pork Photo:VCG

A Chinese official from the Ministry of Agriculture and Rural Affairs on Tuesday warned hog farmers not to gamble on the pork trade market by blindly cutting hog production, despite plunging pork prices.

At a press briefing in Beijing, Xin Guochang, an official at the ministry's Animal Husbandry and Veterinary Bureau urged farmers to closely follow official notices, weed out low-yielding sows, and continue to cut costs and improve efficiency. 

Pig farmers should not gamble on the pork market, reduce output blindly or plan their herd size based on market speculation alone, Xin said, adding that the peak in profits is over.

Analysts noted that the golden age of profits from pork is over as the price for live pigs dwindled to 10 percent of the peak level.

The retail price for pork also dropped to 24.60 yuan ($3.79) per kilogram as of the end of June, down more than 50 percent from the peak of 59.64 yuan in February 2020, according to Xin. Prices have fallen for five consecutive months this year. 

The profit for a live pig during the peak season could reach 3,000 yuan previously, but it's returned to a normal level of 200-300 yuan as the high-profit stage has ended, Wang Zuli, deputy researcher at the Institute of Agricultural Economics and Development at the Chinese Academy of Agricultural Sciences, told the Global Times on Tuesday.

Wang said that the normal level of profitability would incentivize pig farmers without pushing pork prices out of reach for ordinary people.

Live pig prices have slumped because supplies have surged amid a robust recovery in production. Xin said that 22 million pigs were slaughtered in June, up 66 percent year-on-year.  

The first half of the year is usually a low season for the pork market, said Wang, adding that poultry has been gradually replacing pork, and the high price of pork in the past two years accelerated the trend.

Some farmers were misled by hype from commercial agencies when the survival rate of piglets decreased at the beginning of the year amid a cold wave, analysts said. These farmers gambled on a market improvement during the Dragon Boat Festival and refused to sell the pigs they had raised. 

Pork price has stabilized at a point that is a bit below the cost of production, and the price for live pigs is returning to 16 yuan per kilogram after relevant authorities jointly worked together to curb the trend, said Xin, adding that the National Development and Reform Commission (NDRC) has previously issued price warnings. 

The NDRC also purchased and stored 33,000 tons of pork in two batches from the market. 

In the second half of the year, overall consumption is expected to increase, leading pig farming to return to normal profit levels as consumption picks up, officials said. 

Global Times