Cost of China’s Favorite Meat Set to Soar as Swine Fever Hits Supply

Pork prices in China, the world’s biggest producer and consumer of the meat, could hit fresh records later this year, pushing the country’s inflation rate higher, as the nationwide outbreak of African swine fever leads to shortages, senior government officials warned on Monday.

The epizootic has so far led to the culling of 1.02 million pigs nationwide, Wang Junxun, a deputy chief of the Ministry of Agriculture’s veterinary bureau, told a press conference, wreaking havoc on the supply of pork. Describing the situation as “grave,” Wang said a total of 129 outbreaks have been recorded in the country since August, with 30 taking place in the past four months.

The year-on-year decline in the number of live pigs and fertile sows has exceeded 10% for three straight months, while the output of pork dropped 5.2% year on year to 14.6 million tons in the first quarter of the year, Wei Baigang, head of the Department of Development Planning of the Ministry of Agriculture and Rural Affairs, told the same briefing.

“Affected by the African swine fever, large-scale pig farms are cautious about increasing the number of pigs they raise while small, individual farmers are withdrawing (from the sector) at a faster pace than before,” Wei said.

Wang added that the stock of live pigs slumped 18.8% in March from a year ago while the number of sows dropped 21%, both marking the fastest declines in nearly a decade. He projected the price of live pigs will hit record highs in the fourth quarter.

Record prices forecast

“We expect the supply of pork to tighten in the second half of the year and prices to rise sharply, as the piglet rearing cycle is typically six months,” Wei said.

“We must ensure the production capacity of live pigs because pork takes the biggest share in food in the calculation of the CPI (consumer price index) and price increases will lead the CPI to soar,” he said.

The government has not released the weighting of different items in the basket of goods and services used to calculate the CPI, but analysts widely estimate that food accounts for about 30% of the overall index.

Pork prices rose 5.1% last month from a year earlier, driving the CPI up by 2.3%, the biggest jump in five months, official figures show. On a month-on-month basis, pork prices increased 1.2% in March, bucking the traditional trend that usually sees prices fall as demand ebbs after the Lunar New Year holiday.

Tang Ke, head of the agricultural ministry’s department of market and economic information, said last week that the year-on-year rise in pork prices could surpass 70% in the second half of this year to hit record highs, and called on pig farmers to boost their breeding stock to take advantage of the boom.

Wei said that the transportation of live pigs is now “picking up” as the ban on the movement of pigs and meat has been lifted in more regions as outbreaks have eased — a total of 23 provinces have now had the prohibition removed, he said. Yu Kangzhen, a vice minister of agricultural and rural affairs, revealed in mid-March that 21 regions were no longer subject to the ban, according to a previous report by the official Xinhua News Agency.

The outbreak of African swine fever, which is fatal to pigs but does not affect humans, was first reported in China in August 2018 in the northeastern province of Liaoning and has now been found in all 31 provincial-level regions on the mainland after the southern province of Hainan reported its first outbreak on Friday.

Contact reporter Fran Wang (fangwang@caixin.com)