Wednesday, June 9, 2010

Hog farmers cut herds

Hog farmers in China are squeezed by falling hog prices and rising corn prices. Several years ago hog prices were shooting skyward with seemingly no return to earth possible. Now they keep plunging downward.

On June 7, a farmer in Shandong's Shanghe County told a reporter, "This month the hog price is down to 5 yuan per jin. If it goes any lower I will start cutting my hog inventory."

A spokes person from the Jinan Price Bureau said the average price was down to 4.95 yuan, a decline of 24% from the previous month.

The price fell below the breakeven point in March, so hog farmers have been in loss territory for 2 months.

Facing these losses, some farmers are cutting their herds to stem losses. One farmer in Shanghe County who has 1,000 hogs said he has cut back his herd by 20% since last year at this time, especially sows. Another farmer told the reporter over the phone that he had cut back 30%.

One factor is that summer is the low season for pork consumption. Another is rising feed costs. The Jinan Price Bureau said that feed for finishing hogs is up 8.3% from last year at this time. The price for feeder pig feed is up 9%. Corn constitutes at least 60% of hog feed, and feed accounts for 60% of hog production costs. Corn's price is up 30% from last year, according to the Jinan Price Bureau.

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