Pork prices decline in China

The price of pork - a staple food product and something of a bellwether for inflation in China - is on the way down. Pork prices have declined about 10 percent in the past six weeks, thanks to the post Chinese New Year lull. Some people are also avoiding the meat after thousands of dead pigs were spotted floating down Shanghai's Huangpu River, sparking fears of contamination and swine flu.

Some say China's economy is largely riding on the cycle of pork prices. Pork prices dropped by over 9 percent in March compared with February, a major drag on food prices.

While it may benefit meat lovers, hoggeries and butchers are having trouble making ends meet, as the cost to feed pigs is rising.

Farmer Mi Yugui from Da Yi Country Yaodong Pig Raising Corporation said, "The cost for every half kilogram of meat is around 7 yuan, and that's excluding all the bills, rent, salaries, interest, and medicines. I might stop operation because if I keep it going, I would make a loss of about one to two million yuan by the end of this year, if things don't get better."

The price of live pigs started declining from January, and dropped around 14 percent. Compared to its highest levels in 2013, prices fell over 26 percent as of the 15th March.

Analysts say it was triggered by a 30 to 40 percent fall in pork demand, as the food shopping frenzy faded after the Chinese New Year. However, some industry insiders are not all that pessimistic.

Deputy General Manager of Cheng Du Agricultural Products Wholesale Centre, Lu Jian, said, "I anticipate prices to be back on the rise in five to six months, around October."

The ratio of pork price to feed price has dropped below 6 to 1, flagging the high possibility of profit losses of pig farmers. The government stepped in to purchase frozen meat on Monday, but it didn't stop the wholesale price from falling below 16 yuan on the same day.