Today we can read the following news in Financial Times:
A disease killing millions of pigs in China has sharply lifted the price of pork, the country’s staple meat, fuelling fears about inflation and prompting calls from Beijing’s top leadership for increased production of the meat.
Pork prices have risen as much as 30 per cent in Chinese cities over the last week. According to the agriculture ministry, wholesale prices for pigs have gone up even more, rising 71.3 per cent since April.
China’s 500m-odd pigs are the country’s most important source of affordable meat, and any sustained interruption in supply would be a big political problem for the government.
While the price of feed, such as corn, has risen, the main culprit is an epidemic of a mysterious illness known as “blue ear” disease, as well as the more common foot-and-mouth affliction.
“I have heard it has killed as many as 20m hogs,” an industry executive said.
China cannot easily find competitively priced pork to replace the shortfall at home, because of itsown health-related restrictions on imports from South America, where pricesare relatively low. US andEuropean pork is more expensive.
The government has a “strategic pork reserve”, established in the late 1990s, including both frozen stocks and access to pig farms, which could provide abuffer.
“We are considering releasing some of these reserves into the market in certain targeted areas in order to reduce soaring prices,” said Li Xizhen, of the Ministry of Commerce.
“We will not be giving free meat to people, but will sell pork and use market mechanisms to bring down volatility.”
The Standard also points:
“Pork accounted for about 5-6 percent of the mainland CPI basket in the past but, with the price gains, it now makes up more than 20 percent,” Chen Xindong, senior economist at BNP Paribas Securities, told The Standard.
With the surge in pork prices, economists said, inflation in the coming months will surpass the 3 percent target set by Premier Wen Jiabao in March.
Former U.S. Federal Reserve chief Alan Greenspan may be worried that a drastic correction is ahead for high-flying Chinese stocks, but Chinese Premier Wen Jiaboa appears to be more concerned about the dangers posed by the soaring price of pork.