China’s massive pig farms spark a supply glut as hog prices hit 8-year low

China’s pig prices have plunged to their lowest level in nearly eight years, as the country struggles to deal with a persistent supply glut triggered by the spread of huge industrial farms and a post-holiday drop in meat consumption.

Live pigs were selling for 11.05 yuan (US$1.60) per kilogram on average during the third week of March, down 2.9 per cent from the previous week and 28 per cent from a year earlier, data from China’s Ministry of Agriculture and Rural Affairs showed.

Prices are now at their lowest level since June 2018, according to financial data provider Wind. Pork meat prices are also on the decline, sinking to 22 yuan per kilogram last week – down 2.1 per cent on the previous week and 16.5 per cent from last year.

The problems in the meat industry are creating a headache for Beijing, as falling pork prices undermine the government’s efforts to stave off deflation. They are also squeezing the country’s millions of pig farmers just as the US-Israel war on Iran pushes up global oil, grain and feed prices, raising their costs.

The hog glut was caused by the spread of industrial-scale farms in China’s pork industry over the past few years, which led the swine supply to grow faster than market demand, according to Yao Jingyuan, a former chief economist at China’s National Bureau of Statistics and a special researcher at the State Council’s Counsellors’ Office.

But the facilities have upset the balance in China’s pork market, especially as industrial farming has compromised the quality of meat produced, according to Yao.

South China Morning Post