Experts interpret why pork prices are so expensive for half a year

According to the September 2011 economic data released by the National Bureau of Statistics, the CPI in September was only lowered by 0.1% from August, and is still operating at a high level of “6”. Food is still a “booster” for rising CPI. It also played an important role, with an increase of 43.5% year-on-year, affecting the overall price level by about 1.24%. Although prices have slightly fine-tuned in recent days, they are still operating at high levels. Why are pork prices so expensive in the past six months? How to maintain a stable price without frequent ups and downs? In response to these problems, a reporter from the China Economic Times interviewed Xu Xiaoqing, Minister of the Rural Economy Research Department of the Development Research Center of the State Council; Qiao Juan, Professor of the School of Economics and Management, China Agricultural University; and Liu Gang, Deputy Director of the Analysis and Forecasting Division of the Price Monitoring Center of the National Development and Reform Commission.

â–  The host Lu Hongxing increased pork prices for a long period of time. In addition to the rising cost of feed ingredients and the rising cost of labor wages, the main reason was the rigid demand for pork and the relative lack of supply. Economic Times: This round of pork prices rose sharply and lasted for half a year. There was no cyclical fall in people's expectations. It is generally believed that the cost increase is an important factor in the pork price increase. What are the other reasons?

Xu Xiaoqing: This year's increase in pork prices is indeed relatively large, and the duration is relatively long. From the situation of previous years, the pork price dropped seriously from 2006 to 2007, which led many pig farmers to withdraw from the market, and the supply decreased. Then the price of pork rose from the end of 2007 to the beginning of 2008, and the government suppressed the price. Rising, taking a variety of measures to support pig rearing, after 2009-2010 prices have not been a substantial fluctuation. The rise in pork prices I believe is caused by the following three reasons: First, the cost of feed and labor has been rising. According to the pig feed price index released by the National Bureau of Statistics, we can see that from 2003 to 2010, the price index It has risen to 1.73, which is still only an average. During this period, the increase in labor costs is even more obvious. Labor costs have more than doubled from about RMB 50/day. Second, it is exactly the transition period of the pig-breeding method. Since 2006, many retail households have withdrawn from the pig-breeding market. The proportion of large-scale farming has increased year by year. However, large-scale farming requires capital, land and technology, and it takes time to form a certain scale. At present, it is just in the midst of such a retail household withdrawal and large-scale farming. Third, the current market is over-funded, and many products and services, especially agricultural products, are subject to different levels of price increases.

Qiao Juan: The increase in pork prices this time is actually longer than the previous price increases since 2008. However, we cannot see only the time when the price of pork rises and we cannot see that the price of pork has continued to fall. time. In terms of price alone, the price of pork is rising and the increase is very high. However, in the market economy, pork prices are determined by supply and demand, and are affected by changes in production costs.

This time, pork prices have risen and lasted for a long time. Apart from the part of the rising cost of feedstuffs, such as rising raw material prices and rising wages, the main reason is the relative lack of rigid demand and supply of pork, or pork prices. The actual performance of the price increase phase in the volatility cycle.

From the aspect of pork demand, it is well-known that although pork consumption demand accounts for the proportion of meat consumption demand of Chinese residents, although it is declining, it is still high, and the national average is around 65%, if it is taken into account that some ethnic minorities and residents with specific beliefs do not Eating pork or seldom eating pork, pork consumption will account for a higher percentage of meat consumption by consumers; coupled with rapid economic development in China, rapid increase in people’s income and living standards, and demand for pork and other livestock products Upward trend. Therefore, it can be assumed that the consumption demand of pork by Chinese residents presents a certain rigid character, and fluctuations in the supply level will be quickly reflected by market prices.

From the aspect of pork supply, the following two main reasons have led to a lower level of live pigs and slaughter since 2010, resulting in insufficient supply of pork. First, hog prices have been relatively low from 2008 to the second half of 2010, and pig farmers have suffered serious losses. Many farmers have reduced the size of livestock populations, and a large number of farmers have even stopped farming. Second, the epidemic of pig disease from the end of 2010 to the beginning of 2011, Lead to piglets, sows and even fat pigs with high mortality.

Liu Gang: I think the dramatic increase in feed costs, as well as the rise in labor costs and epidemic prevention fees, is an important driving factor in the rise in pork prices. In fact, changes in the price of pork mainly depend on the number of live pigs, the status of slaughter, and the supply and demand of the pork market. The price of pork has risen significantly since the beginning of this year. The current price has risen by 30% from the beginning of the year. The income from raising pigs has been significant. The enthusiasm of farmers to replenish the bar has been high, and the live pig population has also increased. However, the number of live pigs and fertile domestic sows has been in storage since 2010. With a gradual reduction, although the main data indicators are still above the safety line as a whole, compared to the two years prior to 2010, the number of live pigs and fertile sows decreased by a large amount, which caused a serious imbalance between supply and demand. The change in supply and demand is an important reason other than the cost.

The fluctuation of agricultural products market is normal. What we want to avoid is the ups and downs of prices, as well as the periodic fluctuations in prices. China Economic Times: We know that price fluctuations in the market economy are normal economic phenomena, but the price of the V shape is Consumers are still unbearable to farmers. After the price of pork has soared, apart from encouraging farmers to raise more pigs, the government is subsidizing and importing large amounts of pork to balance domestic prices. The growth cycle of live pigs is generally about six months, so it is very easy for meat to be found after six months. Injury to farmers, thus laying the groundwork for the next price increase. How do you think we can jump out of this cycle?

Xu Xiaoqing: The volatility of the agricultural product market is normal. What we want to avoid is the ups and downs of prices, as well as the cyclical fluctuations in prices. As mentioned earlier, what the government needs to do is to establish regulatory mechanisms to reduce the magnitude of price fluctuations; establish disease prevention and control mechanisms to provide producers with relevant services, and then provide timely information on market supply and demand.

Qiao Juan: The growth cycle of live pigs is actually not as short as 6 months. It takes at least one year from the time of supplementing gilts to the production of piglets for fertile sows, and to the listing of piglets after fattening.

In order to jump out of the so-called V-shaped circle, I think the government should improve and improve the pig industry support policy in accordance with the following ideas, promote the healthy and stable development of the pig industry, and ensure relatively stable pork prices.

The first is to further strengthen the prevention and control of live pig diseases that are public goods. Live pig disease has a devastating impact on live pig production. It is necessary to follow the principle of “prevention from prevention, prevention and control combined”, and make great efforts to prevent and control live pig disease and improve the prevention and control system of live pig disease.

The second is to improve the early warning system of the live pig market with public goods as soon as possible. While improving the organizational structure, scientific and reasonable information collection methods are adopted to improve the accuracy of the supply and demand information of live pigs; the specific issuers of pig information are determined to facilitate the farmers to obtain information; and the analysis and prediction of market conditions must be reasonably forward-looking.

The third is to further promote the rationalization of pig industry organization. On the one hand, it is necessary to appropriately guide the large-scale breeding of live pigs. On the other hand, it is necessary to encourage the development of professional pig cooperatives.

Fourth, it is appropriate to select the timing for the introduction of the policy and ensure that the policy is relatively stable. The pig industry policy must be predictable, and it must be fixed in a certain form of regulation to reduce the unreasonable expectations of pig farmers for government support policies.

Fifth, it is necessary to further improve the pork purchasing and storage policy and establish a three-tiered reserve system.

Sixth, we must learn from the experiences of developed countries and gradually cultivate the hog futures market on the basis of further improving the live pig market system.

Liu Gang: The growth cycle of pigs is about 6 months. However, after the market supply and demand of piglets fluctuate greatly, the growth cycle of live pigs will be significantly prolonged. Therefore, in some cases, the price of pork will fluctuate, and the time for regulating and restoring supply and demand balance will be longer. . In my opinion, we must establish a control mechanism based on target prices, starting with supply and demand adjustment, market expectations, social and government reserves, epidemic prevention, market supervision, information guidance, and food safety management. Multi-sector coordination should form an effective set. The monitoring and early warning of abnormal pork price and abnormal fluctuation control mechanism can realize accurate monitoring, timely warning, and regular regulation, so as to keep prices stable.

China Economic Times: At present, many foreign-funded enterprises such as Goldman Sachs, Deutsche Bank, etc. compete to invest in China's live pig market, thus “supplementing” the Chinese pork market. How do you view this phenomenon? At present, what kind of role orientation is foreign investment in China's hog market?

Liu Gang: It is a good thing for foreign-funded enterprises to invest in the live pig market. From the perspective of diversified development of the market, it is a good thing. It can provide an efficient and safe breeding model for the majority of farmers and improve the domestic pig breeding technology and level. Judging from the current situation, the scale of hog investment by foreign-funded enterprises is not very large across the country, which is not enough to have a big impact on the pork market. If the proportion of the foreign-funded enterprises' investment increases, the market should pay attention to them. The pork market, as an important livelihood area, should be dominated by the scale of domestic companies.

Xu Xiaoqing: With regard to foreign-funded enterprises investing in China's pig-breeding market, the pork price has been buzzing for a while after the last wave of pork prices. Afterwards, it has cooled down. Recently, it seems that this matter has come again. I don’t think we need to read too much. We need to understand the background of foreign companies entering the Chinese market. Most of them are motivated by the potential of China’s agricultural products market and seeking business opportunities to make money. We also need to look at the way foreign investment enters, mostly through joint ventures and equity participation with Chinese companies. With participation, we can gradually increase our competitiveness in this way. Of course, we cannot say that foreign capital does not attach importance to the hog industry that has infiltrated into the domestic market. However, we should not think that it can control the hog market in China. It is still so difficult for the government to regulate the Chinese market. It is easier to control it. In addition, some overseas funds entering the Chinese market are also suspected of speculation. Originally, they were real estate speculators and oil speculators. Now that they see pork making money, they begin speculation again.

Qiao Juan: Foreign companies entering the Chinese market are not actually trying to control China's hog and pork markets as some domestic media have said. The entry of foreign capital into China's pig-breeding industry is not directly linked to the production of pigs. The main foreign investment is the link of pig breeding in China. The main varieties of pigs currently slaughtered in China are imported varieties. Based on the need for intellectual property protection and long-term profitability, foreign breeder pigs will not sell raw pigs to Chinese companies at one time. Imported breeders usually need to be renewed in about 5 years. Therefore, China’s huge hog industry scale and space for breeding pigs will inevitably attract foreign capital to supply China with the required breeder pigs through imports, joint ventures, and even wholly-owned investment. This is also a result of the development needs of the Chinese hog industry, so in a sense, Has a certain degree of mutual benefit. Of course, in the long run, if China's hog industry wants to continue healthy development, it must solve the supply problem of excellent breeding pigs for its own sake. Because of this, the country has already started to adopt corresponding policies and measures in this regard and further strengthened its support for the development of the domestic pig industry.

Producers, operators and consumers all hope that pork prices will remain relatively stable and price fluctuations will be normal, but the ups and downs will not benefit anyone. The purpose of government regulation is to stabilize prices basically, and to seek a balance between producer income and consumer affordability. China Economic Times: In the course of price increases during this period of time, the role played by pork has been a “contribution”. Many people believe that the government often pays attention to governing the price increase while ignoring price cuts. This gives people a sense of valuing the public and peasants. Do you think this is not the case? What should the government do to balance the relationship between the two?

Qiao Juan: First of all, I do not agree with the view that “the main reason for rising prices is caused by rising pork prices”. On the one hand, there are many reasons for the rise in the overall price level. Pork is only one of the consumer goods and it has a limited share in the general price index. On the other hand, the increase in pork price is not only a practical reflection of the regularity of the price cycle of pork, but also leads to The result of the combined effect of many factors of rising prices.

In terms of agricultural product prices, relatively speaking, the government does have to pay attention to price increases and despise price cuts. The main reason is that peasants are still a disadvantaged group in comparison with citizens, and the power of speaking is much weaker than that of citizens.

Many agricultural products have a relatively long production cycle and are affected by natural factors. The volatility of the price cycle is relatively large. The vast majority of consumers are unaware of the real causes of fluctuations in the price cycle of agricultural products. When prices are low, they are happy and prices are high. Just complain. In recent years, most consumers have been able to accept large periodic fluctuations in the prices of agricultural products such as Vegetables and Fruits. The correct guidance and publicity of the media and the government have contributed to this. When prices fluctuate abnormally, the media and the government should study the real causes of the price fluctuations and pass them on to consumers through popular science propaganda. To let consumers understand the cyclical characteristics of agricultural production, especially hog farming, there must be a recovery cycle after the supply shortage occurs; let the consumers know whether it is possible to directly intervene in market supply and prices through such means as increasing imports. What will happen?

The vast majority of pig farmers have been operating at a loss for the first two years. Now that the price of pork has risen to earn some money, shouldn't we make up for the losses of pig farmers? Therefore, I believe that the government should not excessively interfere with market prices, but should thoroughly study the root causes and main influencing factors of price increases, and adopt targeted policy measures based on the long production cycle and objectively cyclic fluctuation characteristics of the pig industry. , to reduce the cycle of pork price fluctuations in order to avoid the ups and downs of pork prices.

Xu Xiaoqing: I think this is still the case. Producers, operators and consumers all hope that pork prices will remain relatively stable, and price fluctuations will be normal, but ups and downs will not benefit anyone. The purpose of government regulation is to stabilize prices basically and seek a balance between the income of producers and the affordability of consumers. The live pig market in China was liberalized from 1985, and it was the earliest agricultural market to be liberalized. After liberalization, it was basically controlled by the market. Pork accounts for more than 60% of China’s residents’ meat consumption. If only pork, beef, and mutton are consumed, the proportion is about 80%, which has a relatively large impact on food prices. Therefore, the government should regulate and control when prices fluctuate significantly. When pork prices are high, the state will encourage farmers to raise more pigs and properly import pork to balance prices; but when pork prices are relatively low, there are relatively few measures currently taken. From this point of view, there are still problems but I It is considered that this is not the country’s intention. As mentioned before, the government seeks a balance between the income of the producer and the affordability of the consumer. This issue is now being explored. It can provide direct and indirect support to the pig farmers and indirect support as already adopted. Establish policy insurance, increase investment in prevention and control of animal diseases, support the establishment of large-scale breeding communities, etc.; direct support, it is possible to explore joint ventures with pig farmers to establish risk funds, when the market price is lower than the cost of raising pigs, direct subsidies to producers, etc. .

Liu Gang: Although price increases must be taken seriously, in fact, when the price drops sharply, it should be given more attention. After a sharp drop, it will often face a sharp increase in risk. In my opinion, it should be judged by different circumstances whether it is heavyweight citizens or farmers. It is proposed to improve the current subsidy system of “ups and downs” and to establish a floating subsidy system based on the target price. When the price rises significantly, it should be “emphasizing the public and light farmers”, appropriately reducing subsidies for farmers and increasing subsidies for low-income groups. Encourage the expansion of aquaculture scale; in the event of excessive price falls, we must “lighten the people and peasants”, appropriately increase subsidies for farmers, reduce the subsidies for low-income groups, and appropriately reduce the scale of breeding, but determine the target price and the scale of subsidies. The grasp requires a certain amount of time to run in, adjust and test.

In the coming period, the price of pork will not plunge or soar, and it will remain stable on the whole. China Economic Times: Some people think that it will soon enter the winter and pork will enter the peak period of consumption. Therefore, there will be no large pork price within half a year. The volatility will continue to remain high, and some people believe that the price of pork will plummet as pigs are slaughtered. Based on your understanding of this price increase, what is your judgment?

Qiao Juan: If authorities want to accurately predict the future price of pork in a certain period of time, they must be able to accurately predict the possible slaughter of hogs in the coming period. Therefore, at least it is necessary to fully grasp the gilts and energy conservation in various regions of the country at present and in the future. The scale and culture of sows, piglets, finishing pigs, etc., need to understand the possible changes in the cost of farming, but also need to predict the occurrence and control of the disease, but also need to understand the trend of price changes of pork substitutes. If we must make a general judgement on the recent price movements, based on the incomplete and not necessarily accurate information that I can obtain, taking into account the cyclical nature of hog production and the immediate entrance into winter, the traditional pork consumption peak, I It is believed that the price of pork will not drop sharply in the short term, and there will be no soaring in the short term if there is no major epidemic impact, and it will remain at a relatively high price for a certain period of time.

Xu Xiaoqing: Because there was no careful investigation and analysis, the issue could not be affirmatively stated whether to reduce or not to drop. However, judging from experience, I believe that a substantial price reduction is not possible because the cost is there and there are no conditions for plunge. The conditions are: First, the supply has increased substantially in a short period of time. Second, the demand for pork by consumers suddenly dropped sharply. Pork consumption accounted for the bulk of meat consumption, so this situation will not occur. From another perspective, the consumption elasticity of pork is larger than that of salt and food. Taken together, pork prices are mainly affected by the relationship between supply and demand, and will not plunge but will remain stable.

Liu Gang: As the period of live pig breeding is long, it is impossible to increase the amount of livestock in the short term. Plus, in the fourth quarter, it is the peak season for meat consumption. The market price of beef and mutton is also in a high range, causing beef and mutton to not serve as substitutes to a certain extent. It is difficult for pork prices to fall sharply. It is expected that pork prices will stabilize at a high level in the fourth quarter. In addition, the weather, live pig disease (such as live pig diarrhea, pig fever, etc.), special events and other factors will also affect the structure of the pork market, local supply and demand imbalance. Considering comprehensively, the price of pork will not drop sharply, and the overall stability will be maintained while some fine-tuning may be carried out.