ASIA – Inflation Tough to Digest for Asia as Costs Climb

Asian cuisine may be too much of a good thing for some of the region’s central banks as policy makers grapple with the challenge of responding to spikes in the cost of staples from rice and pork to onions and chilies.

Pork prices jumped 57 percent in June in China, leading Premier Wen Jiabao to vow to curb inflation even as growth slows. India had to buy onions from arch-rival Pakistan this year for curries and Indonesia told spice lovers to grow their own chili as shortages stoked prices. A wider variety of diet and greater purchasing power for non-food items leave wealthier nations less vulnerable to food-cost spikes.

Food makes up more than 30 percent of inflation indexes on average in Asia, compared with about 15 percent in Europe and less than 10 percent in the U.S., according to Rabobank Groep NV. The sensitivity of their economies to swings in meat and vegetable costs means emerging-market policy makers need to raise interest rates more to stem inflation when global agriculture prices soar.

“People can’t change their diets overnight,” said Song Seng Wun, an economist at CIMB Research Pte in Singapore who has analyzed Asian economies for more than two decades. “All monetary policy can do is to try to contain what is perhaps a supply disruption issue from broadening to the wider economy.”

Rice, the staple food for about half of the global population, has surged 69 percent in the past year according to futures traded on the Chicago Board of Trade. The export price of rice from Thailand, the world’s biggest exporter of the grain, has jumped 23 percent.

Share of Prices

Within Asia, home to 60 percent of the world population, food’s weighting in consumer-price indexes varies from about 45 percent in the Philippines and India, to more than 30 percent in China and about 10 percent in South Korea, Rabobank says.

“For low-income countries, food expenditures normally account for a larger share of the consumption basket,” said Yao Xianbin, director general for the Regional and Sustainable Development Department at the Asian Development Bank in Manila. “As countries get wealthier, food expenditure will account for a declining share of total expenditure.”

Outside of Asia, Mexico has also seen challenges from reliance on a relatively limited diet — an increase in the cost of tortillas, a staple of the nation’s diet since the Maya ruled 1,000 years ago, in 2007 stoked a slump in Mexican bonds and the peso. President Felipe Calderon arranged a price freeze with tortilla makers and the central bank boosted rates into 2008 even as the global financial crisis took hold.

Companies to Buy

Higher food costs have benefited some Asian food companies. Bloomberg’s Asia Pacific Food Index of 50 stocks is up about 8 percent in 2011, while the MSCI AC Asia Pacific (MXAP) index is down 0.6 percent. Pork prices have boosted producers such as Henan Chuying Agro-pastoral Co., which has risen 17 percent this year. Twelve of 13 analysts rate Henan, China-based Chuying a buy, data compiled by Bloomberg shows.

In China, the rise in pork prices made up more than a fifth of June’s overall inflation rate. An average Chinese will eat an estimated 38.8 kilograms of pork in 2011, compared with 9.6 kilograms of chicken and 4 kilograms of beef, according to the U.S. Department of Agriculture.

Inflation has breached the Chinese government’s 4 percent target for 2011 every month this year, with consumer prices rising 6.4 percent in June from a year earlier, the most in three years. The nation has raised lending rates five times since mid-October.

Hog Research

The nation should invest in research for hog producers to help steady costs, Shenggen Fan, director general of the Washington-based International Food Policy Research Institute, said in an e-mail.

World food prices held near a record in June as the cost of sugar, meat and dairy increased. An index of 55 food commodities rose to 233.8 points from 231.4 points in May, the United Nations’ Food and Agriculture Organization said July 7. The gauge climbed to an all-time high of 237.7 in February.

A fivefold jump in Indonesian chili prices last year made the spice costlier than beef, the Jakarta Globe reported in January. Indonesian’s Agriculture Minister Suswono said at the beginning of 2011 that the government will distribute chili seeds to 100,000 households, the paper said. Bank Indonesia, while trailing counterparts from Thailand to Malaysia this year, raised rates in February.

India’s Onions

In India, where the price of onions has at times become an election issue, the central bank has raised rates 10 times since the start of 2010. The world’s second-biggest onion grower said in December it would buy the vegetable from abroad and banned exports after excess rainfall damaged crops and stoked prices.

About 42 percent of Indian households are vegetarian and rely on pulses — edible seeds of leguminous plants — for protein, according to a report submitted to the FAO by the International Food Policy Research Institute. The country accounts for 73 percent of the world’s production of tur dal, one of its staple seeds.

“Some part of food inflation is due to higher prices of staple pulses which are very specific to India,” said Shubhada Rao, chief economist at Mumbai-based Yes Bank Ltd. “It is very specific consumption and there is no adequate supply of these commodities in the global market.”

Indian food-price inflation quickened to a three-week high of 8.31 percent in the week ended July 2. The nation’s benchmark wholesale-price index climbed 9.44 percent last month from a year earlier, after a 9.06 percent pace in May. Montek Singh Ahluwalia, an adviser to Prime Minister Manmohan Singh, said this week it will take “several months” to bring inflation to an acceptable level.

 

Source: Bloomberg

CHINA – Melamine-Tainted Feeds Used at Chinese Pig Farms

CHINA – Chinese authorities have reportedly caught some farmers in China giving their pigs melamine-tainted feed.

Citing Xinhua News Agency, Arirang reports that a broker named Tang bought roughly 7 tons of melamine-tainted formula in Hebei, a northern province of China, and sold 2 tons of it to pig farmers in Chungqing and Chengdu.

The amount of melamine detected in the feed was over 5-hundred times the legal limit.

The farmers say that they stopped using the contaminated formula after their pigs became ill but Chinese consumers are still worried that melamine-contaminated pigs may have entered the country’s food supply.

In 2008, several Chinese companies were implicated in a scandal involving milk and infant formula that had been adulterated with melamine from which six babies died and some 300-thousand others were sickened.

Source: ThePigSite News Desk

CHINA – NDRC: Inflation Under Control Despite Concern – June 24, 2011

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.

Information ThePigSite News Desk

CHINA – China to Import More US Soybeans – June 23, 2011

CHINA – Soybean imports are expected to rise by five per cent this year, increasing the attraction of the country to US soybean farmers.

The statement was made by Alan Kemper, president of the American Soybean Association, report official sources in China.

The increase in the soybean trade may help promote China-US relationships, indicating a way to balance bilateral trade, Chinese experts said.

Mr Kemper said: “China is the most important market for US soybeans, and the soybean trade will play a large role in improving the balance of China-US trade.”

China is the largest importer of US soybeans. It imported a quarter of the country’s domestic production last year, according to the association.

Zhang Monan, a researcher at the Economic Forecast Department of the State Information Center, said soybean trade between the two countries will help maintain a stable development in bilateral relations.

The US has heavily subsidised its agricultural sector so it is important for the country to ensure profit margins in the global food market, Mr Zhang said.

Given constraints over land and water resources, it is difficult for China to meet growing demand for agricultural products such as soybeans domestically. It can buy agricultural products with its bulky foreign reserves, she added.

If imports are to increase, it is not because of a decline in domestic production but because of growing demand, said Liu Denggao, vice-president of the China Soybean Industry Association.

Mr Liu said: “The size of the area where China’s soybeans are grown remains largely unchanged from last year.”

Even with the fresh demand in China’s market, the competition is growing fiercer in the international market, as imports from South American countries such as Brazil and Argentina have also increased in recent years.

To consolidate its position, the US soybean industry will invest more than $2 million this year in China’s market, Mr Kemper said.

The investment will finance programmes teaching Chinese farmers efficient ways of using soybeans to improve the production of swine, poultry, dairy and other agricultural sectors, according to the association.

Marc Curtis, chairman of the United Soybean Board, said: “These programmes have been carried out for the last 30 years since we arrived in China. We will continue our efforts to serve China’s market.”

China imported a historic 54.8 million tons of soybeans in 2010, compared with 15.2 million tons of domestic production, General Administration of Customs data showed. The country’s self-sufficiency rate currently stands at 22 per cent.

The imported soybeans are all genetically modified and mainly used as animal feed or for oil crushing.

Imports of soybeans to China declined by one per cent year-on-year to 4.56 million tons in May. China’s soybean imports during the first five months of this year remain largely the same compared with the same period last year.

Information ThePigSite News Desk

CHINA – Increase in Pork Prices Breeds Hopes and Worries – June 23, 2011

CHINA – Shortage of pigs and rising costs of feed and labor fuel the momentum, report Hu Yongqi in Shandong province and Li Jiabao in Beijing.

Wang Yugui, a farmer in Zibo, Shandong province, has not seen pork prices this high since he started raising pigs in 2001.

When pork hit a record 18.4 yuan ($2.83) a kilogram this month, nearly twice the March 2010 price, Wang decided to sell the 10 pigs he had that weighed more than 100 kg, the market minimum.

However, 60 of his pigs are still underweight. Like more than 1,000 other pig farmers in Zibo, the 50-year-old must wait and risk missing out on turning a profit.

“I hope all our pigs grow to 100 kg so I can sell them at peak price.”

There’s no way to speed the fattening-up process, but Wang’s luck might just hold. Some experts expect pork prices will keep going up for the rest of the year. Good news for those who raise pigs, not for those who buy pork at the grocery store.

“The price increase is a reflection of the pig growth period,” said Zhu Baoliang, deputy director of the economic forecasting department at the State Information Center. “It takes about a year and a half for the price to reach the peak from the bottom.

“The price touched bottom in July and then began to pick up. It will keep going up before the next pigs are fattened in six or eight months.”

Li Yongqiang is more patient about selling his pigs. He is 62 and has been farming pigs for 21 years. “If I stock the pigs for one more week, each pig will bring me another 100 yuan.”

Li sold more than 400 pigs last Thursday. Then he learned that the price has edged up 0.1 yuan a day since early June. A one-week delay in selling his pigs could bring Li 1 or 1.2 yuan more for each kilogram.

Li keeps about 6,000 pigs in his breeding farm in Dasungezhuang village in Beijing’s Shunyi district.

Numbers down

A shortage of stock and rising feed and labor costs are chiefly responsible for the increase in the market price for pigs.

Shandong farmers raised 40 million pigs last year, 1 million of them in Zibo. This year, however, the number of pigs in the city has dropped to about 950,000, said Xue Lequan, deputy director of the city livestock bureau’s production division.

Farmers reckon the cost of raising a pig to market is 8 yuan a kg. When the price dropped from 13 yuan in 2009 to 9.6 last year, many growers stopped breeding pigs and sought city jobs.

In Zibo, Shandong province, 17 families left pig breeding behind last year. Only seven are still in business.

They are raising 1,200 pigs this year, which is 1,700 fewer than last year, Wang Shunlin said. He owns the biggest pigpen in the village, accommodating 600 heads.

Farmers fear disease most. Last winter was warmer than normal, and more bacteria survived. Many sows fell ill and fewer piglets were born. Five of the 10 sows in Wang Yugui’s pen failed to get pregnant because of disease, and he lost 40 piglets.

Food and keepers

“Corn accounts for 60 per cent of pig feed” and its price is up 30 per cent from April 2008, said Feng Yonghui, chief analyst of Soozhu.com, an online pig market monitoring and analysis service. “It reached a record high in March this year before the price of pigs and pork did.”

Li, the Beijing pig farmer, thinks that in the background of inflation, the price of corn is acceptable if it stays below 3 yuan a kg. Still, even if farmers are getting more for their pigs at market, the extra they spend on fodder narrows their profit margin.

Each pig consumes 250 kg of corn in the six months or so from birth to market. Corn, which sold for 1.6 yuan a kg in 2005, now costs 2.3 yuan a kg. It means Wang Yugui spends 12,250 yuan more on corn.

Labor costs are up too, “by at least 20 per cent from last year”, Feng said. “Migrant workers now earn 2,500 yuan or 3,000 yuan a month and their monthly wage was about 2,000 yuan last year.”

And it’s not just the wages that are a problem, Li said.

“I now pay the keepers 100 yuan a day, though I paid them 5 yuan a day in the past years. But if I were to offer 100,000 yuan a year, I would still have trouble hiring a breeding technician because few college graduates are willing to work in the hot, dirty pigsties with no breaks.”

Swings, stability

Pig farmers said the market is basically self-regulating, which means there can be wide price fluctuations. The central government does maintain a livestock reserve so it can provide more pork when the retail price is very high. It also provides occasional subsidies to farmers, such as one last year when the market price dropped so low.

Wang Yugui received 1,500 yuan, which eased the strain a bit, but he said it made just a small dent in his loss of 10,000 yuan.

Wang Shunlin said, “We farmers prefer a stable price for pigs as we will suffer less loss when the price undergoes a dramatic drop.”

Meanwhile, pig production continues at a stable pace. A female pig, called a gilt, reaches maturity at about 8 months, but farmers usually wait two months more before letting her mate because she will produce bigger litters. Gestation takes about 114 days, four months, and once the piglets arrive, the gilt is called a sow. Piglets need six to eight months to reach market weight, Li said.

The farmer will lose money when the price of pigs for slaughter is below 14 yuan a kg, because the cost of raising a pig runs about 1,500 yuan. If the price hits 19.8 yuan a kg, the farmer can profit about 500 yuan on a 100-kg pig.

Advantages of scale

As in most businesses, the bigger producers are better able than small ones to weather price fluctuations and setbacks, such as illness. Xue, at Zibo’s livestock bureau, said, “Small farm owners do not have enough money to buy sanitary facilities and they usually cure sick pigs themselves.”

Usually, they must sell their market-size pigs before they can buy what they need for the smaller animals. A pen large enough for 100 pigs costs about 300,000 yuan in Wang Yugui’s village, and farmers cannot afford to resume the business if they quit. If prices drop year after year, they must sell off their stock, even at a loss.

Large pig farms also are better able to recover from financial losses, so local authorities followed the central government’s stipulation to support farms that raise at least 500 pigs. Now, Xue said, more than 100 farms in Zibo keep at least 1,000 pigs.

He thinks there is little room left for the price to increase because millions of pigs will be put up for sale in late August or early September, the busy trading season. Li, the Beijing pig farmer, agrees.

“The price will begin to fall next June when the next pigs are supplied into the market,” Li said. “It takes at least one year because many pig farmers slaughtered even their stud boars and sows when they suffered from low prices last June and diseases at the end of last year.

“Small pig farms can do well when the price is increasing,” Li said, “but a single loss could drive them to bankruptcy. This is a business of high risk and high reward. Their hearts are broken after suffering from the price fluctuations in the past years.”

Li’s village had about 100 pig farmers 10 years ago, and now has about 20. Fewer than five of them keep more than 50 sows.

“The price of piglets was 16 yuan a kg at the end of 2010 and it is now 36 yuan, while a piglet weighs about 25 or 30 kg,” Li said. “A piglet costs about 1,000 yuan now.”

Add the costs of corn and vaccinations, and consider how many piglets will not make it to market. Their death rate is as high as 70 per cent because of diseases, he said. “A sow bears twice a year and bears about 13 or 14 piglets when the farmer is lucky. But the farmer starts to profit when a sow bears 15 piglets.”

Slaughter slowdown

Pork processors also are feeling the effects of increased costs to farmers and higher market prices.

“It has become difficult to buy grown pigs now,” said Zhang Youtang, general manager of Qimeisi Pork, the biggest pork processor in Linzi district. The factory produces 15 tons of pork each day.

“Though pig and pork prices increased, the profit my factory earns dropped by 20 per cent because much less pork is produced,” Zhang said.

Every morning, seven employees called collectors are sent to villages to find and buy pigs, but most bring back fewer than 20, half of the number last year. And half the usual number are run through the production line, where agile butchers can handle three pigs in one minute.

With fewer pigs to process, butchers are working fewer hours, but at their full pay rate, said Yang Yandong, who is in charge of production in the factory.

Grocery bills

Grocery shoppers have already noticed. Compared with a year ago, the price of pork was up 41.5 per cent in May and 45.5 per cent in June. On Wednesday, the average price was 25.46 yuan a kg, which was 1.55 yuan a kg higher than on Tuesday.

Analyst Feng Yonghui said to expect the prices of corn and other vegetables to rise as well. “About 70 per cent of China’s corn is used as feed. The growing demand for pig will further tighten the corn supply.”

Feng also noted that about 65 per cent of China’s meat is pork. If consumers find it too expensive, they “may end up turning to vegetables for alternatives, and that would raise their prices. The flooding in the South could further raise vegetable prices.”

It also could raise the consumer price index (CPI), because it’s “an important factor in the calculation”, said the information center’s Zhu. “A price increase of 40 per cent could add 1.2 per centage points to the CPI.”

China’s CPI surged by 5.5 per cent in May from a year earlier, with food price contributing about 11.1 per cent to the increase, according to National Bureau of Statistics.

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CHINA – Mitsubishi Invests in Meat and Livestock in China – June 23, 2011

CHINA – Mitsubishi Corporation (MC), ITOHAM FOODS INC. (ITOHAM) and YONEKYU CORPORATION (YONEKYU) are to invest livestock and poultry breeding, slaughtering, processing and meat products trading and importing business of COFCO in China.

Mitsubishi, ITOHAM and YONEKYU will acquire 33 per cent of the shares issued by COFCO’s subsidiary, which is a holding company of COFCO’s meat business through MIY Corporation (MIY), an investment vehicle jointly established by them, by July.

COFCO, Mitsubishi, ITOHAM and YONEKYU will expand meat products and processed foods business in China by spending a total of 10 billion Chinese Yuan (approximately 125 billion Japanese Yen) by 2017.

With regard to meat products business, there are plans to open seven new plants, giving a combined total of 12 plants, which will increase slaughter capacity from 50 million to 300 million birds for poultry and from 0.5 to 5 million pigs a year.

As for processed foods (including processed pork and poultry products), the number of plants will be increased from four to 11, which in turn will lead to an increase in production capacity from 20,000 tons to 210,000 tons.

When combined with meats, such as beef, pork and chicken, imported from overseas, annual sales will increase to 18.1 billion Chinese Yuan (approximately 226.3 billion Japanese Yen) from 2.3 billion Chinese Yuan (approximately 28.8 billion Japanese Yen).

MIY will subscribe for the capital increase needed for business expansion of the Holding Company in proportion to its shareholdings to maintain its 33 per cent shareholding ratio and then MIY’s total investment is expected to be approximately 3.3 billion Chinese Yuan (approximately 41.3 billion Japanese Yen) by 2017.

Mitsubishi said that consumption of meat products and processed foods in China has increased following China’s economic expansion and is expected to continue to increase for the foreseeable future.

Despite the fact that the Chinese livestock and meat market is one of the biggest in the world, that industry is currently operated by small and medium sized players.

With growing demand for stable supplies of high quality and safe products COFCO’s mission, as a corporation owned by State-owned Assets Supervision and Administration Commission of the State Council (SASAC), is to establish a system to ensure supply of more high quality meat products and processed foods.

Under a Business Alliance Agreement formulated in 2009, Mitsubishi, ITOHAM and YONEKYU have been investigating opportunities to jointly strengthen their respective businesses. In particular there have been many discussions focusing on the participation of COFCO’s meat business in China.

Mitsubishi, ITOHAM, YONEKYU and COFCO have agreed to work together to achieve each company’s objective and to establish a stable supply of high quality and safe meat products and processed foods in China.

In order to achieve this, Mitsubishi, ITOHAM, and YONEKYU will look to combine the skills and know-how that they have developed in these industries with COFCO’s strong business foundations in China.

We hope this project will effectively promote each company’s growth strategy while also contributing to the development of China’s meat industry and the stable supply of food products.

In July 2010 Mitsubishi released its Midterm Corporate Strategy 2012 in which it designates China as one of its strategic regions for investment.

Mitsubishi and COFCO have enjoyed a strategic alliance since 2004 and will look to strengthen their ties through the forthcoming project.

Mitsubishi will also be looking for opportunities both to expand its business in the rapidly growing Chinese market and to develop new businesses in food-related and other fields.

“To be one of the most reliable meat processors in Asia’ is the key vision on ITOHAM’s midterm corporate strategy, CNV2015, which was announced in January 2011. One of ITOHAM’s growth strategies is to expand sales in growing Asian markets. The forthcoming project in China is an example of this strategy being put into action,” a spokesman said.

One of the key growth strategies of YONEKYU’s fifth midterm corporate strategy which was announced in April 2011 is re-entering the overseas market. Following this project, YONEKYU will seek opportunities to expand business in other regions.

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CHINA – China’s Pork, Pig Prices Soar Past 2008 Record – June 21, 2011

CHINA – The prices of pork and live pigs climbed higher than the record set in 2008 and will continue their rising momentum to the end of the year, analysts said.

Consumers buy pork in a store in Yiwu, Zhejiang province. In some second- and third-tier cities, the price of pork rose above 30 yuan ($4.64) a kilogram. [Photo: China Daily]

“Live pigs cost 18.57 yuan (2.87 U.S. Dollars) a kilogram by the end of the third week in June, and the peak in April 2008 was 17.2 yuan a kilogram. The price of pork surged to 27.67 yuan a kilogram last week, and the peak in 2008 was about 26 yuan. In some second- and third-tier cities, the price of pork rose above 30 yuan a kilogram,” said Feng Yonghui, chief analyst of Soozhu.com, an online pig market monitoring and analysis service.

Zhu Baoliang, deputy director of the economic forecasting department at the State Information Center, said he believed that prices are unlikely to fall before the end of the year.

“The growth period of a pig is about a year and a half. The prices of live pigs and pork touched a bottom in July and have been picking up since then. The prices will keep rising till the end of the year,” Mr Baoliang told China Daily.

He added that the central government may have little chance to regulate prices. “Many pig farmers slaughtered breeding stock in the last production period because of losses from low prices and diseases. The government might slightly regulate the prices through the pork reserve, but pigs can’t be fattened within six to eight months. So the prices will keep climbing before the next pigs reach the market.”

Mr Yonghui said the latest price rises started on 2 May, when live pigs cost 14.8 yuan a kilogram. The price shot up by 23.7 per cent in a month and a half. The main reasons are the growing cost of pig farming and the shortage of stock.

“Corn is the biggest force driving the prices of pork and live pigs higher and it reached a record high in March, before the pig and pork prices did,” he said.

Farmers now charge 2.2 yuan a kilogram for corn, which makes up about 60 per cent of pig feed. In April 2008 it cost 1.75 yuan a kilogram in the marketplace. Bean pulp, another important ingredient of pig feed, has dropped from 4.7 yuan a kilogramin April 2008 to 3.28 yuan a kilogram this year.

Growing labor costs are another factor force in the price rise. “The cost of labor went up by about 20 percent year-on-year. Migrant workers earned about 2,000 yuan a month last year, and their monthly wage is now between 2,500 and 3,000 yuan,” Mr Yonghui said.

Li Yongqiang, an experienced pig farmer in Beijing’s Shunyi district, agreed that the cost of labor is challenging.

“I now pay the keepers 2,000 to 3,000 yuan a month. Even I were to offer 100,000 yuan a year, I would still have trouble hiring a breeding technician because few graduates are willing to work in the hot, dirty pigsties with no breaks.”

The shortage of pigs came from the losses farmers suffered last year and diseases in the stock last year that drove many private pig farmers out of business.

Mr Yonghui said he worries that the price increases for pork and pigs could also lift the prices of grains and vegetables.

“Sixty-five per cent of China’s meat is pork,” he said. “People may end up turning to vegetables for alternatives, and that would raise their prices. The flooding in the south could further raise vegetable prices.”

Mr Yobghui rejected the idea that importing pork could help solve the problems. “China accounts for half of the world’s pork production, with 600 million live pigs, while the Unites States, the second-biggest pig farming country, keeps about 100 million pigs. Importing two or three million tons of pork may only maintain the country’s pork consumption for just half a month.”

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CHINA – China’s grain reserves free from contamination – 23 Jun 2011

China has conducted a nationwide inspection of its grain reserves and found them safe for consumption, a senior official of the State Administration of Grain (SAG) said.

According to a statement by SAG deputy head Zeng Liying, the inspection indicates that the state’s grain reserves are “well-preserved” and grain inventory is trustworthy.

During the inspection, which was conducted over the first half of last year, 5,370 samples were taken from 1,157 grain depots nationwide. Inspectors checked the samples for contaminants such as pesticide residue, heavy metals and mycotoxins. The results showed that 97.3% of the samples were found to be of “safe” quality.

The announcement came as the country increased efforts to reap summer grains in 2011 while some of its grain production provinces are plaguing by a lingering drought and deadly floods.

The country’s grain output rose 2.9% year-on-year in 2010 to reach 546.41 million metric tonnes, marking the seventh consecutive year of growth.

Another inspection, this time of wheat reserves that were purchased in 2010 summer in provinces of Jiangsu, Anhui, Hubei and Henan, found that 1,656 of the inspection’s 5,378 samples contained an excessive amount of mycotoxins, according to the SAG statement.

A total of 1.75 million metric tons of contaminated wheat was sealed up to prevent the spread of mycotoxins, the statement said. The administration did not mention whether contaminated grain reserves were found elsewhere.

Information AllAboutFeed.net

CHINA – Arrests Made over Tainted Pork Scandal – June 16, 2011

CHINA – Ten people have been arrested following the scandal about clenbuterol-contaminated pork in the east of the country.

Authorities in east China’s Jiangsu Province have said that they have arrested ten people, including four government staff and six butchers, in a case involving pork tainted with a toxic chemical.

The government staff, including three officials, were from the trade bureau, health inspection station and veterinary station of Jianye District in the provincial capital city of Nanjing, said a spokesman with the city’s procuratorate.

They were accused of neglect of duty, according to the spokesman.

Six butchers, all from the Xingwang Slaughterhouse, were accused of selling poisonous food as they knew the pigs had been fed with the chemical and sold the pork.

Police investigation in March showed that over 100 pigs at the slaughterhouse test positive for clenbuterol, a banned chemical used to make animals develop more muscle and less fat.

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CHINA – Higher Pork Prices Fuel Inflation – June 16, 2011

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.”

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