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Of the 1 billion pigs being raised in the world, about half are in China, where pork consumption is increasing as the Chinese economy develops. As a result, pork prices are rising, a trend that is impacting the world economy.
To ease the public's dissatisfaction with the price increase, which could lead to rioting, the Chinese government is increasing pork production. However, the move is causing a growth in demand for pig feed and raising feed prices in international markets.
Following the rise in living standards in China, the number of people who prefer eating meat is growing. However production is not keeping up with the increasing demand. As a result, the price of one pig has increased from 600 yuan (7,280 yen, or $94) to 2,100 yuan.
Corn feed prices have tripled since 2007. The starting wage for migrant workers from Sichuan province and other parts of China has doubled to 2,200 yuan.
In China, pork production has increased more than 10 percent in the past five years to 52.5 million tons. By comparison, poultry production is about a quarter of that amount and beef about one-eighth.
The consumer price index (CPI) in China in July rose 6.5 percent from the same month last year. The growth rate is the largest since June 2008. Of the 6.5 percent, 1.5 percent was attributed to pork, whose prices rose nearly 60 percent year-on-year.
In July, the government announced that it would earmark 2.5 billion yuan for expansion of pig farms and breed improvement. It also plans to release stockpiled frozen pork and import some products from the United States.
By inviting participation from foreign companies, the government is also trying to improve distribution systems and expand pig farms to raise production efficiency. However, those measures are not expected to bring immediate relief. Small-scale pig farm operators, which account for most of the pig farm operators in the country, are withdrawing from the business one after another due to the increase in production costs.
In China, pork prices have been in a three-year cycle, but there is a growing sign that such a cycle will not reoccur. The rise in prices of feeds and fuels is increasingly linked to overseas market moves. In addition, personnel costs are rising. As a result, there is a growing possibility that pork prices will not decline as much as expected.
The pork production increase is also raising world grain prices. In China, corn imports that are used for pig feed increased sharply from 50,000 tons in 2008 to 1.57 million tons in 2010.
In the Chicago market, the futures prices of corn per 25 kilograms rose sharply from less than $4 in the first half of 2010 to about $8 in June, marking the highest price ever.
The volume of China's corn imports is not large compared to the country's domestic production of 177 million tons.
Meanwhile, anticipating that pork consumption in China will increase further, companies in Japan, including Marubeni, Singapore and other countries are investing in pig farming-related businesses in China.
ASAHI
http://www.asahi.com
