China to buy pork for state reserves to support prices and farmers

China’s National Development and Reform Commission recently announced that the country’s central and local governments would start buying pork for state reserves in an effort to support prices that had fallen sharply in recent months.

According to the commission, prices had entered an “excessive decline” in the fourth week of June, but it did not provide details on the volumes of pork that would be purchased.

Reuters reported that between January and early June this year, the prices of live pigs in China, the world’s top pork producer, plummeted 65%, which resulted in farmers’ profits being eroded. This raised concerns that many would stop farming, which would result in shortages.

A report by market analyst Shanghai JC Intelligence indicated that the pig-to-grain price ratio, an indicator of farmers’ profits, was 4,9:1 on average in the fourth week of June, almost breaching the 5:1 level set by the commission to trigger a level 1 warning, which was its highest level.

Shares in China’s pig farming companies rose sharply following the announcement of the state’s plan to buy pork for stockpiling, despite pig prices starting to show a recovery.

According to Reuters, live pig prices bottomed out at 12,9 yuan/kg (about R28,56/kg) on 21 June, and then started to rise sharply to reach 17,35 yuan/kg (R38,41/kg) at the end of June. – Staff reporter

FW ARCHIVE In an attempt to boost prices and prevent farmers leaving the industry, the Chinese government will soon start buying pork for state reserves.