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China's Rising Pork Prices Amplify Beijing's Woes

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09/10/2019 | 01:28pm EDT

By Stephanie Yang

NANNING, China -- Beijing has tried a variety of measures in recent weeks to bump up the pork supply and bring down prices after a yearlong outbreak of African swine fever decimated the country's hogs. So far, they haven't been enough.

Government officials have pushed farming incentives, rationing, campaigns encouraging people to eat more chicken -- even opening its emergency pork reserves.

But rising prices still threaten to mar the celebratory mood ahead of the 70th anniversary of Communist Chinese rule on Oct. 1, adding to a litany of headaches that includes the trade war with the U.S. and protests in Hong Kong.

Government data released on Tuesday showed prices of pork -- a key staple of the Chinese diet -- surging 46.7% in August from the year-earlier month, the biggest such jump in eight years. The leap in pork prices alone was enough to lift the overall headline consumer-inflation figure for the month by more than one percentage point to match July's 17-month high.

African swine fever, which is harmless to humans but lethal for hogs, pushed up meat prices across the board by nearly 31% in August as consumers sought alternatives like beef and mutton, government figures show.

The price of pork in China is closely watched by authorities at the Ministry of Commerce, which in August pledged to release frozen pork reserves to keep prices from fluctuating too dramatically.

The southern province of Guangdong, one of China's most prosperous, on Monday said it would release more than 3,000 tons of pork from its reserves ahead of the Mid-Autumn Festival on Friday and the country's 70th birthday.

The fallout is particularly acute in markets around Nanning, the capital of neighboring Guangxi province and traditionally one of the country's leading regions in pork supply and consumption. Here, consumers and producers are struggling with the financial fallout from the outbreak.

In early September, Nanning officials capped prices, lowering them by 10% and handing out pink ration tickets at some local markets -- limiting buyers to one kilogram a day, in a move that prompted comparisons to Mao-era China.

After two days, the pink-slip system was abandoned. Even with price cuts across the board, local residents said the meat was still too expensive. Markets selling discounted pork had few customers. Vendors lamented a sales slump they hadn't seen in decades of doing business.

He Jie, a 30-year-old father of two, said he was unable to get a ticket after standing in line on the first day. Two days later, he bought a handful of ribs at the same marketplace during a quiet lunch hour, to make into soup for his wife and nursing infant. "I can't imagine life without pork. But our income is not growing and prices are rising," he said.

With few signs of a price reversal, authorities hope citizens will learn to cope. In recent days, state media have begun building a case for not eating pork.

The Life Times, an official newspaper tied to the People's Daily, ran a story on Friday last week proclaiming the benefits of eating less pork for one's health and pocketbook. It recommended chicken or fish instead, eliciting skeptical responses from Chinese readers. "I see. Next time, when beef prices are up, you will say eating beef is bad," one online user wrote.

In the latest sign of the distress setting in among policy makers, China's cabinet on Tuesday urged local officials to step up their efforts to stabilize pork prices, ordering them to "ensure efficient supply of pork during major holidays" and requiring them to submit progress reports by the end of the year.

"There's a significant reversal in the direction of policy," said Zhang Wendong, an assistant economics professor at Iowa State University and co-founder of the school's China Ag Center. "I think the Chinese government originally underestimated the potential magnitude of this outbreak."

In Nanning, Wang Yuling, a vendor who has been selling pork for more than 20 years, said the recent government subsidies wouldn't be enough to keep her afloat. "That money can't do anything. I will have to close my business and go back to farming again," she said.

The Nanning Daily, an official newspaper, quoted the city's economic-planning agency acknowledging the impact of high pork prices, saying they had severely affected the lives of locals. Nanning officials didn't immediately reply to requests for comment.

In the longer run, some analysts said, one of the government's biggest hurdles will be persuading farmers to raise more pigs after more than a year of combating the disease. Without a viable vaccine for African swine fever, the threat of another outbreak has discouraged farmers from expanding or restoring production.

The possibility of infection compelled Luo Hengfeng, 63, to rush his hogs to market at a 40% discount, despite the fact, he said, that none of them had fallen ill.

Two months ago, the farmer bought about 5,000 chickens that now roam freely around the empty concrete pig pens. Out of a herd of hogs that once numbered more than 500, Mr. Luo now has just two -- piglets he has kept to see whether or not they're capable of surviving. So far, Mr. Luo said, they seem to be healthy.

"If there are vaccines, I'd like to keep raising pigs until I'm 70," he said.

--Liyan Qi contributed to this article.

Write to Stephanie Yang at stephanie.yang@wsj.com

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