Saturday, December 14, 2019

China's Plan to Restore Pork Supplies by 2021

Chinese officials plan to restore normal pork production by 2021 via a crash farm-building campaign and other measures that include ordering local officials to ensure local pork self-sufficiency, reconfiguring the slaughter industry, and setting up rigid pork supply pipelines. At the same time, officials plan to address chronic problems by shoring up disease prevention and dotting the countryside with tanks to collect millions of tons of manure and diseased carcasses.

The Ministry of Agriculture and Rural Affairs circular, "Three-year plan to speed up recovery of hog production" issued on December 4 calls for achieving a small rebound in pork output by the end of 2019, rebuilding production capacity by the end of 2020, and restoring normal pork supplies in 2021.

The announcement aimed to impress local officials with the program's importance by citing Xi Jinping's many "important directives and instructions" and "clear requirements" issued by Li Keqiang. It follows a series of teleconferences and meetings where farmers in the northeastern region were instructed to resume producing pigs and southern provinces were ordered to "stop the decline as soon as possible," and "consultations" were held with leaders of important pig-producing provinces. The news media have been ordered to write articles that restore the confidence of pig farmers by reporting on effectiveness of government policies and giving examples of successful recovery.

At a November 30 national livestock work conference, Vice Premier Hu Chunhua proclaimed that restoring pork supply would be a top priority of this year's rural work, declared that China must rely on domestic production for its pork needs, and ordered local officials to develop the livestock industry. The Vice Premier chaired a December 1 "market basket responsibility system" meeting where he ordered city leaders to strive for at least 70% local self-sufficiency in pork and develop arrangements with pig-producing counties to fill the balance of city pork supplies. Pork surpluses are envisioned in northeastern provinces, the north China plain, and south central provinces. The southwestern and northwestern provinces are expected to be self-sufficient in pork. Marketing will shift from transporting pigs to transporting pork.

Local officials were warned that the task of restoring pork supplies is "extremely huge" and pork production still faces many difficulties and challenges. Local officials were admonished to strengthen their "sense of responsibility and sense of urgency" and to "do everything possible" to increase pork production by the end of the year and to ensure pork supplies for the new year, spring festival, and "two meetings" of communist party leaders in March.

Officials were sternly warned to take seriously 18 policy support measures, getting a "firm grasp" on pork production in the same way officials "firmly grasp grain production." The policy measures are an impossibly broad set of objectives: build "standardized" pigs farms, shut down sub-standard slaughter facilities, stop feeding restaurant waste to pigs, build modern slaughterhouses in production areas, prevent disease, and protect the environment.

The key tasks for the hog production recovery are summarized as follows:
  1. Start building farm projects before the end of the year using this year's subsidy funds and use 2020 funds to build projects and rush them into production as soon as possible. 
  2. Order local officials to subsidize purchases of automated feeding equipment, and equipment for environmental control, disease prevention and control, and waste treatment using the agricultural machinery and equipment subsidy program.
  3. Loosen bans on using farmland to build pig farms, waive the approval process for using village "construction land" for pig farms, and otherwise simplify land approvals.
  4. Use hog county transfer payments to fund industry development, veterinary services, and marketing infrastructure. Issue ASF culling payments promptly. 
  5. Expand a collateral loan pilot, issue subsidized working capital and construction loans for breeding farms and large-scale farms. Expand insurance for sows and finishing hogs. 
  6. Create 120 replicable high quality demonstration farms to upgrade production. 
  7. Choose 1 or 2 localities for pork-based poverty alleviation projects in provinces of Hunan, Hubei, Guangdong, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, and Shaanxi. Companies will collaborate with small and medium-scale farmers to expand pork output.
  8. Urge local officials to ease up on local environmental bans on livestock farms by the end of the year and order local officials to stop declaring "pig-free" cities and counties.
  9. Carry out environmental impact assessment of pig farms. Utilize an automated system and let farms of 5000 head or more start construction without having to wait for the final approval. 
  10. Monitor disease and movements of pigs, stop feeding kitchen waste to pigs, pay out culling funds. 
  11. Urge farmers to take responsibility for disease prevention by implementing isolation, chemical disinfection, biological immunity, and complete a "farm animal disease cleanup project." Support third-party testing and slaughter plant self-testing.
  12. Regularize disease reporting, encourage farmers to inspect animals and promptly report disease. Punish concealment and intentional delays in reporting, false reports, and especially obstruction of reporting by others. Set up a reward hotline for ASF reporting. 
  13. Urge localities to set up a complete province- and city-level animal disease administration, strengthen city and county veterinary lab capacity, launch and fund standardized grass roots animal disease prevention organizations, strengthen disease emergency team construction, fill in gaps in disease organization and personnel asap. In big livestock farming counties carry out a special employment plan for disease prevention personnel; employ 10,000 or so personnel.
  14. Collect manure and utilize it. Set up centralized collection or facilities near fields. Solve the manure treatment problem for small and medium farms. By the end of 2020, raise the national livestock and poultry manure utilization rate to 75% or higher, and 95% of scaled-up farms should have manure treatment infrastructure and equipment.
  15. Create a system of collection points for safely disposing of diseased hog carcasses. Design a spatial layout of disposal enterprises, ensure biosecurity in collection, transportation, and disposal of carcasses, distribute support funds and ensure the sustained operations of the disposal system.
  16. Regulate and standardize hog slaughter. Shift slaughter enterprises to major production regions in the northeast, Huang-Huai region of northern provinces, and south central provinces. Starting from the current 5,000 slaughter enterprises, rectify small slaughter points and create 100 demonstration slaughter enterprises by 2020. Ensure that it becomes normal for slaughter facilities to carry out self-inspection of hogs and to have veterinary inspectors posted in facilities.
  17. Strengthen R&D and technical services to farmers. Increase effort in ASF vaccine development. Demonstrate ASF control methods, promote use of effective control methods on large scale farms. Implement the subsidy for use of improved breeds and increase use of artificial insemination. Bring into play veterinary and livestock bureaucracy, industry associations, and a hog technology organization to increase farmer training and visits.
  18. Promote direct links between production and sales areas. Urge net-deficit cities and coastal regions to maximize self-sufficiency and to form direct coordinated links with production regions to fill pork deficits. Adopt a "farm-slaughter link, direct supply" system, use a pilot electronic system to transmit animal inspection certificates and collect statistics monitoring pig movements. Ensure orderly marketing and transport of pigs using a point-to-point marketing system. 
Many of the measures aim to revive rigidities of the planned-economy: regional production quotas, fixed supply pipelines between regions and enterprises, Potemkin-style "model" farms and slaughterhouses, plans to populate an inspection and veterinary system with warm bodies, "point-to-point" transportation of pigs. Imposing rigidities of the planned economy will undermine the efficiency of China's pork industry which has been one of the country's most-privatized, agile, and flexible sectors. Officials chasing subsidies and responding to directives will eclipse problem-solving entrepreneurs, leaving the countryside dotted with derelict barns, underused slaughterhouses, and rusting equipment.

Most of these programs will probably atrophy within a few years as did these now-forgotten initiatives:
  • a sow subsidy introduced in 2007 to induce farmers to keep their sows during downturns disappeared as cyclical gyrations it was designed to address just got worse.
  • a 2009 hog price stabilization program with an elaborate system of statistical reports and price ratios with red-yellow-green zones to trigger sales of pork reserves and subsidies--also intended to eliminate price gyrations--is now mostly forgotten except for monthly reports of pig inventories, slaughter, and the hog-corn price ratio.
  • a 2010 Ministry of Commerce plan to reconfigure the hog slaughter layout by eliminating half of "backward" capacity and building a hierarchy of city, county and township facilities was issued and quickly forgotten. Responsibility for slaughter oversight was handed to the Ministry of Agriculture a few years later.
  • in 2011 all veterinary technicians had to take an examination to weed out unqualified people and provinces were ordered to include funding for county veterinary services in their budgets, yet poor or nonexistent local veterinary services were one of the reasons for the lightning-fast spread of African swine fever to every single province in half a year. 
Officials are also asking everyone to forget the series of laws, initiatives and action plans to close polluting pig farms that were the focus of hog industry policy during 2013-18 as a part of an environmental clean-up program--one of Xi Jinping's signature policies--and to build pig farms everywhere, as fast as possible.

And, of course, the news media are tasked with reporting nothing but good news about pork, so news media and statisticians have doubled down on their propaganda function and can no longer be believed. Rare honest assessments of the actual supply and demand situation are swamped by a flood of propaganda.

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