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China released 10,000 tons of reserve pork imported from overseas on Thursday amid tightened supplies.
The reserves were auctioned online, with each bidder being allowed to order a maximum of 300 tons, according to the China Merchandise Reserve Management Center, as reported by Caixin.
The center that holds China's meat stocks tapped on the frozen pork reserves after the country culled one third of its hogs this year when cases of African swine flu were discovered. This led to a supply shortage and soaring pork prices. Thursday's move precedes the week-long National Day holiday in the first week of October when the country celebrates 70 years since the founding of the People's Republic of China.
Pork meat is used as an ingredient of a host of dishes in Chinese cuisine, which makes it a staple food. /VCG Photo
What's behind the state pork release?
China is the world's leading pork consumer and home to half of the world's live pigs, so when a third of them had to be culled earlier this year, the impact was considerable. Pork is a crucial staple food in China and an ingredient for many dishes, including dumplings, soups, and stir-fries. A middle school in east China's Anhui Province created a buzz online after it awarded excellent academic performance with 1.5 kilograms of pork ahead of the Spring Festival this year, as this year marks the year of the pig according to Chinese zodiac. The unusual gift shows that pork holds a deep-rooted symbolic meaning.
Even though the overall meat supply is expected to satisfy consumer demand until the end of the year, the Ministry of Agriculture and Rural Affairs announced in July, pork takes a 60 percent chunk out of all meat consumption and is culturally hard to replace. Besides, the pork prices that have been surging since June have also driven up other meat prices. According to the Ministry of Commerce, the average pork price in 22 major Chinese provinces and cities soared more than 30 percent during August. The national average lies at about 38 yuan per kilogram (about 5.3 U.S. dollars), the Financial Times reported on September 10, referring to official statistics.
"Securing the supply (of pork) affects people's livelihoods and overall situation,” Vice Premier Hu Chunhua said in August, adding that the central government will use all necessary means to ensure supply.
Governments at the provincial and national level have thus decided to tap into their pork reserves to ease the shortage.
After the African swine fever was diagnosed in a number of hogs in China, one third of live pigs in China were culled this year. /VCG Photo
What else is China doing to deal with the pork shortage?
Beijing has introduced a slew of measures to respond to high pork prices at different levels of the supply chain.
The country has lifted imports from overseas, mainly Europe and Brazil, while encouraging other meat production. China imported 819,000 tons of pork in the first half of this year, an increase of 26.4 percent, and chicken meat production increased by 13.5 percent, according to the People's Daily. On September 13, Xinhua reported that China is also exempting U.S. soybeans — used for pig's feed — and pork from additional import tariffs.
To boost production, Beijing announced subsidies ranging from 500,000 to 5 million yuan (about 70,500 to 702,500 U.S. dollars,) according to Xinhua. Fiscal measures are aimed at encouraging pig breeders and hog farmers to expand and ramp up on necessary infrastructure and disease prevention and control.
Nanning, capital of south China's Guangxi Zhuang Autonomous Region, offered subsidies to meat vendors to offer pork at discounted prices while turning for a short period to rationing and price controls. Low-income families have also received 3.23 billion yuan (about 455 million U.S. dollars) of subsidies to be able to afford pork from the government, SCMP reported.
Beijing's hog breeders and farmers receive subsidies to continue and expand production. /VCG Photo
Are government measures effective?
Consumer prices in China, including the cost of pork, are forecast to remain stable with the support of government policy, Meng Wei, spokesperson of the country's top economic planning agency said on Wednesday. The National Development and Reform Commission (NDRC) will continue to monitor changes in the prices of staple foods and will intervene to keep them stable if necessary, Wei added. The NDRC expects prices to remain stable over the National Day holiday.
While the release of the state reserve can help to keep prices from rising in the short term, it might take much longer to stabilize the situation since most of the hogs are raised in small farms, Liu Jing, professor of accounting and finance at Cheung Kong Graduate School of Business in Beijing told CGTN Digital. China's population of live pigs is expected to drop by a total of around 50 percent in 2019, Dutch financial services company Rabobank said in a quarterly report published in July. Stocking up on pigs takes time, as it takes up to eight months for pigs to grow to a size that makes them fit for the market.
"This pandemic in hogs will generate pressure for Chinese agriculture to be more industrial and systematic, especially in disease control," Liu said.