China Is Facing A ‘Porkflation’. Prices Of The Popular Meat Surge To A New High
The surge in pork prices has prompted Chinese government authorities to dip into national meat reserves to ensure continued supply.
Pork costs in China are rising steadily. In July, when the Asian giant’s headline consumer price index (CPI) hit a two-year high of 2.7%, the pork prices rose to the highest recorded month-on-month increase of 25.6%, according to reports. August saw the CPI inflation easing to around 2.5%, according to official data, but pork prices still recorded an average of 22.5% year-on-year rise, the reports said.
The surge has prompted authorities to dip into national meat reserves, so there is no disruption in supply during the holidays, The Guardian reported. China celebrated the mid-autumn festival last weekend, and is preparing for its National Day on October 1.
As part of its meat reserves policy, the world’s biggest consumer of pork maintains a frozen “reserve” supply. The report said the Chinese government is releasing some reserves for the first time this year.
Pork traders in China, however, are of the opinion that this may not be of much help.
"Most of our customers prefer fresh pork to frozen pork," a seller in Shanghai told Nikkei Asia. "Customers these days are buying less than before the lockdown in April because household incomes are flat and pork prices are rising," he added. Shanghai saw a two-month Covid-19 lockdown earlier this year.
Quoting an analyst who shared a similar view, the report said the government’s intervention was only a short-term solution.
"Pork prices are going to stay at high levels,” Deng Shaorui, an analyst at Huatai Securities, was quoted as saying.
Why Pork Is Short In Supply
Pork is the staple meat in China and weighs the heaviest among other food items that determine the country’s CPI. The government maintains the reserves to keep the prices steady and ensure year-long supply. The year 2019 saw pork prices rise to a record high in China after an African swine fever outbreak across the country.
The higher cost of feed and a high demand for pork in the holiday season are being cited as a reason for this year’s price rise, according to the Guardian report. Another season is the impact of reduction in breeding stocks last year.
With people staying home, because of lockdowns and a general advisory against travel due to the Covid pandemic, there is leisure time to cook, leading to more consumption of pork, many suggested.
According to some, there is a shortfall in supply also because some producers are apparently holding on to stock.
China’s National Development and Reform Commission had advised famers in July to shed “irrational reluctance to sell”, saying hoarding pigs for better prices later or to fatten them up could result in short-term shortages and also a glut.
In March, when pork prices fell, the Chinese government announced it would buy 38,000 tonnes of the meat. Experts say the reserves policy is in “vital interests of the masses”.
“When the price of pork is low and the farmers lose severely, the government will boost the price of pigs by collecting and storing [ product]. When pork prices are high, the government will stabilise the price of pigs by releasing reserves,” Dr Wang Zuli, an expert in pig production monitoring and early warnings who teaches at the Chinese Academy of Agricultural Sciences, was quoted as saying in the Guardian report.
Pork prices in China have been on a rise since May when the cut in breeding herd began to show on the output.
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