It's the pork, stupid!

Monday, October 3, 2011

Forget the cost of gas, housing, most food and wages. China has a simple index of its inflation. It is based on the price of pork, which is rocketing upward. That has the attention of the world's most populous country's top leader, Premier Wen Jiabao.

According to a government of China press release issued in the summer, Wen said "the government holds the unavoidable responsibility of stabilizing pork prices." He urged relevant authorities to announce policies as soon as possible to encourage more pigs to be bred and stabilize the pork market.

Price increases are good for pig farmers, according to the Chinese government's website, but increased urban residents' living costs.

Reports in North America indicate that the Chinese government pulled more than 200,000 tonnes of pork out of cold storage to try to keep prices down. In addition, China is importing pork from the United States. Unlike selling to Japan, marketing pork to China is a low-margin business. Carcasses are split down the middle and each half is cut into a shoulder, a middle and a ham, and then frozen. In the spring, China began requiring that imported meat products have individual weights marked on them.

The biggest concern for North American sellers is that the pork be free from the widely used growth promotant, ractopamine. China has a zero tolerance for residues. In the first quarter of 2011, China imported nearly 140 million pounds of U.S. pork and pork products valued at $94 million. BP