Monday, September 26, 2011

Pork Imports a "Problem"?

On September 13, a widely-circulated commentary offered the opinion, "Large Imports of American Pork are a Big Problem." The commentary was prompted by the USDA's report that U.S. exports of pork to China during the first seven months of 2011 totaled 200 million lbs., five times more than the same period last year. A number of commentaries make much of the large percentage increase in imports this year, but they fail to note that U.S. imports were at minimal levels during most of last year due to an H1N1-motivated Chinese ban.

The article's title seems to be sounding an alarm, but the text is ambiguous. The commentator points out that imports are beneficial for cooling off what is called "pork inflation" in China. He argues that high pork prices are a reflection of China's limited grain supplies. He says high grain prices are good for farmers, but they erode Chinese farmers' international competitiveness. He asserts that imports pose a long-term problem for food security by discouraging Chinese farmers from planting grain and calls for more subsidies for farmers.

Last week, Fujian's Southeast Net said, "With pork prices at a high level, American pigs have come to the rescue." In Fuzhou Province, customs data show that imports of pork totaled 7,757 metric tons during January to August of this year. Imports have been coming in at a rate of 1000 tons per month since April. Of the total, more than half came from the United States. Other sources were Canada and Taiwan. The price of imported U.S. pork is calculated to be about 6 yuan per jin, about half the domestic pork price of 11 yuan.

The manager of a processing plant in Xiamen says the imports are mainly frozen pork used for making processed products like braised pork and sausages. The head of the Fuzhou hog industry association says the taste of frozen pork is not as good as fresh pork. He says Fuzhou people like to eat "hot" (freshly slaughtered) pork and the frozen pork is mainly bought by processing plants and dining halls. Still, the processing plant manager points out that the imports reduce the demand for local Fujian pork. The article notes that imports are increasing in various regions of China.

The article cites the USDA's forecast that China's imports will continue into next year. The article notes that China's pork market is "open," with no barriers to import. Pork imports have not received much attention in recent years, it says, because domestic prices have been low. Imports have surged this year because domestic Chinese prices have risen sharply, giving imports an advantage.

According to the article, people in the industry think imports have a limited role in "stabilizing" the market. The vice director of the livestock industry association says pork prices will likely stay at a high level through the end of the year due to high feed costs and limited supplies. Fujian Province data show that hog supplies cannot rebound very quickly.

Fuzhou city is exploring the establishment of a frozen pork reserve to add to the reserve of live hogs as a measure for controlling pork prices.

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