Poultry & Meat

China to Auction Frozen Pork from National Reserve Stockpiles

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With wholesale pork prices surging in the PRC due to shortages caused by African swine fever, which has reduced hog herds by as much as one-third or up to 100 million pigs, the China Merchandise Reserve Management Center is poised to auction off 10,000 tons of frozen pork from on September 19. Qualified buyers may procure as much as 300 tons, according to a statement from the state-owned company responsible for storing and managing strategically important foodstuffs.

The average price for pork in 22 major cities and provinces spiked by more than 31% in August, reported the Ministry of Commerce. In Nanning, the government intervened by offering subsidies to meat vendors to reduce prices. Local reserves of frozen pig meat have already been released in several other locations with combined populations of about 130 million people.

Some observers claim that prices have risen closer to 50% over the past year. Pork consumption in China may fall to 52 million tons in 2019 and to 48 million tons in 2020 due to lower supplies, compared with 56 million tons last year, estimates the PRC’s China’s Agriculture Ministry.

With celebrations of the 70th anniversary of the People’s Republic of China planned for early next month, the government wants to make sure that pork will be available for banquets. As such, officials have already disbursed subsidies valued at 3.2 billion yuan ($452 million) to low-income families who may find it difficult to afford pork at current high price levels.

US Pork to the Rescue?

On September 13 media outlets in China reported that the PRC was suspending punitive tariffs on United States pork imports imposed as a result of the US-China trade dispute. Upon hearing the news, National Pork Producers Council President David Herring, a pork producer from Lillington, North Caroline, commented:

“If media reports are accurate, this is a most welcome development. The Chinese have placed punitive tariffs of 60% on most US pork products, bringing the effective tariff rate on most US pork to 72%. According to Iowa State University economist Dermot Hayes, the Chinese retaliation on US pork has shaved $8 off the price of every hog sold in the United States for well over a year. Most of our competitors face only a 12% tariff on their pork exports to China. Pork is somewhat unique given that it is the most important protein consumed in China, accounting for a significant part of the consumer price index.”

Herring continued: “Pork is in short supply in China because African swine fever has ravaged the Chinese hog herd and significantly reduced the production of pork. When you consider that China is the largest producer and consumer of pork in the world, the importance of this market to US pork producers is clear. US pork exports could single-handedly make a huge dent in the trade imbalance with China. We are hopeful that this apparent gesture of goodwill by China leads not only to more sales of US pork, but that it contributes to a resolution of U.S.-China trade restrictions.”