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China's Protein Problem: Rising Pork Prices
Is African Swine Fever Attacking China Again?
Food inflation today becomes food insecurity tomorrow, with hunger coming the day after.
One does not need a degree in economics to understand how that evolution comes about: as food prices rise, fewer people can afford to eat, and eventually some begin to go hungry.
Even totalitarian regimes generally prefer to avoid the food riots and other civic instabilities that occur when food insecurity and hunger become widespread. Thus it should surprise no one that Beijing is taking steps to control the steeply rising price of a staple of Chinese diets: pork. Beijing is releasing 200,000 tons of pork from its frozen reserves of the meat to stabilize prices and calm a restive population.
A new survey via research firm Oliver Wyman found that Chinese people are beginning to complain about inflation as pork prices rise. However, inflation is not nearly anywhere compared to the US and the rest of the world.
The only thing President Xi Jinping can't afford is discontent among the population due to rising prices ... thus Beijing will continue dumping pork supplies to tame prices.
The 200,000 tons of meat released by the government into the marketplace is a record, which should illustrate how significant the price rises are for pork in China.
According to the amount already put in and the plan for later release, it is expected that the country and localities will put about 200,000 tons of pork reserves in September, and the amount put in a single month will reach the highest level in history.
If nothing else, Xi Jinping is serious about containing the rise of food price inflation for the Chinese people.
Global Rise In Pork Prices
China is especially attuned to the price for pork as it is by far the largest producer and consumer of pork in the world. However, the rise in the price of pork has been a global occurrence, with Europe and the US showing significant inflation in pork prices.
While food price inflation is not officially as high in China as it is in the US, pork prices have risen more dramatically in China than in Europe or the US.
With pork prices spiking, it is not hard to understand what prompted Beijing to release stores of the frozen meat.
Return Of African Swine Fever
One reason pork prices are more volatile in China is that the country is still recovering from a major outbreak of African Swine Fever in 2018-2019, which resulted in a vast cull among Chinese herds.
It’s difficult to overstate the scale of the problem. As of July, China had lost more than 100 million pigs in the last year, according data released Tuesday by the country’s agricultural ministry.
As the graph for pork prices in China (above) shows, in the wake of the ASF outbreak pork prices soared in China.
Yet while the major ASF outbreak presumably ended in 2019 or 2020, the disease never truly went away. New outbreaks happened throughout last year, with hog farmers in Sichuan—which on average supplies 9% of China’s pork supply—losing as much as 15% of their herds to the virus.
Ironically, last year’s outbreak resulted in significant declines in pork prices in China, as hog farmers responded to the outbreak by sending more hogs to slaughter, increasing supply in an effort to not suffer financially from the disease.
The latest outbreaks have created additional supply as farmers panic and send pigs to slaughter. Sichuan's hog price, usually higher than most regions because of its large population and high consumption levels, has fallen below the national average to 15.6 yuan ($2.40) per kg this week.
ASF also resulted in fresh devastation to swine herds in northern China as well, with some 20% of the animals there infected.
“At least 20% of the herd was affected, maybe even 25%” in the northern and northeastern Chinese provinces because of outbreaks during the first quarter, said Jan Cortenbach, chief technical officer at feed maker Wellhope-De Heus Animal Nutrition.
Henan lost between 20% and 30% of its breeding sows, a report by Founder Cifco Futures said on Monday, adding the damage could be “irreversible”.
While there have been no reports of fresh outbreaks recently in China (at least, a search for news articles about ASF turned up no new reports), neighboring Taiwan received an ASF scare when a pig carcass washed up on the island of Kinmen that was found to be infected with ASF. Although the origin of the dead animal cannot be proven with certainty, Kinmen’s shores routinely see garbage from China washing up, including pig carcasses.
It seems likely that ASF continues to ravage Chinese swine herds.
Other Meat Prices Rising As Well
While pork is far and away China’s favorite meat, it also consumes other meats—and the prices of those other meats have risen significantly as well over the past year, as the prices for white chicken illustrate.
Thus China is facing a significant economic challenge regarding food. Pork prices have been rising faster than food price inflation, which clocked in at 6.1% year on year last month, down from the previous month but still significantly high.
Food price inflation itself has been rising faster than overall inflation, which in China is still down around 2.5%.
Even at a low rate of inflation, China’s foodstuffs are becoming more expensive at a rate over twice as fast as that for other goods typically purchased by Chinese citizens.
Not Famine, Just Food Insecurity
While China still has ample stores of meat and still produces plenty of its own meat, these recurring outbreaks of disease among livestock are, much like Zero COVID, an ongoing disruption of food supply chains—never an easy challenge when attempting to feed the world’s most populous country. With ongoing drought wreaking havoc on grain production, recurring epidemic disease among the nation’s livestock is the last challenge the Chinese people would want.
The human diet requires more than just grains. Protein is every bit as essential to good nutrition, and while there are plant sources of protein, in a season of drought and reduced harvests turning to those sources merely exchanges one food insufficiency crisis for another.
While Beijing has had the foresight to lay up stores of frozen meat to help keep meat prices stable, such efforts to limit price increases can only have at most transitory benefit. If pig production is not stabilized and ASF outbreaks are not brought under control quickly, food price inflation in China will only get worse over the coming months, and possibly over the coming years.
Food price inflation is not (yet) at a point to bring down the CCP dynasty, but it is yet another ongoing crisis that has the power to undermine the CCP’s legitimacy as the source of competent and capable governance. Capable governments are not supposed to have issues producing enough food to feed their people; Beijing seems unable to resolve that challenge.
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