Pork Supply Problems Emerge in China

CHINA - H1N1 flu elsewhere is highlighting problems in the pork supply chain, including a sharp drop in the wholesale price.

Official sources report industry insiders saying that the influenza A (H1N1) flu virus has contributed to a slide in the wholesale price of pork in Guangdong province.

"A lot of difficulties emerged in the industry of pig feeding and selling since last year, such as having an excess of supply over demand," added Zhou Hong, a deputy secretary of Guangdong feeding stuff industry association, who pointed out that other factors were the main reason behind the slide in prices.

"Competition in the market has turned more severe but the A(H1N1) virus has aggregated the difficulties."

According to Mr Zhou, the reason for much of the oversupply began several years ago when the number of pigs being farmed fell sharply in the second half of 2006 after a strain of fever spread widely among piglets.

The size of the herd that year was 17 per cent smaller than the previous year, and the price of pork in 2007 and the first four months of 2008 rose quickly because of the shortage in supply.

"A kilogram of pork was sold at 20 yuan ($2.90) at that time – double the price of the previous year," he said.

The soaring pork price enticed an influx of businessmen to invest in the industry, resulting in the supply of pork recovering and soon outstripping demand.

Consequently, the price started to drop last May, he said.

"The wholesale price of a kilogram of pork dropped from 20 yuan to 12 yuan last year," Mr Zhou explained.

"The price in the first four months of this year kept dropping," said Chen Sheng, president of Guangdong Tiandi Food Group, adding that the wholesale price for one kilogram of pork fell to less than 10 yuan last month, he added.

At the start of the H1N1 flu outbreak, when the disease was being referred to as 'swine flu', people began to have concerns about eating pork, even though medical experts assured the virus could not be caught by eating pork.

He warned that if the wholesale price of a kilogram of pork remained below 10 yuan in the fall, many pig farmers might lose confidence in the business.

Masks, meanwhile, and anti-flu drugs are very popular in the market area of Guangdong. Many pharmacies in Guangzhou asked a customer to buy no more than two masks, and some anti-flu drugs have sold out, according to the report.