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A Porcine Problem

Sep 26-2019   



The recent fluctuations in the pork market can be traced to the supply side. Besides cyclical factors of pig farming, two special causes can be identified – government planning and the African swine flu, according to the analysis by Prof. Lu Feng of NSD.

 

Since its first reporting in Liaoning Province in August last year, the African swine flu has spread to 31 provinces and municipalities as well as Hong Kong within less than a year, wreaking unusual havoc on China’s pig-farming industry.

 

Moreover, a well-intended plan by the government might have misfired and resulted in lower production capacity. To curb pollutions from animal farming, the plan capped pig farming in eastern and southern China and encouraged more output from northern and western regions. It turns out that production has decreased too rapidly in southern China while output in northern China hasn’t been able to make up for the shortfall.

 

Various factors were underestimated with regard to northern China. Pig farming is too water intensive for a region not known for ample supply of water. The cold weather there requires high energy consumption to keep pigpens warm enough. Cross-regional transportation of pigs for slaughtering close to consumption markets further adds to overall costs (and heightens risks of cross-regional virus spread). In addition, statistics show that powered by market forces, pig farming had already been growing in northern China before the release of the plan, whose belated arrival could hardly pump up production. Northeastern China’s share of national pork production steadily rose from 8.2% in 2001 to 10.8% in 2013 – its highest level – and skidded to 10.3% in 2018.

 

The shrinking output in southern China had to do with overzealous smacks in certain regions when implementing the new environmental and farming rules. 

A Porcine Problem

Sep 26-2019   



The recent fluctuations in the pork market can be traced to the supply side. Besides cyclical factors of pig farming, two special causes can be identified – government planning and the African swine flu, according to the analysis by Prof. Lu Feng of NSD.

 

Since its first reporting in Liaoning Province in August last year, the African swine flu has spread to 31 provinces and municipalities as well as Hong Kong within less than a year, wreaking unusual havoc on China’s pig-farming industry.

 

Moreover, a well-intended plan by the government might have misfired and resulted in lower production capacity. To curb pollutions from animal farming, the plan capped pig farming in eastern and southern China and encouraged more output from northern and western regions. It turns out that production has decreased too rapidly in southern China while output in northern China hasn’t been able to make up for the shortfall.

 

Various factors were underestimated with regard to northern China. Pig farming is too water intensive for a region not known for ample supply of water. The cold weather there requires high energy consumption to keep pigpens warm enough. Cross-regional transportation of pigs for slaughtering close to consumption markets further adds to overall costs (and heightens risks of cross-regional virus spread). In addition, statistics show that powered by market forces, pig farming had already been growing in northern China before the release of the plan, whose belated arrival could hardly pump up production. Northeastern China’s share of national pork production steadily rose from 8.2% in 2001 to 10.8% in 2013 – its highest level – and skidded to 10.3% in 2018.

 

The shrinking output in southern China had to do with overzealous smacks in certain regions when implementing the new environmental and farming rules.