Swine fever caused big trouble for China's pig population - and the economy. Photo / Mark Schiefelbein, AP
Swine fever caused big trouble for China's pig population - and the economy. Photo / Mark Schiefelbein, AP
China has unveiled regulations that aim to more tightly control the world’s largest pig population, after a recent growth in herd numbers weighed heavily on pork prices.
The country’s agriculture ministry said in a notice on Monday that its guidelines on herd sizes should be “better used” to “prevent largefluctuations in pig production capacity” after a period of volatility.
China’s pig herds, which make up about half of the global total, were devastated by an outbreak of African swine fever from 2018 to 2021, leading to widespread culling, higher prices and a push for more production that in subsequent years resulted in volumes recovering to the point of overcapacity.
China’s pig population was 434 million in 2023, up significantly from a low of 310m in 2019.
The price of pork, a staple good in China and the most important component of its closely-watched consumer price index, has fallen drastically as a result, adding to a wider climate of deflation that has pressured Beijing for the past six months.
The Government said its regulations needed to be updated “as pig production efficiency continues to improve and pork consumption tends to stabilise”, and that it would continue to implement long-term targets for breeding sows.
Last week, the Government reduced the target for retention of breeding sows from 41m to 39m in a notice that said it would pay close attention to the control of diseases including African swine fever.
Fitch, the rating agency, noted last week that “overcapacity in China’s hog breeding industry is likely to persist into the second quarter”, and that most breeders “are likely to continue facing losses”.
It pointed to a “reluctance to downsize” across the market that “may partly stem from a desire to maintain their [breeders’] leading market positions and recoup previous investments”.
Pork is a staple good in China and the most crucial component of its closely-watched consumer price index,
China’s consumer prices fell 0.8 per cent in January, driven by a 5.9 per cent decline in food prices and a 17 per cent drop in the price of pork. Excluding food and energy, core consumer price growth was positive at 0.4 per cent.
Pork prices dropped 13.6 per cent in 2023, according to a Nomura analysis of the latest available data.
On a month-on-month basis, they edged 0.2 per cent lower in January, suggesting unusually weak appetite from consumers despite the onset of the lunar new year.
“The flat reading for pork prices in January contradicted the seasonal increase in pork prices that typically takes place in the run-up to the Chinese new year holiday and points to weak pork demand,” analysts at the Japanese bank wrote.
Written by: Thomas Hale in Shanghai. Additional reporting by Wang Xueqiao in Shanghai
