on The Hog-Corn Price Ratio below). A series of fluctuations in China’s pork industry are marked by peaks in the ratio early in 2005 and a much higher peak three years later in 2008. Periods of low prices and severe losses for hog producers occurred in mid–2006 and mid–2009, again three years apart.


The recent cycles resulted from a chain of events that began in 2004, when concerns over an outbreak of avian influenza drove Chinese consumers to substitute pork for poultry meat. The increased demand for pork increased hog prices and encouraged farmers to expand hog inventories. Hog prices peaked in 2005 but subsequently fell as the supply of pork surged. Prices reached a low in mid–2006, and many producers experienced losses and culled sows. In late 2006 and 2007, animal disease epidemics reduced the supply of pork, and pork prices again began to rise. The previous year’s cull of sows and continuing concerns over the effects of animal diseases constrained the industry’s ability to expand production in the short run. Demographic changes also affected the pork supply as off-farm employment and rising incomes encouraged many rural families to purchase pork instead of raising hogs in their backyards. The inelastic short–run supply contributed to a sharp increase in pork prices.

Rapidly rising pork prices became a national concern in China during 2007. China’s consumer price index for meat was up 40 per cent year–over–year, the highest increase among all categories. The jump in pork prices contributed to the country’s high inflation rate that year.7

An NDRC study of the factors behind rising pork prices during 2007 focused on the tight supply of feeder pigs. The report found that hog prices received by farmers were up 45 per cent year–on–year but that feeder pig prices were up 60 per cent. The feeder pig supply was reduced by the culling of sows and the effects of a disease epidemic that caused sows to abort.

High prices for hogs in 2007 and early 2008 attracted investment in large Chinese hog farms and pork processing. Investors included meat, feed and real estate companies; overseas investment banks; and a well-known Chinese software entrepreneur (Jiao and Kou, 2010). According to official statistics, China’s hog inventory grew five per cent during 2007, and it expanded at a similar pace in 2008. The hog inventory peaked at nearly 470 million head in late 2009, an increase of 51 million from the 2006 total. This marked China’s largest expansion of hog inventories since 1996-99.

During 2009 and 2010, two periods of losses and recovery occurred about a year apart, interrupting the pattern of three–year cycles. The hog-corn price ratio reached a low point in May 2009, about three years after the rapid increase in pork prices in 2007. During the second half of 2009, prices rebounded briefly but the hog-corn price ratio fell again during the first half of 2010, following outbreaks of animal disease epidemics that led to many animal deaths and early slaughter of sick hogs. Furthermore, low prices and economic losses prompted many farmers to cull sows or exit the industry, and China’s hog inventory declined during early 2010. Hog prices rebounded in July that year and continued rising during the second half of 2010 and into 2011. The sector returned to profitability during the second half of 2010 but rising corn prices slowed the increase in the hog-corn price ratio. In early 2011, hog prices neared the historical high reached in 2008 and the hog-corn price ratio was 7:1, slightly above ‘normal’. Due to high corn prices, however, the 2011 hog–corn price ratio did not rise as high as it did during the 2008 peak period.

By mid–2011, rising pork prices were again a major influence on China’s consumer price index, as they had been in 2007. The sow inventory had yet to recover from the losses and culls of the previous year, and the tight supply of piglets slowed the industry’s expansion. High feeder pig prices seemed to be consistent with a limited supply of feeder pigs, and Ministry of Agriculture statistics indicated that sow inventories were down two to three per cent from a year earlier. In one article, industry analysts expressed unease that the situation would be ‘a repeat of the 2008 roller coaster’ (Sun et al., 2011).

The Hog–Corn Price Ratio
The hog–corn price ratio became a valued resource for US commodity market analysts in the 19th century as it reflected the ratio of output price to the price of the main input. At that time, many Midwestern farmers used hogs as an alternative way of marketing corn. When corn prices were low, farmers fed the corn to hogs instead of selling it on the market.

The hog–corn price ratio is now widely used in China as an indicator of hog sector profitability. Market analysts and policy–makers in China often view 6:1 as a ‘normal’ level for the ratio. Higher values are considered an indicator of profitability and expansion, while lower values are an indicator of losses and contraction. The break–even level is often reported to be 5.5:1. The ratio is not as widely used in the US hog industry today because corn accounts for a smaller share of production costs than in years past. The ratio’s value as an indicator is also questionable in the Chinese hog industry because corn is only one of many kinds of feeds used by Chinese farmers.

In China, the hog–corn price ratio is computed using prices in yuan per kg. In the United States, the ratio is traditionally computed in dollars per cwt for hogs and dollars per bushel for corn. Because the units used by the two countries differ, the US ratio is typically quoted as a much larger number. Using data from the 1970s, Van Arsdall and Nelson (1984) calculated a break–even (cash basis) ratio of 15:1 to 16:1, which would be equivalent to 8.5:1 to 9.0:1 calculated using prices in dollars per kilo. In a study of historical patterns in the US hog–corn ratio, Holt and Craig (2006) surmised that an increasing trend in the ratio beginning in the 1940s reflected diversification of hog feedstuffs during the post–war period. Recently, US hog market analysts have quoted a higher reference level of 18:1 to 20:1.

Chinese officials regarded the fluctuations in hog prices and profitability beginning in 2007 as evidence of unusual volatility. This prompted extensive government intervention to stabilise the market. However, a comparison with historical US data for 1909 to 2010 shows that the recent cycles in the Chinese hog–corn price ratio are not unusual (see figure). Chinese fluctuations are similar to cycles that occurred in the United States during the early 20th century. Coase and Fowler’s (1935) description of hog cycles in Great Britain during 1920 to 1933 is also remarkably similar to that of recent cycles in China.

Cycles in China’s Pork Market
The sharp increase in pork prices during 2007 drew attention to the Chinese market’s volatility and cycles, highlight Fred Gale, Daniel Marti and Dinghuan Hu in a report entitled ‘China’s Volatile Pork Industry’ from the USDA Economic Research Service.



Fluctuations in prices and production, however, are not new to the industry. Cyclical patterns in the hog market were recognized in the United States during the 19th century and studied extensively by agricultural economists beginning in the early 20th century (Haas and Ezekiel, 1926). Chinese scholars and analysts have observed similar cyclical fluctuations in China (Liu and Wang 2009; 2010). Zhang (2010a) identified six periods of pork-price increases (1985, 1988, 1994, 1997, 2004, 2007). Several Chinese studies identified a series of four three– to four–year cycles in the hog sector between 1996 and 2009 (Han and Qin, 2007; Liu and Wang, 2009; Nie et al., 2009). The price increase during 2007 prompted Chinese officials to intervene extensively in the pork market to stabilise prices, which is discussed later in this report.

The well-known ‘cobweb model’ was developed in the 1930s to show how cycles in pork prices can result from the biological lag in supply response (Ezekiel, 1938; Coase and Fowler, 1935). In China, it takes 18 to 20 months to raise a new generation of gilts to breeding age, produce a crop of pigs and then raise those pigs to slaughter weight (Zhou, 2010). Thus, when an increase in pork prices prompts farmers to expand production, the corresponding increase in pork supply may take more than a year to enter the market. Conversely, when farmers slaughter sows during a downturn in the market, the sector’s ability to expand supply is constrained in future months.

Seasonal fluctuations in demand that correspond to major holidays also affect China’s pork market. Hog inventories build up in anticipation of peak demand before the Chinese New Year (usually late January or early February) and the mid-Autumn festival and National Day (mid-September to 1 October). In the months following these festival/holiday periods, demand, hog slaughter and pork prices often decline.

Cycles are evident in the ratio of hog price to corn price, an indicator of short-term profitability in the hog sector. A high ratio indicates that the output price (for hogs) is high relative to the price of the chief input (corn), which typically induces farms to build up hog inventories to increase production. Conversely, a low ratio signals financial losses, which prompt farms to decrease hog inventories.

China’s hog-corn price ratio has generally fluctuated around 6:1 (figure 8; see section on The Hog-Corn Price Ratio below). A series of fluctuations in China’s pork industry are marked by peaks in the ratio early in 2005 and a much higher peak three years later in 2008. Periods of low prices and severe losses for hog producers occurred in mid–2006 and mid–2009, again three years apart.


The recent cycles resulted from a chain of events that began in 2004, when concerns over an outbreak of avian influenza drove Chinese consumers to substitute pork for poultry meat. The increased demand for pork increased hog prices and encouraged farmers to expand hog inventories. Hog prices peaked in 2005 but subsequently fell as the supply of pork surged. Prices reached a low in mid–2006, and many producers experienced losses and culled sows. In late 2006 and 2007, animal disease epidemics reduced the supply of pork, and pork prices again began to rise. The previous year’s cull of sows and continuing concerns over the effects of animal diseases constrained the industry’s ability to expand production in the short run. Demographic changes also affected the pork supply as off-farm employment and rising incomes encouraged many rural families to purchase pork instead of raising hogs in their backyards. The inelastic short–run supply contributed to a sharp increase in pork prices.

Rapidly rising pork prices became a national concern in China during 2007. China’s consumer price index for meat was up 40 per cent year–over–year, the highest increase among all categories. The jump in pork prices contributed to the country’s high inflation rate that year.7

An NDRC study of the factors behind rising pork prices during 2007 focused on the tight supply of feeder pigs. The report found that hog prices received by farmers were up 45 per cent year–on–year but that feeder pig prices were up 60 per cent. The feeder pig supply was reduced by the culling of sows and the effects of a disease epidemic that caused sows to abort.

High prices for hogs in 2007 and early 2008 attracted investment in large Chinese hog farms and pork processing. Investors included meat, feed and real estate companies; overseas investment banks; and a well-known Chinese software entrepreneur (Jiao and Kou, 2010). According to official statistics, China’s hog inventory grew five per cent during 2007, and it expanded at a similar pace in 2008. The hog inventory peaked at nearly 470 million head in late 2009, an increase of 51 million from the 2006 total. This marked China’s largest expansion of hog inventories since 1996-99.

During 2009 and 2010, two periods of losses and recovery occurred about a year apart, interrupting the pattern of three–year cycles. The hog-corn price ratio reached a low point in May 2009, about three years after the rapid increase in pork prices in 2007. During the second half of 2009, prices rebounded briefly but the hog-corn price ratio fell again during the first half of 2010, following outbreaks of animal disease epidemics that led to many animal deaths and early slaughter of sick hogs. Furthermore, low prices and economic losses prompted many farmers to cull sows or exit the industry, and China’s hog inventory declined during early 2010. Hog prices rebounded in July that year and continued rising during the second half of 2010 and into 2011. The sector returned to profitability during the second half of 2010 but rising corn prices slowed the increase in the hog-corn price ratio. In early 2011, hog prices neared the historical high reached in 2008 and the hog-corn price ratio was 7:1, slightly above ‘normal’. Due to high corn prices, however, the 2011 hog–corn price ratio did not rise as high as it did during the 2008 peak period.

By mid–2011, rising pork prices were again a major influence on China’s consumer price index, as they had been in 2007. The sow inventory had yet to recover from the losses and culls of the previous year, and the tight supply of piglets slowed the industry’s expansion. High feeder pig prices seemed to be consistent with a limited supply of feeder pigs, and Ministry of Agriculture statistics indicated that sow inventories were down two to three per cent from a year earlier. In one article, industry analysts expressed unease that the situation would be ‘a repeat of the 2008 roller coaster’ (Sun et al., 2011).

The Hog–Corn Price Ratio
The hog–corn price ratio became a valued resource for US commodity market analysts in the 19th century as it reflected the ratio of output price to the price of the main input. At that time, many Midwestern farmers used hogs as an alternative way of marketing corn. When corn prices were low, farmers fed the corn to hogs instead of selling it on the market.

The hog–corn price ratio is now widely used in China as an indicator of hog sector profitability. Market analysts and policy–makers in China often view 6:1 as a ‘normal’ level for the ratio. Higher values are considered an indicator of profitability and expansion, while lower values are an indicator of losses and contraction. The break–even level is often reported to be 5.5:1. The ratio is not as widely used in the US hog industry today because corn accounts for a smaller share of production costs than in years past. The ratio’s value as an indicator is also questionable in the Chinese hog industry because corn is only one of many kinds of feeds used by Chinese farmers.

In China, the hog–corn price ratio is computed using prices in yuan per kg. In the United States, the ratio is traditionally computed in dollars per cwt for hogs and dollars per bushel for corn. Because the units used by the two countries differ, the US ratio is typically quoted as a much larger number. Using data from the 1970s, Van Arsdall and Nelson (1984) calculated a break–even (cash basis) ratio of 15:1 to 16:1, which would be equivalent to 8.5:1 to 9.0:1 calculated using prices in dollars per kilo. In a study of historical patterns in the US hog–corn ratio, Holt and Craig (2006) surmised that an increasing trend in the ratio beginning in the 1940s reflected diversification of hog feedstuffs during the post–war period. Recently, US hog market analysts have quoted a higher reference level of 18:1 to 20:1.

Chinese officials regarded the fluctuations in hog prices and profitability beginning in 2007 as evidence of unusual volatility. This prompted extensive government intervention to stabilise the market. However, a comparison with historical US data for 1909 to 2010 shows that the recent cycles in the Chinese hog–corn price ratio are not unusual (see figure). Chinese fluctuations are similar to cycles that occurred in the United States during the early 20th century. Coase and Fowler’s (1935) description of hog cycles in Great Britain during 1920 to 1933 is also remarkably similar to that of recent cycles in China.


Footnote
7The increase in China’s consumer price index was 12 per cent for all food and 4.8 per cent for all items during 2007.

Monday, March 12, 2012
Chinese Steelmaker Invests in Pig Farm
CHINA - China's steelmakers, battling to stop their profit margins from narrowing further, are diversifying into unrelated sectors, including wine production, vegetable planting, and even raising pigs.


Deng Qilin, a deputy at the National People's Congress and general manager of Wuhan Iron and Steel (Group) Corp, a leading Chinese steelmaker, revealed that the company's latest goal is to build a farm that can hold 10,000 pigs.

The project is one of the company's investment programs at more than 39 billion yuan ($6.2 billion). It will also build vegetable bases to tap the food market and is ready to enter the logistics business by providing services to urban residents.

While steel production in China has increased over recent years, steelmakers' profits have slumped to less than 3 per cent, far below the 6 per cent registered by the industrial sector.

Tuesday, March 13, 2012
Yurun Group Sees Profits Down
CHINA - Chinese integrated meat processor China Yurun Food Group has reported a turnover of HK$32,315 million last year compared to HK$21 in 2010 - an increase of 50.5 per cent.


The Group's gross profit was HK$2,785 million compared to HK$3 in 2010, which was a drop of 10.1 per cent.

The Group's overall gross profit margin reached 8.6 per cent during the year.

The company said the decrease in gross profit margin was mainly due to the significant increase in raw material costs, in particular hog prices, together with weakened market confidence in the group's products and the increasing difficulty in transferring the group's increased operation costs to its customers.

The decrease has also ben attricuted to product promotion activities conducted by the group in the fourth quarter of 2011, which were targeted at retaining market share.

The board of directors of the Company has not recommended the payment of final dividend for the year of 2011.

Zhu Yicai, Chairman of Yurun Food said: "In 2011, the pork product and hog slaughtering industries in China faced unprecedented challenges. It has been a short term turmoil experienced by the highly fragmented hog slaughtering and meat processing industries in China.

"For Yurun Food, this crisis allowed us to better recognise the challenges and opportunities of the Group's development in all aspects.

"The possible insufficient communication with the market during our development led to misunderstandings on the Group's quality management processes, which triggered a crisis of trust.

"Having experienced this setback, Yurun Food will remain committed to the realization of its long-term development strategies, optimize the communication channels between the Company and consumers, so as to rebuild the brand and regain the trust of consumers of the Group, as well as to bring returns to shareholders."

Mr Zhu added: "The management believes that the Group's business has reached the light at the end of the tunnel.

"We are confident that our business will progressively return to normal and realise a long-term steady growth.

"Looking ahead, the Group will be fully committed to our motto of 'you trust because we care', continue to implement internationally recognized internal quality control measures, strive to realise its nationwide marketing and production capacity development, so as to capture the business opportunities brought by industry consolidation, and to strengthen its leading market position."

As at 31 December 2011, slaughtering capacity of the Group was 46.05 million heads per year, representing an increase of 10.45 million heads as compared to 35.60 million heads at the end of 2010, while the group's annual capacity of downstream meat processing was 304,000 tons. The Group will continue to expand its capacity, accelerate the enhancement of its nationwide production capacity in the coming years and aim to reach a slaughtering capacity of 70 million heads per year, as well as a downstream capacity of 600,000 tons per year by 2015, so as to further strengthen its leading position in the industry and capture the tremendous business opportunities in both upstream and downstream markets.

Wednesday, March 14, 2012
Rise in Rvenue and Income for Zhongpin
CHINA - Chinese meat and food processing company, Zhongpin, has reported higher revenues, net income, and diluted earnings per share for 2011.


Revenues increased 54 per cent to $1,456.2 million in 2011 from $946.7 million in 2010, while net income increased by 10 per cent to $64.2 million in 2011 from $58.3 million in 2010.

Basic earnings per share decreased 0.6 per cent to $1.66 in 2011 from $1.67 in 2010 on average basic shares outstanding that were 10.5 per cent higher than 2010, but diluted earnings per share increased 0.6 per cent to $1.66 in 2011 from $1.65 in 2010 on average diluted shares outstanding that were 9.3 per cent higher than 2010.

Over the coming year, Zhongpin expects that sales revenues should be within a range of US$1.55 billion to $1.72 billion for 2012.

Gross profit margin is expected to be within the range of 8.6 per cent to 10.2 per cent. Net profit margin is expected to be within the range of 3.3 per cent to 4.2 per cent.

The resulting diluted earnings per share for the year 2012 is expected to be within the range of $1.36 to $1.92 per share, assuming average diluted common shares outstanding of about 37.5 million shares in 2012.

Zhongpin added 201,000 metric tons of annual capacity for pork and pork products during 2011 to bring total capacity at year-end 2011 to 904,760 metric tons.

Zhongpin said it will be investing about $10.5 million in a by-product processing plant in Changge, Henan province, to product sausage casings and the raw material used to make heparin sodium.

Annual production capacity will be 100 million metres of casings and 300 billion units of the raw material for heparin sodium. The construction is scheduled to start in the first quarter of 2012 and operations should begin in fourth quarter of 2012.

Xianfu Zhu, Chairman and Chief Executive Officer for Zhongpin, said: "We continued to deepen our penetration in our current markets and aggressively increase our geographic markets, sales locations, customers, and operations in 2011 to support higher sales, profits, and operating cash flow in the years ahead, so the year was good in operations.

"Our financial results in 2011 reflected new aggressive price competition in the markets and our higher expenses in operations, promotion, marketing, and sales to build our market share in 2011 and prepare the Company for increasing success in the future.

"Most of our 54 per cent increase in sales revenues in 2011 came from our pork products prices for which rose an average of 44 per cent for the year, on tonnage that was up 7 per cent. With the prices of both hogs and pork expected to decline from 15 per cent to 20 per cent in 2012, it will be difficult to report higher results in 2012 compared with 2011.

"In 2012, we will slow the rate of our capacity expansions and focus on greater use of existing facilities, which we believe should help our financial results.

"As of today, China expects its economy to grow at a good rate in 2012, with its gross domestic product continuing to increase but perhaps at a slower rate of growth.

"Despite challenging competition that is likely to continue in the marketplace in 2012, and given the good outlook for the China's economy, we expect to report somewhat higher revenues in 2012 than 2011, a somewhat lower gross profit margin and a somewhat lower net profit margin than in 2011, and diluted earnings per share within the range of $1.36 to $1.92 per share in 2012. The lower margins are expected because we are facing tough competition in the markets and must simultaneously prepare the Company for improved operating and financial performance that we expect will create substantial additional value for shareholders in the years ahead.

"As you know, we believe that the number one reason for our continuing success is that Zhongpin provides outstanding, flavorful, and increasingly convenient pork products with the highest product quality and safely, from farm to fork.

"We developed and launched 79 new products in 2011, most of which focus on regional flavors and convenient preparation methods that should be very attractive in China. As of December 31, 2011, we offered more than 410 types of pork products and more than 25 different categories of vegetables and fresh fruits. In addition, we had more than 90 new products under development at yearend 2011.

"Our fundamental strategy has proven its effectiveness in the past several years, including 2011. Our major objectives, which are designed to create additional long-term value for our shareholders, include increasing our brand recognition and sales, expanding our market presence, increasing our production capacity, expanding and optimizing our product lines, and maintaining our technological superiority.

"We plan to continue building a leading national brand by gaining higher market share and prudently increasing our markets, processing plants, and cold-chain distribution networks to satisfy the increasing demand for our high quality products. The result should be growing value created over the years to benefit our shareholders."

Thursday, March 15, 2012
Tianli Agritech Reports Increased Market Hog Sales
CHINA - Tianli Agritech yesterday announced that the company's revenue increased 49 per cent year-over-year to $8.7 million due to higher selling prices, increased unit sales of Tianli market hogs plus retail sales of "Tianli AnPuluo" hog meat.


Tianli's Chairwoman and CEO, Hanying Li, said, "We completed another successful year, which included the acquisition of our 11th hog farm and the launch of our Tianli-branded retail pork products through our partnership with An Puluo Foods. While our fourth quarter results were negatively impacted by complications resulting from contaminated feed at a few of our farms, we responded quickly to contain the impact. Having implemented a series of additional safeguards, we expect the negative drag on our financials to subside in the first half of 2012."

Revenue for the fourth quarter of 2011 increased 49 per cent to $8.7 million from same period a year ago. The Company sold 25,472 hogs, down 1 per cent from the prior year reflecting the stronger demand for market hogs offset by the weaker demand for breeder hogs. Sales of market hogs increased 68 per cent to $5.3 million as high retail pork prices drove strong demand for market hogs. Breeder hog sales fell 38 per cent to $1.6 million, representing 19 per cent of total sales in the fourth quarter of 2011.

Through its cooperation with An Puluo Food, Tianli's retail division generated $1.7 million in sales in the fourth quarter after launching in the third quarter of 2011. Tianli provides and co-brands hog meat cuts, packaged and sold in refrigerated food cases under the Tianli AnPuluo brand in over 50 major retail outlets in great Wuhan, including Wal-Mart, Zon 100 and RT Mart.

Gross profit in the fourth quarter of 2011 was $2.0 million, a 20 per cent decrease from the same period last year. Gross margin was approximately 23 per cent and 43 per cent for the fourth quarter of 2011 and 2010, respectively. The year-over-year margin decline was attributable to $1.3 million in costs related to the disposal of a shipment of contaminated hog feed and the treatment and disposal of hogs which became ill as a result of eating the contaminated feed.

Selling, general and administrative expenses were $0.9 million in the fourth quarter of 2011, an increase of approximately $0.5 million. Approximately $0.1 million of the increase was related to higher public company expenses and $0.4 million related to the Company's retail business and marketing costs not present in the year ago period.

Net income attributable to Tianli common stockholders was approximately $0.8 million, down 61 per cent from $2.2 million in the three months ended December 31, 2010. Earnings per fully diluted share were $0.09 compared to $0.12 the previous year.

Chinese Policies Attempt to Smooth the Cycle
Chinese officials use a variety of policy measures that are intended to reduce cyclical fluctuations in pork production, explain Fred Gale, Daniel Marti and Dinghuan Hu in a report entitled ‘China’s Volatile Pork Industry’ from the USDA Economic Research Service.



Measures include subsidies, tax breaks, and market interventions in hog farming and pork processing. Government officials often play a coordinating role by recruiting farmers as suppliers, arranging access to land and bank loans, and brokering deals with investors or final customers.

In response to the steep increase in pork prices during 2007, the government announced a package of hog-sector subsidies just two months after rising pork prices became a subject of public concern (see Zhu, 2007). A series of additional grants, subsidies and tax breaks aimed at the pork industry followed later in 2007 and in succeeding years. A programme introduced in 2009 sought to stabilise pork prices by buying and selling pork for government reserves. The government renewed its emphasis on pork policies in mid–2011 when pork prices surged again.

Pork Industry Subsidies
China’s pork policies are part of an ongoing effort to transform the traditional structure of ‘backyard’ farms, small butchers and pork vendors into a ‘modern’ livestock sector (see box, “Policy Priorities: Modernisation and Stability”). Since the 1980s, efforts to modernise the industry have included standardising hog breeds, feeds and veterinary medicines; regulating the use of feed additives; enforcing animal health regulations; and shifting toward modern slaughter, processing, and retail markets.

Efforts to modernise China’s pork industry were revisited in 2007, a period marked by soaring prices and widespread animal disease epidemics. Officials viewed the prevalence of small–scale backyard farmers as a source of instability because these operations are said to more readily slaughter sows during a market downturn and are more susceptible to animal disease epidemics than larger operations.8 Officials believe a modernized industry chain will bring stability to the market while also addressing food safety and disease issues.

China’s pork policies emphasise improvements in the breeding and farrowing stages of production, upgrading or refurbishing structures and equipment for farms raising slaughter hogs, and attracting investment to the sector.9 The main policy measures include the following (values converted to US$ at the official exchange rate in 2010):

A subsidy payment for each breedable sow set at 50 yuan per head in 2007, raised to 100 yuan ($14.60) in 2008. The sow subsidy was withdrawn in many areas in 2009 but was restored in 2011.


Subsidised insurance for sows against losses from disease and natural disasters. The premium (paid to a designated insurance company) is 60 yuan ($8.78) per head, of which 12 yuan is paid by farmers and 48 yuan is paid by central and local governments. Initially, the program only covered breedable sows, but it was extended to include gilts in 2011. Pilot programmes in some areas insure hogs raised for slaughter.


Free mandatory immunisations against Porcine Reproductive and Respiratory Syndrome (PRRS, called ‘blue ear disease’ in China), foot-and-mouth disease and classical swine fever. Vaccines are procured from companies through a bidding process with costs split between central and local government. Vaccines are distributed to farms by veterinary officials.

A ‘fine breed’ subsidy for artificial insemination using semen from boars of approved breeds, such as Duroc, Landrace and Yorkshire. The subsidy is 10 yuan ($1.46) for each insemination, for up to four attempts per year for each sow.


Financial awards (grants) of approximately $1 million each to local governments of 362 major pork–supplying counties for financing investments in hog housing, manure handling, immunisation and veterinary work.


Financial awards to large farms holding at least 500 sows ($146,000) and to standardised farms and village ‘production zones’ where at least 500 hogs are slaughtered annually – from $30,000 to $117,000, according to farm size and province.


Subsidies of $146,000 were given to each of 300 key breeding farms and provincial hog–breeding centres.


A waiver of the 25 per cent corporate income tax for companies that engage in livestock and poultry production took effect in January 2008 (Petry and Zhang, 2009).
Spending on these programmes is only reported on a piecemeal basis by Chinese authorities. The total is difficult to ascertain since there are so many programmes, and many are financed jointly by central and local government funds. Central government funds for the ‘fine breed’ subsidy increased from $26 million in 2007 to $95 million in 2010. Pork surplus county awards totalled three billion yuan ($450 million) in 2010. Financial awards for large–scale farms totalled $367 million in 2010. Most subsidies are targeted to 362 important pork–producing counties that account for over 40 per cent of China’s hog production.10 The award funds are distributed by local authorities to farms, companies, and local officials for refurbishment of hog housing, acquisition of breeding hogs, vaccination programmes, manure management, subsidised loans and support of pork processing, breeding, feed companies and other segments of the industry supply chain.

Various measures are carried out at the local level as experimental pilot programmes. These include subsidies for village methane digesters to produce natural gas from hog waste, ‘ecological’ hog-farming projects, subsidised insurance for finishing hogs, funds to pay for disposal of carcasses of diseased hogs and small cash grants to encourage migrant workers to return to their home villages and set up hog farms.11 Some of these are extensions of an existing web of local subsidies, model farms, pork reserves, wholesale markets and supply chain linkages supported by the ‘vegetable basket responsibility system’ in which municipal leaders use various measures to ensure adequate supplies of meat and vegetables for their cities. Pork reserves (both frozen pork and hogs kept in reserve) are held at three levels: central, provincial and city. In 2011, China’s state council ordered large and medium cities in coastal provinces to hold pork reserves to meet 10 days of consumption; other cities were ordered to hold a seven–day reserve.

The implementation of hog sector support varies from year to year and place to place. Local government and bank officials make extra efforts to implement policies when orders are issued from national officials. In 2007, the China Bank Regulatory Commission issued a document ordering banks to make loans to expand pork production capacity. Commercial banks were instructed to lend to companies that raise or slaughter hogs; rural credit cooperatives were instructed to lend to individual hog farmers; and village banks and rural lending companies were instructed to offer production credit. An account by journalists described how local officials in a county of Sichuan Province organised a meeting in 2007 to urge farmers to raise hogs and offer them subsidies while bank officials went door to door to offer loans secured by personal property like ceiling fans and washing machines.

In coastal provinces, hog production is increasingly dominated by large–scale farms operated by companies. In some cities, hog production is banned due to environmental concerns. In western provinces, slaughter hogs are usually raised by individual small–scale farmers but officials encourage companies to invest in large breeding and farrowing farms that supply feeder pigs. In 2007 and subsequent years, Ministry of Agriculture officials accelerated implementation of a plan to subsidise construction of ‘livestock production zones’ (‘yang zhi xiao qu’) where individual farmers may concentrate their animals in facilities that simulate large–scale farms. In 2011, China’s State Council announced a plan to allocate 2.5 billion yuan ($385 million) annually over five years for construction of large–scale hog farms.

In 2007, the combination of policies and high prices attracted investment in new farms, slaughter and processing plants, and imported breeding animals. The build–up of production capacity stimulated by policies helped drive prices down during 2008–09 nearly as fast as they had risen during 2007. Meat sector analysts attributed falling prices to excess supply of pork, with some citing the influx of investment due to government policies as a chief cause (Yi Zhang, 2010, Feng, 2004; Xiao and Wang, 2009).

Policy Priorities: Modernisation and Stability
In 2006, China’s vice minister of agriculture gave a speech at a ‘Modern Livestock Industry Summit’ that typifies the government’s approach to livestock industry policy. In his remarks, the vice minister stressed the importance of the hog sector’s transformation to a modern industry, citing special instructions issued by the country’s top leaders. According to the speech, President Hu Jintao had instructed officials to design policy measures to ensure the stable development of the industry, and Premier Wen Jiabao had called for policies that would stabilise hog prices and prevent large fluctuations in pork production.

Promoting a ‘modern’ livestock sector was emphasised in the government’s five–year plan for 2006–10. Modernisation includes the related strategies of ‘industrialisation’ (chan ye hua), ‘standardisation’ (biao zhun hua) and increased scale of production (gui mo hua). These strategies entail concentrating livestock on larger–scale farms, making capital investments in farms and processing facilities, disseminating new technologies and equipment, and integrating farms with processors, breeders and feed mills. The vice minister’s speech emphasised the need to nurture strong pork processing companies that would establish well-known brands, play a leadership role in the industry, and improve the industry’s competitiveness on the international market. He also encouraged farmers to unite in cooperative organisations. The speech called for livestock industry support measures, including subsidies, tax waivers, earmarked bank loans and other methods. It also said that the government would experiment with methods for attracting private investment to the pork industry.

The vice minister stated that the livestock industry had experienced unprecedented price fluctuations in recent years, and that the hog industry was recovering from a period of very low prices. He emphasised the importance of improving vaccinations and disease resistance. The speech took place about six months before the spread of ‘blue ear’ disease and sharp increases in pork prices in 2007. Many of these policies were implemented during 2008–09 but they failed to prevent an even steeper increase in pork prices during 2010–11.
 

‘Price Alert’ Market Stabilisation
In 2009, Chinese policy–makers introduced a ‘hog price alert’ market intervention program aimed at reducing the cyclical variation in hog prices. The programme’s main function is to buy up pork for reserves to increase demand when prices are low and sell pork to augment supply when prices are high. The programme intends to stabilise hog inventories by preventing extended periods of low prices that might prompt large culls of sows.12

According to documents describing the programme, movements in the hog-corn price ratio and several other designated market indicators trigger purchases and sales of pork reserves. The programme specifies the ‘normal’ range for the ratio as 6:1 to 9:1 and authorities may take measures to prevent the hog–corn price ratio from falling below 5.5:1.13 When the ratio falls in various ranges below 6:1, authorities can order designated meat companies to purchase frozen pork to hold in reserve (table 1)14 When the ratio is 5.5:1 to 6:1, provincial documents specify that cities should maintain a 7-day reserve of pork (based on average consumption of 100 grams/person/day).15 When the ratio falls below 5.5:1, the central government can subsidise interest on loans to slaughter and processing companies to encourage them to increase inventories of pork and increase output of processed pork products.

Also, the government can authorise an increase in central meat reserves and local reserves in large cities. At ‘abnormally low’ levels below 5:1, the programme calls for large increases in reserves, and officials can authorise one–time subsidies per sow for farmers in major pork–producing counties to prevent slaughter of sows. The document also calls for limits on pork imports ‘to reduce market supply’ and increases in pork exports by raising food safety standards and providing technical, information and policy support.16 When the hog–grain price ratio exceeds 9:1, the government can sell frozen pork reserves to bring down prices, and it may issue subsidies to low–income consumers.

Since the programme’s inception, China’s NDRC has published weekly average prices and monthly hog inventory and slaughter on a web site. However, little information about purchases and sales of pork under the programme is revealed. News media reports reveal that purchases and sales have taken place but details on amounts or locations of the transactions are seldom announced.

Table 1. China’s pork market intervention guidelines
Hog–grain price ratio1 Color code Government action
Over 9:1   Sell frozen pork reserves into the market; issue subsidies to low–income consumers.
6:1 to 9:1 Green (‘normal’) Monitor markets and price fluctuations; issue information. Pork reserves mainly used for emergencies and disasters.
5.5:1 to 6:1 Blue Add to central and local pork reserves when ratio is in this range for 4 consecutive weeks.
5:1 to 5.5:1 Yellow Subsidise interest on loans to large meat processing companies to encourage them to add to commercial reserves and increase pork processing.
Under 5:1 Red Increase central reserves and require large and medium cities to increase local reserves of frozen pork when the ratio is in this range for 4 consecutive weeks. The number of live hogs kept in reserve may be increased. If the ratio is still in this range after reserve purchases, a temporary subsidy of 100 yuan per sow may be given to farms in main hog-producing counties when sow inventory is down 5 per cent year-on-year. Appropriately limit pork imports to reduce the market supply; ‘improve’ the food safety system to encourage pork exports.
1Some provinces set a higher threshold for the hog-grain price ratio.

Source: USDA, Economic Research Service using National Development and Reform Commission, Regulatory plan for controlling excessive hog price declines, Bulletin No. 1, January 9, 2009, and provincial guidelines for implementation.

The first intervention under the stabilization programme occurred in May 2009, less than six months after its introduction (figure 9). The hog–grain price ratio fell below 6:1, and the government began purchasing pork for reserves in mid–June 2009. During April–June 2010, the government conducted five rounds of pork purchases before prices rebounded in July. Official reports said the hog–grain price ratio fell from 5.07 in mid-April to 4.81 by May 26, well into the ‘red’ region specified by the programme. It was still in the red region when the fifth round of purchases was carried out at the end of June 2010. NDRC reported that the hog–grain price ratio reached the 6:1 normal level in late July.


Later in 2010, the government ordered sales of pork reserves when pork prices began to rise rapidly. Hog prices rose more than 20 per cent during July–November 2010. A round of frozen pork sales was ordered to prevent excessive price increases ahead of the October 1 National Day holiday, and a second round was ordered in November. Some local authorities sold pork reserves in mid–2011 as pork prices reached record levels. These sales occurred when the hog–corn price was far below the 9:1 ratio specified for triggering such sales.

During 2011, as pork prices again became a national concern, there were scattered reports of pork reserve sales by some local authorities but no coordinated national campaign to sell pork reserves. Instead, the State Council issued a new directive ordering local authorities to increase their pork reserves. Large and medium cities and cities in coastal areas were directed to maintain a reserve equivalent to 10 days of pork consumption and other cities were directed to maintain a seven–day reserve.

The influence of the price alert programme on pork prices is hard to discern, especially since the amount, timing and location of pork reserve purchases and sales are not announced. The programme’s ability to affect the market is limited because frozen pork purchases constitute a tiny portion of a huge, scattered market. Zhang and Nie (2010) reported that reserve purchases in 2009 totalled 110,000 metric tons, equivalent to just 0.26 per cent of China’s annual pork output. The Agricultural Development Bank of China reported that it financed meat-reserve purchases of 250,000 metric tons in 2010, about 0.5 per cent of annual pork production.17 Frozen pork itself constitutes a relatively small part of the market because Chinese consumers have a strong preference for freshly slaughtered meat.18

Officials credited the first round of purchases in 2009 for bringing about a recovery of pork prices that year but this seems unlikely since authorities were still recruiting companies to hold reserves and many provinces had not even released their implementation regulations at that time. Some market reports again credited reserve purchases for the rebound in hog prices in July 2010 but the rebound was more likely due to a 5.7 per cent decrease in hog slaughter that month.

The weakness of the hog price alert programme was revealed by the sharp increase in pork prices during 2010–11. During this period, rising food prices were a major policy concern in China and officials ordered sales of pork in the fall of 2010, yet hog prices rose 40 to 50 per cent and by June 2011, pork prices reached the record level set in early 2008. Market reports ascribed the surge in prices to short supplies of pork, which resulted from widespread animal disease, culls of sows and exits from the industry during the period of low prices and losses in 2010. The supply of feeder pigs in 2011 was limited by the cull of sows a year earlier, while rapid income growth created robust demand (Woolsey and Zhang, 2011). The wide swing in prices and hog inventories during 2010-11 was remarkably similar to that of 2006–07 – exactly the type of phenomenon that the price alert policy was intended to prevent.

Tuesday, March 20, 2012
Large Scale Meat Safety Tests Underway
TAIWAN - The Department of Health (DOH) and local health authorities will conduct its largest scale tests to date from March 20-22 to check for the leanness enhancing drug ractopamine in 1,000 products, including samples obtained from beef, pork, and geese, officials from the DOH's Food and Drug Administration (FDA) has said.


According to Focus Taiwan, a food safety crisis task force working under the Executive Yuan decided to expand the tests, and central and local health authorities will be testing 500 beef, 400 pork, and 100 geese samples, and will include products sold at malls, supermarkets, traditional markets and restaurants.

Product labels on imported meat will also be checked for accuracy, including whether the items are from the actual country claimed on labels, and distributors will be counseled to implement self-management, the DOH added.

The last nationwide inspection was carried out on March 5, in which 219 beef samples were tested for the meat additive ractopamine.

The decision was made after Health Minister Chiu Wen-ta met with top health officials from various cities and counties on Friday for an urgent meeting to lay out how the DOH will work with local governments to step up checks on leanness enhancers in meat products sold in shopping malls, supermarkets, traditional markets and restaurants.

Importers having past violations will have all their beef inspected, while the current system of a five per cent check will be maintained for those who have no such record.

From January 2012 to March 11, DOH tests found 36 ractopamine-tainted beef samples, out of a total sample of 219, and local health authorities have now destroyed 7,000 Kg of tainted beef.

In addition, the DOH has tested 98 pork products, but have not found any traces of ractopamine, and the department is still trying to confirm whether meat products sold by a food company contained traces of ractopamine.

Wednesday, March 21, 2012
Farm Produce Prices Rise on Reduced Supplies
CHINA - Prices of major farm produce monitored by the government rose last week as snow falls interrupted supplies, the Ministry of Commerce said Tuesday.


The wholesale prices of eight staple aquatic products gained 0.3 per cent last week, with the price of grass carp up 2.1 per cent.

Meanwhile, the price of pork, which was the main driver of the nation's inflation last year, fell for seventh consecutive weeks last week, down 1.3 per cent. Egg prices dropped 0.1 per cent during the period.

Food prices have a one-third weighting in the calculation of China's consumer price index (CPI), a major gauge of inflation. The country's CPI eased to 3.2 per cent last month, down from 4.5 per cent in January.

Swine Epidemics Affect the Chinese Pork Market
Outbreaks of ‘blue ear’ disease (PRRS), foot-and-mouth disease (FMD), classical swine fever, pneumonia, Streptococcus suis, circovirus, parasites and erysipelas are common in China’s pig industry, according to Fred Gale, Daniel Marti and Dinghuan Hu in a report entitled ‘China’s Volatile Pork Industry’ from the USDA Economic Research Service.
 

News reports indicate that large losses attributed to disease periodically restrict the supply of pork, contributing to price surges. Chinese news media periodically report illegal sale of pork from diseased hogs, pork that is discolored or bearing lesions, and discovery of large numbers of hog carcasses in rivers and canals.

The impact of disease on the pork market is impossible to assess with any precision. When disease affects sows and young pigs, impacts on the market may occur several months after an outbreak. The frequency and incidence of disease is hard to measure accurately, and outbreaks are often regional. While the Ministry of Agriculture reports on disease outbreaks, these figures likely understate the actual incidence of disease because farmers and merchants have little incentive to report diseased animals to authorities (Woolsey et al., 2010).

Rising pork prices in 2007 and 2011 were attributed in part to disease outbreaks. During 2006-07, the supply of feeder pigs was reduced in part because blue ear disease (also known as porcine reproductive & respiratory syndrome, PRRS) caused sows to abort. This restricted the supply of finished hogs and led to high prices during 2007-08. During 2010, another round of disease outbreaks induced many farmers to slaughter hogs early, and many diseased carcasses were illegally sold to slaughterhouses. The increased supply of slaughtered hogs and the prevalence of tainted pork led to a period of depressed prices during 2010 (Woolsey et al., 2010). The disease–related decline in hog inventories during 2010 led to tight supplies of feeder pigs and another surge in pork prices during 2011 (Woolsey and Zhang, 2011; Sun et al., 2011).

Chinese agricultural officials have taken steps to reduce the effects of animal disease epidemics. Immunisations for PRRS, classical swine fever and foot and mouth disease (FMD) are compulsory and subsidised. Farmers are compensated for culling animals to prevent epidemics, and local officials must bear the cost of sanitary disposal of dead animals. Agricultural officials have made it a priority to improve veterinary services, biosafety and monitoring and control of farms, slaughterhouses, transportation and markets. Chinese pigs are required to have ear tags recording seven to eight mandatory immunisations. Slaughterhouses are required to ensure that hogs have ear tags and vaccination certificates. Inspectors are required to conduct ante– and post–mortem inspections of slaughtered hogs, and tissue samples are to be examined for parasites at slaughterhouses.

However, government programmes and regulations are not uniformly implemented, and problems with animal health persist. Vaccines may not be effective against multiple strains of PRRS that exist in China’s hog herds. Wang (2009) reported that ear tags (that record immunisations) and animal quarantine certificates can be easily falsified or purchased; farmers often miss vaccinations; syringes are often used on multiple animals; and veterinary personnel needed to carry out vaccinations are in short supply. In a small survey of farmers, Liu et al. (2007) found most farmers whose sick pigs did not respond to treatment sold the animals before they died or improperly discarded the carcasses of dead animals; only one farmer said he buried dead pigs as required by regulations. Liu et al. found that most farmers did not use ear tags or only attached them at the time the pigs were sold; pigs without ear tags were sold to unlicensed butchers or neighbouring farmers.

The high density of animal populations, rudimentary facilities, lack of technical knowledge among farm personnel and lack of resistance among ‘foreign’ breeds of pigs may contribute to vulnerability to disease. One article in a Chinese veterinary publication warned farmers that changes in feed, poor nutrition, neglect of immunisations and other animal stress–inducing factors that are more common on small–scale farms may heighten risk of classical swine fever outbreaks (Ren, 2010). According to Feng (2010), periods of extreme weather or flooding can trigger an epidemic among farms characterised by stressed animals and neglect of immunisations. 19 As evidence of farmers’ cost-cutting, Feng noted that many feed and veterinary drug companies reported sales declines of as much as 30 per cent during the period of losses in 2010. Feng also suggested that periods of losses by farmers may leave local governments short of cash to pay veterinary technicians and dispose of carcasses.

Feng (2010) hypothesised that disease outbreaks may actually be linked to the hog cycle itself. Writing in an industry newsletter, he observed that extended periods of losses for small– and medium–scale hog farmers may leave them short of cash. Farmers may then cut costs by switching to lower quality, less nutritious feeds and neglect vaccinations. Less nutritious diets leave animals in a weakened state and vulnerable to disease. Jiao and Kou (2010) reported that farmers in Sichuan cut costs during a period of depressed prices by increasing the proportion of rapeseed stalks in hog rations. Sun et al. (2011) observed that the substitution of cheaper feed substitutes contributed to chronic disease problems in the industry.

Chinese officials introduced subsidised insurance for producers of sows to reduce the risk of financial losses attributed to animal deaths, but some market reports indicate that this programme encountered moral hazard problems. Liu (2010) reported heavy losses incurred by companies offering sow insurance in Henan Province, citing large numbers of claims, high costs and fraud.20 In July 2010, a Yangzhou newspaper reported that the insurance company’s pay–outs for sow death losses had doubled from the previous year and reached 25 per cent in one county (Yang, 2010). According to an insurance worker quoted in the article, some farmers neglected to treat sows for diseases during periods of low hog prices because the insurance indemnity exceeded the animal’s salvage value if it were culled and sold.

Tuesday, March 27, 2012
Police Raids Uncover Pork from Sick, Dead Pigs
CHINA - Police in southeast China's Fujian Province raided several unlicensed butcheries and underground workshops that processed pork of sick and dead pigs into meat products and sold them to other places.


Liu Yonghe was detained last July for illegally purchasing dead pigs from pig farms and butchering them in his workshop in Fuzhou City, reports ShanghaiDaily.com, citing Xinhua news agency.

He sold the meat to Ling Jianjun who processed it into salt-cured pork and sausages. Ling is also in police custody.

The contaminated pork products had been sold to wholesale markets in Fuzhou as well as in Wenzhou and Ningbo in neighboring Zhejiang Province.

Dead pigs were sold to illegal butchers at less than 2 yuan per kilo. The price tripled after they were cut up. When the meat was processed into pork products, the price would jump to more than 20 yuan per kilo.

The lucrative business has prompted some pig farms to sell sick and dead pigs to illegal butchers instead of cremating them as ordered by the law, the report said.

Fujian police have confiscated more than 1,300 tons of dead pigs and 480 tons of processed meat, the report said.

Wednesday, March 28, 2012
Taiwanese Pig Farmers Anxious About Bankruptcy
TAIWAN - Hog industry representatives yesterday voiced their worries about how 50 per cent of hog farmers are likely to face bankruptcy by October as a result of the country's falling pork prices.


According to Focus Taiwan News Channel, the COA's (Council of Agriculture) move to control hog numbers auctioned in markets can only raise future hog prices, said Chang Wen-Shan, chairman of the Pingtung County Hog Farmers Association.

According to Mr Wen-shan, due to the slow cycle of the hog industry, it will take at least 14 months before hog prices start picking up.

His comments came after Agricultural Minister Chen Bao-ji said last Tuesday at a legislative session that the COA will help return the hog price to a base level of NT$6,500 (US$219) per 100 kilograms. Chen also said the agency will immediately increase the hog inventory to 9,000 heads and inspect pig farms across the country to control hog supply.

Yen Chen-tou, chairman of the Tainan City Hog Farmers Association, said domestic auction price for hogs currently stands at NT$5,000 per 100 kilograms, while in China, price is NT$7,000 per 100 kilograms.

He urged the government to promote exports of pork to China to help offset a glut of pork in the domestic market.

Kang Fu-hu, chairman of the Yunlin County Hog Farmers Association, suggested the government inspect the overall number of hogs in the country regularly to monitor hog supply.

Monday, April 02, 2012
Pork Imports to Increase on Strong Demand
CHINA - Pork imports have already hit the nadir and there seems to be no letup in demand, considering that domestic supplies are likely to remain constrained for some time.


"The gap between supply and demand is bound to increase within the next few years, despite an expected recovery from diseases and the reduction of small-scale pork farmers," said Wang Xiaoyue, a senior analyst at Beijing Orient Agribusiness Consultant Ltd.

"China's pork imports will continue to rise due to strong demand and competitive pricing on imports," he said.

The sharp decline in pork production last year led to record imports. China's imports of pork and pork offal reached 1.35 million tons, up 50 per cent over 2010, with the US being the largest exporter, accounting for more than half of the total volume, according to the General Administration of Customs.

At the same time, China has also become a top lure for meat exporters as demand has been climbing steadily. Most of the major pork exporting nations from Europe, North and South America are knocking on China's doors.

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.

"As a country develops economically, the first quality of life aspect that improves at the household level is the carbohydrate to protein ratio on the daily diet. Greater economic prosperity among consumers on the mainland has directly translated into higher shares of animal protein such as pork," said Jorge Sanchez, director of agricultural trade office at the US consulate in Guangzhou.

"An increase in pork consumption creates opportunities for US pork farmers, because the unit price increases are fueled by consumer demand."

Ma Chuang, deputy secretary-general of the China Animal Agriculture Association, said that the country's surging demand for pork and pork offal implies an optimal export scenario because Chinese consumers tend to place higher value on pork offal, which is not eaten in Western countries. As a result, overseas farmers can profit considerably from pork offal exports.

Pork imports stood at 467,000 tons last year, and pork offal stood at 882,200 tons. Pork offal such as pig's heads, knuckles and haslet (a form of meatloaf), accounted for 65 percent of the total volume.

Tuesday, April 03, 2012
Pig Farmers Expect Mass Bankruptcy by October
TAIWAN - Despite assurances of support from the government, the country's pig farmers, worrying that pork prices might remain low until mid-2013, on Sunday expressed their belief that about half of them may go bankrupt within seven months.


It takes the prices of pigs at least 14 months to rebound back to the normal level, Chang Wen-shan, chairman of the Pingtung County Pig Farmers Association board of directors said yesterday, adding about 50 to 60 per cent of the country's pig farmers may go bankrupt.

Pingtung, with its 1.5 million pigs, is the country's number-one pig farming county, according to AsiaOne.

"The rest will likely suffer heavy financial losses," he said.

The price-stabilizing measures announced by the Council of Agriculture may work in the future, but are incapable of raising prices now, he continued, adding "even if the price of pigs can be raised from over NT$5,000 (S$213) per 100 kilogram to more than NT$6,000, pig farmers will still lose money."

During an interpellation session at the Legislature a few days ago, COA Minister Chen Bao-ji vowed to revert pig prices to the basic level at NT$6,500 per kilogram.

Mr Wen-Shan also immediately committed 9,000 slaughtered hogs to cold storage and ordered an end to above-quota raising by large pig farms.

According to Mr Wen-Shan, price stabilization must begin from scratch, and the total number of pigs must be kept under control.

Thursday, April 05, 2012
H1N1 Detected in Hong Kong Slaughterhouse
HONG KONG - H1N1 was detected in Hong Kong’s slaughterhouse during regular influenza virus surveillance for pigs in Hong Kong’s slaughterhouse. Despite the detection of pandemic H1N1 in pigs in Hong Kong, it is unlikely that Hong Kong will impose any import suspension of pork or pigs in the future on the grounds of H1N1 concerns.


The Hong Kong government did not take any trade action against pig or pork imports in 2009 when there existed the threat of H1N1. The report did not identify the origin of the infected hogs as either imported from China or raised locally.

To monitor influenza virus activity in pigs, the University of Hong Kong has conducted a regular influenza surveillance program for over a decade. The Center for Food Safety, the food safety authority in Hong Kong, assists the program by collecting blood and tracheal and nasal swabs from pigs in the major slaughterhouse twice a month. (This is the only major slaughterhouse in Hong Kong slaughtering over 3,000 pigs each day and accounting for over 80 per cent of the daily production in the territory. The other two slaughterhouses slaughter less than 20 per cent of Hong Kong’s daily pig supplies. Hong Kong has a daily consumption of about 4,500 pigs. Imports from China account for over 95 per cent while the rest is supplied by local pig farms).

According to the latest surveillance report, 1,500 samples were collected and tested from mid-October 2011 to January 2012, one sample tested positive for the human swine influenza virus (pandemic H1N1). A total of 27 samples were found to contain viruses that were essentially swine influenza viruses but had picked up some genes of human swine influenza virus. Among them, two samples were detected with swine influenza, H3N2, while the remaining 25 samples had H1N2.

The University of Hong Kong has been monitoring swine influenza over a decade and pandemic H1N1 was first detected in samples obtained in the slaughterhouse in October 2009. The human swine influenza virus then has been occasionally found in the regular surveillance exercise.

The University professor who is in charge of the surveillance commented that with the wide transmission of the pandemic H1N1 virus in humans, detection of the virus in pigs is no surprise. He added that positive findings might continue to appear from time to time in future. The government’s announcement also relayed the professor’s comments that “there have been similar reports from many parts of the world showing that swine influenza viruses carried the genes of the human swine influenza virus. Such viruses are unlikely to pose any major human health risk or cause problems in food safety."

Unlike China, Hong Kong did not ban any pork imports from the U.S. in 2009 because of H1N1 outbreak. Given the findings of pandemic H1N1 virus in Hong Kong and the government’s relaying the expert’s message that the viruses are unlikely to cause problems in food safety, the Hong Kong government is unlikely to impose ban on pork imports from places where there are H1N1 cases.

The Hong Kong government has assured the public about food safety in pork by relaying the message from the World Health Organization that “human swine influenza will not be contracted by consuming pork and pork products that are handled properly and thoroughly cooked.” The Hong Kong Center for Food Safety advises the public that it is safe to eat pork and pork products that are cooked to an internal temperature of 70 degrees Celsius or above.

To further assure the public of food safety in pork, the Hong Kong Center for Food Safety, alongside the announcement of the detection of pandemic H1N1, reminded the public that all imported live pigs from China come from registered farms and are accompanied with animal health certificates issued by the Mainland Chinese authorities. Furthermore, Hong Kong officers from the Center inspect the certificates and health of the imported pigs at the boundary control points. Both imported and local pigs have to go through ante-mortem and post-mortem inspections in slaughterhouses. Only pigs that pass the inspections can be supplied to the market and sold for consumption.

Environmental and Food Safety Pressures on China’s Pig Industry
Producing large quantities of pork in China entails additional costs related to the environment and food safety that are not factored into the market price of pork, explain Fred Gale, Daniel Marti and Dinghuan Hu in a report entitled ‘China’s Volatile Pork Industry’ from the USDA Economic Research Service.


According to Wang et al (2006), one Chinese hog produces 5.3kg of waste daily, which contains large amounts of nutrients not absorbed by the animal as well as heavy metals and pharmaceutical residues. During the 1950s and 1960s, Chinese officials encouraged individual households to raise hogs as a means of producing organic fertiliser to spread on fields to raise grain yields. In later decades, chemical fertiliser became available and the rising demand for meat prompted a large increase in the number of hogs. Consequently, the production of manure exceeded the capacity of the surrounding farmland to absorb its nutrients.

Small farms rarely treat manure but large farms are usually required to invest in treatment facilities. Gao et al. (2006) estimated that 80 per cent of commercial–scale farms lack equipment and facilities to dispose of waste properly, which causes ‘serious pollution of water, soil, and air and threatens the health of animals and humans.’ Waste often washes into streams and rivers, fouling drinking water and contributing to eutrophication (nutrient enrichment) of major bodies of water.

Several Chinese studies estimated that pollution from livestock farms totalled roughly three billion metric tons annually, about three times the pollution emitted from industrial sources (Gao et al., 2006; Liu, 2009; and Wang et al., 2006). Gao et al. estimated China’s hog waste at 1.29 billion metric tons annually, 47 per cent of the total livestock and poultry waste generated. A census of pollution sources released in 2009 found that livestock waste was a chief cause of water pollution in China (China Ministry of Environmental Protection, 2010).

While Chinese officials are taking steps to address these problems, the dense population of hogs strains the capacity of the land to supply feed for hogs and absorb their waste and also makes it difficult to control and prevent animal diseases (FAO, 2006). China has many regions with high hog population densities. ERS calculations using provincial– and state–level data on hog inventories and crop–land for China and the United States show that China had 94 hogs for every 100 acres of crop–land nationwide at year–end in 2008, more than four times the US ratio of 20 hogs per 100 acres.

In many of China’s leading hog–producing provinces, the density exceeded 100 hogs per 100 acres, and the density exceeded 200 in Sichuan, Hunan and Guangdong Provinces. North Carolina was the only US State with over 200 hogs per 100 acres (similar to the density in Sichuan), and Iowa had 82 (slightly below the China average and similar to the density in Hebei and Jiangsu Provinces). Other US States had densities of fewer than 40 hogs per 100 acres, far less than in China. With an already–high density of hogs, the environmental impact of hog production and tight supplies of feed may constrain growth of China’s hog industry.


Chinese officials are promoting ‘ecological’ modes of hog production that use hog waste to feed fish or fertilise crops and use bacteria to break down hog waste. China’s 2011-2015 five–year plan will emphasise the importance of controlling livestock waste (Zhang, 2010b). However, a number of cities and provinces in China have introduced regulations that ban hog farms and slaughterhouses from operating near residential areas and waterways. Draft regulations prepared by Shandong Province in 2010 banned new livestock farms in urban areas, near sources of drinking water, in scenic areas and in places where toxic substances exceed prescribed limits.

Food safety is also a major concern for Chinese consumers of pork. The news media in China has frequently reported on the hog industry’s use of clenbuterol and other illegal feed additives, the slaughter of sick hogs, the pumping of potentially contaminated water into hogs prior to slaughter and the contamination of feed with heavy metals. Chinese consumers are also becoming more wary of pork products that contain dyes, preservatives, and other food additives.

In March 2011, a widely publicised report that a subsidiary of China’s largest processed pork manufacturer purchased hogs raised with illegal feed additives had little direct impact on the pork market (Woolsey and Zhang, 2011). However, industry reports claim that the incident helped drive the trend toward consolidation of hog farms discussed earlier in this report. For example, the company implicated in the incident pledged to open a 10,000–head company–operated farm to supply each slaughterhouse it builds to gain more control over the production process .

Food safety concerns are also contributing to changes in purchase patterns that may make consumers more receptive to imported pork. Traditionally, Chinese consumers preferred to purchase freshly slaughtered pork from small wet market vendors but food safety concerns have encouraged them to shift purchases to supermarkets where pork is believed to be more sanitary and free of illegal feed additives. Government plans to consolidate slaughterhouses by 2015 entail an increase in inter–regional trade in chilled or frozen pork.

The diminishing role of localised wet markets and the development of modern market channels with cold–chain facilities may create more opportunities for imported pork to reach Chinese consumers. Many Chinese consumers responded to the dairy industry’s melamine adulteration crisis by purchasing imported milk products, and demand for imported pork could similarly be boosted by domestic food safety concerns

Tuesday, April 10, 2012
Pork Tests Confirm Serious Steroid Problem
VIET NAM - Husbandry authorities announced last week that many samples taken from pork, pigs and their feed nationwide tested positive for banned steroids.


The results came from nine Ministry of Agriculture and Rural Development laboratories as part of a large-scale investigation following a 29 February Thanh Nien report which said that illegal growth-promoting beta-agonist agents were being used by many pig farmers in Dong Nai Province, a major pig and pork supplier in southern Viet Nam.

According to the ministry, 4.8 per cent of the animal feed samples taken from the southern region showed traces of the agents - ractopamine and salbutamol, as did 11 percent of animal drug samples and 4.4 per cent of pork and pig livers.

“4.4 per cent of pork and livers testing positive for the chemical is serious,” Cao Duc Phat, minister of Agriculture and Rural Development, said at the Thursday meeting.
Beta-agonist agents, popular with body builders, can cause increased heart rates, indigestion and various other harmful side effects.

In northern Viet Nam, more than 150 samples have been taken and the chemical was found in one liver sample in Bac Ninh Province, and two animal feed samples in Hoa Binh and Hai Duong Provinces.

Mr Phat said, “I request related agencies work closely with local governments to continue tracking down the banned substances to determine the persons supplying them.”

Hoang Van Nam, head of the Animal Health Department at the ministry, also said the test figures revealed an alarming situation.

“If we fail to keep up the strong inspections, the situation will become complicated and impossible to control,” Mr Nam said at the meeting.

Investigations since early March have led to two pig farms in Binh Duong Province in the south being fined VND25 million each for using the chemical.

Eleven other farms in Dong Nai await punishment, while animal feed stores known to sell the chemical in the province and elsewhere in the north are being investigated by the police, Duong said.

The National Assembly has demanded that a full report be issued by the ministry on the steroid use in pig breeding by 17 April.

China’s Pork Industry: Looking Forward
China’s status as a major pork importer will likely continue to grow, forecast Fred Gale, Daniel Marti and Dinghuan Hu in the final part of their report entitled ‘China’s Volatile Pork Industry’ from the USDA Economic Research Service.



China’s tradition of self-sufficiency in pork will be hard to maintain as feed costs rise and as land for expanding farms and processing facilities becomes scarce and expensive. The environmental and food safety impacts of producing large numbers of hogs in China will become more apparent. Interregional shipments of pork within China are limited by lack of reliable transportation and temperature-controlled storage.

Stricter regulatory enforcement in the United States, greater investments in animal housing and manure handling, wider dissemination of technical expertise, and closer coordination between producers and processing companies help US farmers produce pork with less of an impact on the environment, fewer food safety incidents, and fewer disease outbreaks than in China. Demand from China raises the value of variety meats and offal that are not widely used as food in the US market.

Chinese restaurant chains, hotels, and other buyers who demand pork with high and consistent quality are important potential customers for imported pork (Fabiosa et al., 2005). With diversifying consumer tastes and growing segmentation in the market, imported pork can coexist in the Chinese market with domestic grain-fed pork and meat from local pig breeds.21

Strong resistance to pork imports in China can disrupt trade and affect exporters. China lowered tariffs on pork after its accession to the World Trade Organization, but pork imports still face resistance similar to that described by Hayes and Clemens (1997). Evidence of this can be seen among the policy responses listed in the Chinese ‘hog price alert’ programme, which include unspecified ‘limits’ on imported pork to reduce the market supply and ‘encouragement’ of pork exports. When Chinese pork prices were soaring in 2007, officials made announcements to assure the public that China would not import large amounts of pork (Xinhua, 2007).22

In June 2010 (after China lifted its H1N1-related ban on US pork), an article entitled Be on Guard! American Pork’s ’Soybean Appetite’ warned that imports could eat up China’s pork industry if the industry was not protected (Li, 2009). An analyst quoted in the article cautioned readers to ‘Be careful of the trap set by the Americans’” warning that if US pork imports are not limited, the pork industry ‘is likely to repeat the mistakes of the soybean industry with disastrous consequences’.23

Similarly, Liu (2010) reported that Chinese officials were wary of foreign investment in the pork industry because officials feared losing “guidance power” over the industry.

Tuesday, April 17, 2012
Solving a 700 Million Pig Problem
CHINA - Australian science is helping to solve one of China’s biggest and smelliest problems – what to do with the waste produced by its 700 million pigs.


Working with Chinese scientists and technology firm HLM Asia Ltd, Australia’s CRC for Contamination Assessment and Remediation of the Environment (CRC CARE) has helped develop novel digester technology to help deal with the estimated 1.4 million tonnes of manure and 7mt of urine produced by the burgeoning Chinese pork industry annually.

CRC CARE managing director Professor Ravi Naidu said the new technology can produce clean energy (biogas), fertiliser and other valuable products from nutrient-rich waste, in a system with great potential for application in other industries worldwide.

China has 700 million pigs in 1.8 million farms, which supply two thirds of the country’s rapidly-growing meat consumption. “However these piggeries also produce enormous volumes of waste, only a tenth of which is currently being treated,” he explains.

Despite tighter regulations, large amounts of nitrogen, phosphorous and contaminants are being discharged into the environment where they damage ecosystems and pose a threat to human health. The nutrients lost in the waste of one pig alone are worth about $50 a year, but there is no technology in place yet to recover and use this vital resource.”

Professor Naidu says the joint project has developed a two-step underground anaerobic bioreactor for treating piggery waste, and established the settings for load and digestion time. It has identified a particular combination of anaerobic treatments that can recover the nutrients and produce clean biogas energy as well.

“The technology has been demonstrated in the field and is now being scaled up to treat large volumes of wastes from a number of piggery farms,” he says.

The technology is expected to have widespread application not only in China but throughout Asia, wherever animals are farmed intensively, and to create fresh export opportunities for Australian technology solutions to similar contamination problems.

In this project the CRC is providing scientific expertise, including supervision of six PhD students at Huazhong University of Science and Technology in Wuhan Province with links to research skills at the University of South Australia.

The project is being managed by HLM Ltd on the ground, taking advantage of the relatively low cost of technology trials and scale-up work in China. “It’s a perfect partnership between Australian science and Chinese technical expertise,” he says.

Professor Naidu explains that the main scientific and technical challenges solved by this project are the high N and P loads in pig waste compared with domestic sewage, the current small size of biogas reactors, their slow rate of digestion, the limiting influence of temperature, and the presence of heavy metal contaminants which restrict the use of residues as fertiliser.

So far, the technology has been able to overcome each of these, and is now moving to full-scale trials.

“The market for a successfully packaged solution to this suite of problems is clearly very large – both in Asia and around the world. Besides handling livestock wastes, similar bioreactor technology can be used to manage and cleanse the runoff from urban landfills and organic waste streams from other industries,” Professor Naidu says.

“We anticipate that the scientific and technical knowledge gained in the course of CRC CARE’s research will have real value for Australia’s intensive livestock and food industries – and will help protect our environment from these types of wastes.

“At the same time we are producing a new source of clean energy for industry or domestic use, and a vital supply of nutrients to help secure the future of food production."

Wednesday, April 18, 2012
Another Genesus Nucleus in China
CHINA - Sichuan Giastar Group, a large feed manufacturer, breeding stock producer, and integrator, was recently in Manitoba to purchase a nucleus herd from Genesus.
 

Genesus will offer ongoing technical support to Giastar, as they work towards their goal of one million pigs produced. The Genesus nucleus will replace a PIC unit and drive 7000 sows of GGP and GP production.



Pictured are Left to right - Lambert Houwen, GM Genesus, Xiang Gui You - Chief Veterinarian, Chendu Giastar Swine Husbandry Co. Ltd. Huang Li Hua - General Manager, Muyuan Stock Breeding Science and Technology Ltd. Tang Jie (Frank) - Vice General Manager, Chendu Giastar and Mike Van Schepdael VP Genesus.

Thursday, May 03, 2012
Promotion Aimed at Driving Down Pork Prices
TAIWAN - The Council of Agriculture (COA) has launched a pork promotion campaign, with discounts of 20 percent being offered on frozen products to help drive down the retail price of pork.


A total of 50 supermarkets run by agriculture associations in New Taipei City, Greater Kao-hsiung and Pingtung, Penghu and Kinmen counties are participating in the sale of frozen pork products, Council of Agriculture Minister Chen Bao-ji said, reports TaipeiTimes.

Wholesale hog prices have dropped significantly — to less than NT$50 per kilogram — because of a supply glut, but retail prices have not reflected the -decline and hovered around NT$200 per kg, Mr Chen said.

The council plans to review the campaign every two weeks and see whether the sales need to be expanded, he added. More stores, including supermarket chains and warehouse retailers, will participate in the second wave of sales tomorrow, which will bring the total number of stores participating to more than 800, Mr Chen said.

The campaign will allow consumers to buy pork at discounted prices, while helping swine farmers resolve a supply glut, said Hsu Kuei-sen, head of the council’s Department of Animal Husbandry.

Meanwhile, the council is carefully assessing the oversupply problem, as well as discussing with farmers the number of hogs that need to be slaughtered, Mr Hsu said.

Before a consensus on the number can be reached, the ministry needs to calculate the number of swine exceeding limits set for each city and county, Hsu said, a task he said would be finished tomorrow.

In order to stabilise pork prices, the department has proposed that 60,000 pigs be slaughtered between May and July, but farmers want that number boosted to 100,000, Mr Hsu said.

A final decision will be made at a meeting on Monday between the department and a major swine breeding association.

Thursday, May 10, 2012
Imported Pork Contains 'Lean Meat Powder'
CHINA - Over 100 tons of pork imported from the United States in March contained clenbuterol, commonly known as "lean meat powder", Guangzhou Daily reported Tuesday, citing General Administration of Quality Supervision, Inspection and Quarantine of China.


The products were returned and not sold in China, according to the watchdog, Guangzhou Daily reported.

Meat with "lean meat powder" may cause dizziness, cardiopalmus and even malignant tumors.

Pork Commentary: Roadtrip in China Ends in Crash
23 May 2012


Jim Long is President &
CEO of Genesus Genetics.

CHINA - We have all experienced challenges in our lives, this past week we had just such an experience.We arrived in China on the Saturday. We had several meetings with customers and prospects. Last Wednesday we were riding in a GM minivan just outside Beijing heading to inspect quarantine site for an importation of Genesus genetics – we had just passed The Great Wall, writes Jim Long.

Then as you would say ‘an accident happened’. Heading through an intersection in a rural area our van met a tractor – trailer. It wasn’t pretty. The van was hit on the front, the engine and front of the van was sheared off. I was in the front passenger seat. The seatbelt and airbag worked. I climbed out of the carnage. At this point I saw my partner and Vice President of Genesus, Mike Van Schepdael lying on the road. At impact he had flown out of the side window of the van as the vehicle spun (obviously no seatbelt on). Mike was lying on the asphalt highway unconscious with blood all over. All other passengers including the driver were relatively okay. The tractor trailer was 200 feet down the road – the tractor was on its side separated from the trailer also on its side. Mike regained consciousness; you could see his injuries were obviously to his head. The ambulance arrived with 2 – 90 pound female attendances were no match to pick up a 200 pound Van Schepdael. I was in no shape to help, eventually some by standers helped out. English doesn’t help much when in China but hand signals definitely do.
 
Mike had a quick ride to a local hospital. It didn’t take much to figure out this hospital was not geared to handle such a serious situation. After a mad flurry of phone calls we were off to Beijing about one and a half hours away. As we got into the ambulance, I got into the front passenger seat. I had to laugh when they made a big deal that I should wear a seatbelt. If ever I didn’t need to know that it was at this moment. We then rode with a lunatic ambulance driver who at particular times was smoking, and talking on his cell phone as he madly drove through busy traffic. He really enjoyed the siren horn but not at any particular strategic time. He then got kind of lost trying to locate the hospital (that is always reassuring). Eventually we arrived at the hospital thinking after that ambulance ride I had dodged death twice in the same day.
 
Peking Union Medical College Hospital International wing was where we ended up. Quickly the hospital staff reacted – Mike was checked – a CT scan and MRI were quickly carried out. The doctors and nurses spoke English. Their observation was multiple injuries but no surgery needed for Mike. He was lucky (subjective word) 2 cracked vertebrate, multiple lacerations, broken nose, split lip, fractured cheekbone, etc, etc... lots of things adding up but nothing life threatening.
 
It was at this time our customers in China stepped in to help out. Monita Ma owner of Best Genetics, America raised but with business interests in China including Swine Production stepped in. Her connections quickly found 2 nurses at a time that speak English for 24 hour round the clock care. Monita’s people waded in with cash and put down a deposit to cover all hospital costs. Genesus’ International Insurance will cover all in the end but the initial financial push diminished any potential for delays happening. Soon after our arrival at the hospital Dr. Shen, the Deputy General Manager of COFCO– swine division (China’s largest agri – business) and owner of 2 Genesus Nucleuses in China arrived at the hospital offering to help in any way possible. Others arrived quickly – Hu – Song and Rosemary Smart from the Canadian Swine Exporters Association. Rapid response was greatly appreciated. Mike was hurt badly and I wasn’t feeling real well as the body isn’t built to take the force of tons meeting at speed.
 
It is now five days from the accident and I have been discharged, in pain but high level of functioning. Mike is still in the hospital working towards a full and complete recovery. All indications show no other conclusion. In this time we have had visits from James Jiang General Manager of COFCO meat division and Chairman Wu of Tiabang Group both offering any and all we needed. This past five days has been fascinating; we have experienced the hospitality and kindness of many Genesus Chinese associates. The hospital care has been extraordinary. Caring and knowledgeable doctors and nurses have what we believe as world class care. Indeed at one point our International Insurance Company was pushing us to fly by Air Ambulance Jet to Hong Kong. We weighed the options and decided to stay at Peking Union. We made the right decision and are getting better every day.
 
Our experience has reaffirmed our belief that he world and all countries have excellent quality people with character. When we needed help and care we got it. We will be forever grateful to the great people in China that helped us.
 
On a personal note it reminds us how life can be fleeting, a couple of feet was the difference in this crash between life and death. God was with us and we were lucky. It makes you realize that it’s best to live everyday flat out because you really, really never know when it could be over.
 
Final Point: Wear a seatbelt.

 


Author: Jim Long, President & CEO, Genesus Genetics


 

Wal-Mart Involved in Another Pork Scandal
12 June 2012


CHINA - Wal-Mart has been caught selling diseased pork ribs, reported National Business Daily.

Regulators of the animal husbandry sector in Dazhou, Sichuan province, found in a routine inspection this January that some pork ribs in Wal-Mart's cold storage warehouse were from diseased pigs, local media reported.
 
This incident took place not long after the company's Chongqing "green pork" scandal last year, where Wal-Mart was fined for labeling ordinary pork as "green pork" in a number of its outlets in Chongqing. The "green pork" scandal had caused the company an unprecedented crisis of confidence.
 
An officer of the Dazhou Animal and Health Inspiration Station confirmed the incident to National Business Daily.
 
Wal-Mart Stores Inc told the newspaper that the company has attached great importance to this incident and a task force guided by company headquarters has been established. All pork products related to the incident have been removed from shelves immediately, and cooperation with the suppliers have ended.
 
Meanwhile, Wal-Mart is cooperating with local government departments to work on this matter.

Pork Prices Up After Weeks of Declines
20 June 2012


CHINA - Pork prices rebounded last week, rising 0.2 per cent from one week earlier after weeks of decline, but were still down 14.9 per cent year-on-year, the Ministry of Commerce said.

Shanghai and Beijing saw pork prices rise 3.7 per cent and 2.3 per cent, respectively, last week, according to a statement on the ministry's website.
 
Prices of edible oil, flour and fish all increased last week. Retail egg prices continued to rise, up 1.3 per cent week-on-week, but wholesale egg prices fell 0.8 per cent last week, the statement said.
 
Lower fuel prices dragged transportation costs down, which led to the decline in wholesale egg prices, analysts said, adding that retail egg prices will also fall slightly after the upcoming Dragon Boat Festival holiday.
 
China's consumer price index (CPI), the main gauge of inflation, eased to 3 per cent in May, the lowest level since June 2010. Food prices account for nearly one-third of the weighting in calculating the CPI.
 

Zhongpin Continues to Invest in Tough Market
10 August 2012

CHINA - Chinese meat and food processing company, Zhongpin, has reported higher sales revenues and lower net income for the three months ended 30 June compared with the second quarter 2011.
 
Total sales revenues increased 11.4 per cent to $408.2 million for the three months ended 30 June from $366.5 million in the second quarter 2011 primarily due to higher sales volume for pork products sold at lower average selling prices.
 
Net income decreased 43.0 per cent to $11.0 million in the second quarter 2012 from $19.3 million in the second quarter 2011 primarily due to a lower gross profit margin, the cost of more employees to support expansion, higher salaries, rising labor and utility costs, and higher interest expenses and income taxes.

The higher expenses were mainly due to business expansion and intense competitive pressure in the pork market as the industry continues to consolidate and companies are required to vie aggressively to win additional market share in a variety of ways, Zhongpin said.
 
Basic earnings per common share (based on net income attributable to Zhongpin shareholders) decreased 39.6 per cent to $0.29 in the second quarter 2012 from $0.48 in the second quarter 2011. Average basic shares outstanding decreased 7.8 per cent to 37,189,322 shares in the second quarter 2012 from 40,355,502 shares in the second quarter 2011.

Diluted earnings per common share (based on net income attributable to Zhongpin shareholders) decreased 39.6 per cent to $0.29 in the second quarter 2012 from $0.48 in the second quarter 2011. Average diluted shares outstanding decreased 7.8 per cent to 37,209,695 shares in the second quarter 2012 from 40,365,654 shares in the second quarter 2011.
 
Zhongpin expects that sales revenues should be within a range of US$1.55 billion to $1.72 billion for 2012.

Gross profit margin is expected to be within the range of 8.6 per cent to 10.2 per cent. Net profit margin is expected to be within the range of 3.3 per cent to 4.2 per cent.

The resulting diluted earnings per share for the year 2012 is expected to be within the range of $1.36 to $1.92 per share, assuming average diluted common shares outstanding of about 37.5 million shares in 2012. Assumptions and judgments supporting the guidance are shown below.
 
Xianfu Zhu, Chairman and Chief Executive Officer for Zhongpin, said: "We achieved good sales growth in the second quarter on higher tonnage at lower average prices, compared with last year's second quarter.
 
"The continuing intense competitive pressure due to the ongoing pork industry consolidation in China, and higher costs generally in China, have reduced our gross profit margin and increased our operating costs for this quarter and this year.
 
"We continued to expand our operations in the second quarter, but at a slower rate, to help secure our long-term growth and achieve a much stronger market position in the years ahead. Recently, we finished the construction for additional annual production capacity of 50,000 metric tons for prepared pork products and started trial production in July. With that addition, our total annual production capacity was 954,760 metric tons for all of our products at the end of July 2012.
 
"Pork prices were lower than expected, mainly due to intense competitive pressure as the industry continues to consolidate. Hog prices also declined, but not as rapidly as pork prices. Those were the main factors for our lower gross profit margin in the second quarter compared with last year's quarter.
 
"Our product growth strategy is to develop, produce, and sell more prepared pork products -- first, because customers like them, and second, because the products can be sold at higher profit margins. So the shift you see in our product mix -- with lower tonnage, lower prices, and lower sales revenues from frozen pork and higher numbers from our prepared pork products this quarter – reflects our strategy to use more of our resources to develop and produce our prepared pork products, because those are considerably more profitable and have a very attractive future. Chinese consumers today are embracing more easy-to-complete-and-serve meals, often based on the outstanding quality, safety, and taste of Zhongpin's prepared pork products. In some markets, we even sell complete kits for those meals.

"As of June 30, we offer more than 440 types of different categories of products.

"I believe the long-term outlook for China's pork industry and for Zhongpin is quite good, but given the pork industry's massive consolidation that is expected to continue with increasing intensity in the next several years, we believe that delivering a sustained pattern of higher net income and higher net cash flows in those coming years will be a difficult challenge."
 
Zhongpin is investing approximately $58.5 million to build a new production, research and development, and training complex in Changge, Henan province, excluding the cost of land use rights that it has already obtained.

When completed, this new facility should have an annual production capacity of about 100,000 metric tons for prepared pork products.

Alongside this new production facility, Zhongpin plans to develop a center for research and development, training, and quality assurance and control. Construction for the first phase with a production capacity of approximately 50,000 metric tons for prepared pork products started in the second quarter of 2011 and trial production started in July 2012.
 
Zhongpin established a joint venture company in June 2011, of which the Company owns 65 per cent, with Henan Xinda Animal Husbandry Company Limited. The joint venture company is financed by capital contributions and bank loans. All capital contributions to the joint venture company have been made. The joint venture company will provide 20,000 sire boars annually. Construction of the facility for sire boar breeding is continuing and the operations are expected to begin in the third quarter 2012.
 
Zhongpin is investing approximately $18.0 million in a cold-chain logistics distribution center in Anyang, Henan province. This distribution center will have processing capacity, a temperature adjustable warehouse with a floor area of approximately 27,000 square meters, a distribution center, and a quality control center. The distribution center will be used for third-party cold-chain logistics service. Zhongpin expects to put this distribution center into operation in the third quarter of 2012.
 
Zhongpin plans to invest approximately $87.5 million in a chilled and frozen food processing and distribution center in Kunshan, Jiangsu province, which is near Shanghai. The center will be built in three phases. The first phase will include a processing center, cold-chain logistics center, and business complex. Zhongpin expects to invest about $35.0 million on the first phase that should be put into operation in the fourth quarter of 2012.
 
Zhongpin will be investing approximately $10.5 million in a by-product processing plant in Changge, Henan province. This facility will have a production capacity for 100 million meters of casings and 300 billion units of raw material to make heparin sodium. The construction started in March 2012, and the new facility is expected to begin operations in the fourth quarter of 2012.
 
Zhongpin will be investing approximately $49.0 million to build a slaughtering and processing plant, low temperature prepared pork plant, and logistics center in Tangshan, Hebei province. This facility will have an annual production capacity of about 60,000 metric tons for chilled pork, 20,000 metric tons for frozen pork, and 22,000 metric tons for prepared pork products. Construction is scheduled to start in the third quarter of 2012, and the new facility for chilled and frozen pork is expected to begin operations in the second quarter of 2013.
 
As of June 30, 2012, Zhongpin had an annual capacity of 728,760 metric tons for chilled and frozen pork, 126,000 tons for prepared pork products, 20,000 tons for pork oil, and 30,000 tons for vegetables and fruits, for a combined total of 904,760 metric tons. With the additional annual capacity of 50,000 metric tons for prepared pork products that started trial production in July, Zhongpin's total annual capacity for all products was 954,760 tons as of 31 July 2012.

Zhongpin's outlook for hog prices and pork prices has decreased somewhat since the end of the first quarter 2012.

Although China's economy appears to be healthy and pork continues to be the preferred protein for most Chinese consumers, and the fundamental demand for pork should continue to be quite good, the vigorous competition for market share in the pork industry, as the industry consolidates, has helped to reduce pork prices in the second quarter 2012 more than the cost of hogs has decreased.
 
Zhongpin believes that hog prices may have reached the bottom of the current price decline, despite the current abundant supply of hogs. As the costs for breeding and feed are rising, the Chinese government has recently started to increase the nation's pork reserve, which in the past has generally had the effect of stabilizing hog prices somewhat above the cost to raise hogs.

Hog prices have declined about 15 per cent from the end of January 2012 to early August 2012. Given the expected bottom, we still estimate hog prices to decline on average by 15 per cent to 20 per cent in the year 2012 compared with 2011. The hog price declines in the second quarter 2012 are consistent with that estimation for the year 2012.
 
Pork prices tend to follow hog prices, since most pork producers, including Zhongpin, try to maintain a good spread between the price of hogs and the price of pork.