06/21/2011, 00.00
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Beijing concerned by pork prices, up 4.8 per cent in a few days

Almost all food items increase as food inflation reaches 11.7 per cent in May. The surge is especially serious for less affluent families, and is a sign of the government’s inability to contain prices in essential sectors.
Beijing (AsiaNews/Agencies) – The price of pork jumped by 4.8 per cent in the week that ended on 19 June, after rising 1.6 per cent the previous week. In May, food prices surged by 11.7 per cent compared to a year before, pushing inflation to 5.5 per cent, the highest in 34 months, China’s Ministry of Commerce reported today on its website today. Local sources in many cities claim that price hikes were even steeper.

China is the world’s largest pork producer with 50.7 million tonnes a year, but also the world’s largest consumer. Pork in fact is a basic staple in Chinese gastronomy.

Price increases have been justified by the fact that the number of hogs to butcher has dropped due to a swine epidemics that hit at the start of the year. The price of corn, which accounts for around 60 per cent of pig feed, has also hit a record high because of drought in central and eastern China.

Average retail prices for 18 vegetables, however, fell 1.9 per cent last week after a bumper summer harvest, the government said.

Fruit and vegetable prices in the eastern province of Zhejiang by contrast soared by as much as 40 per cent after heavy rains destroyed crops.

The situation is thus serious for most food items. Egg prices rose 0.8 per cent. The prices of peanut oil rose 0.7 per cent on a week before, whilst soybean oil increased 0.3 per cent and rapeseed oil moved up 0.2 per cent. Flour and rice climbed 0.2 per cent on week. Beef prices gained 0.6 per cent, whilst chicken rose 0.5 per cent.

The figures show that the government is unable to control inflation despite its repeated attempts (through higher interest rates and a higher reserve ceiling for bank).

Rising prices are an alarming fact that threatens the lower and middle classes, who are more likely to feel the pinch of high inflation.

Some price rises are structural. “The shortage looks set to continue in the next year because the herd size was reduced sharply,” said Wang Xiaoyue, an analyst at Beijing Orient Agribusiness Consultant Ltd.

Tight supplies are the result of farmers reducing herds after prices dropped almost 20 per cent in the 15 months through March 2010, Wang said. It takes 12 months for a piglet to become mature enough for slaughter.

For this reason, the government is not likely to impose any form of price controls because they might force pig farmers to reduce their stock or get out of an unprofitable business.

The total cost, including labour and animal feed, has gone up to 1,700 yuan to 1,800 yuan per hog, so that pork must sell for at least 20 yuan a kilogramme for farmers to break even.

Experts note that the price of pork has always preceded and caused an inflationary surge.
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