Here’s a dysfunctional situation: the price of pig feed in China is now more expensive than human food, reports International Finance News. It points out that domestic futures for pig feed reached Rmb4,290 per tonne in late August. In comparison rice cost Rmb2,826 per tonne, and wheat still less at Rmb2,530.
The reason for this strange anomaly? Pig feed is made of soya beans and, as we reported in WiC160, the price of this commodity has soared due to drought in the US and a poor harvest. The rising price is now putting pressure on Chinese farmers, making hoggeries into loss-makers and forcing some to start culling their pig herds. This is a move that worries the government since it could trigger inflationary pressures, reports Reuters. To counter the threat the state has started buying pigs to add to its reserves of frozen pork (which can be released onto the market if supplies fall, and threaten to drive up prices). China produces and consumes about half the world’s pork, making the price of the meat a sensitive issue.
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.