Chinese Pork Prices Escalate, Consumption Plummets

( Gordon Spronk )

As the Chinese people look to celebrate one of their seven national holidays this week, there’s one activity that’s less likely to occur in abundance because of escalating costs: eating pork.

Data published Tuesday by China’s National Bureau of Statistics shows that the price of pork in China is nearly 50% higher today than during this same time in 2018.

The impact of higher pork prices on Chinese consumers was captured in a New York Times article today by reporters Alexandra Stevenson and Raymond Zhong:

“Too expensive, too expensive, too expensive! We can’t afford it,” said Gui Fuyi, a 69-year-old retiree who was browsing the meat section of a Beijing supermarket. The reporters noted that, “These days, Ms. Gui buys only ground pork for wrapping into dumplings, not whole cuts.”

Reuters reports pork prices in the southeast China city of Nanning rose to as much as 40 yuan ($5.64) per kg last week. That equates to approximately $2.56 per pound, a hefty amount for many Chinese. As a point of reference, Yi Wen, an economist for the Federal Reserve Bank of St. Louis estimated China’s average real per capita income in 2018 was $1,039 per month, with rural residents' average income tending to trend well below that amount.

Reserves To The Rescue?

With the second-most important holiday to the Chinese people occurring this Friday, Mid-Autumn Day, China’s officials are now dipping into their pork bank, called the meat reserve scheme. The bank was created in 1996 to help the country stabilize food prices during emergencies.

The South China Morning Post reported on Sept. 6 that local governments were releasing frozen pork reserves into the market as early as Aug. 28.

To soothe citizens’ hunger for pork and prepare for Mid-Autumn Day, the Hainan provincial government says it plans to release 1,520 kg (equivalent to 1.67 U.S. tons) by the end of day this Thursday. The Hainan province is home to 8.67 million people.

Cities in the Guangxi autonomous region and Fujian province are also believed to have started to eat into their pork reserves, according to the Post article. Collectively, more than 86 million people live in the two regions.

The importance of pork in China cannot be overstated. Each individual there eats, on average, 120 pounds of pork annually. Half the world’s total pork is consumed in China.

Vice Premier Hu Chunhua said in late August that China’s pork shortages would be “extremely severe” in the last quarter of 2019 and the first half of 2020.

“The Chinese government estimates that the country will have a 10-million-metric-ton deficit in pork supply this year,” according to a state media account of Hu’s remarks and reported on by The Washington Post.

China is now importing pork from counties such as Argentina and Portugal to help fill the pork gap created by its trade war with the U.S. and the ongoing, ferocious toll African swine fever (ASF) has taken on its swine herds.

Disease Decimates Herd.

A Rabobank quarterly report issued earlier this summer says China’s hog herd could be cut in half by the end of the year, due to ASF. In 2018, Rabobank estimated China’s hog herd at 360 million head but said as many as 200 million pigs could be culled.

Meanwhile, U.S. pork production is expected to rise throughout the third quarter of 2019, driven by a large breeding herd and improvement in productivity, Rabobank said.

Trade talks between the U.S. and China are supposed to resume in October, though a meeting date has not yet been announced.

Despite the planned talks, the U.S. and China increased or are increasing penalties on more of each country’s products, as of Sept. 1. Beijing placed a 5% levy on U.S. crude oil, and Washington put a 15% tariff on more than $125 billion in Chinese imports. Associated Press and other media outlets have reported that President Donald Trump plans another increase Oct. 15.