Experts warn higher prices may push up inflation

Pork output in China continues to fall, official figures showed on Monday, indicating that outbreaks of African Swine Fever (ASF) have hurt the pig-breeding sector, which may push up inflation.

Pork production declined by 5.5 percent in the first half of this year, the National Bureau of Statistics (NBS) said on Monday, compared with a 5.2 percent decrease in the first quarter of this year.

"Declining pork production is closely related to the spread of ASF in China," Wang Zuli, a research fellow with the Chinese Academy of Agricultural Sciences, told the Global Times on Monday.

"We can see that hog stocks in China have kept declining since the ASF outbreaks began last year, and the decline has worsened," Wang said. Supplies may fall 10 to 15 percent short of demand in the second half of this year, a peak demand season, he added.

Wang warned that the hog price may hit 23 yuan ($3.35) per kilogram in the second half of this year, which would be the highest since 2016, when the price reached 21 yuan per kg.

China, the biggest pork consumer in the world, has culled 1.16 million hogs since ASF was first reported in August 2018. China had recorded 143 outbreaks of ASF, which is fatal for pigs but harmless for humans, as of July 3 this year, the Ministry of Agricultureand Rural Affairs (MARA) said earlier this month.

The ministry said that hog inventories in May were down 22.9 percent year-on-year, citing data from 400 counties where raising pigs is the major business.

Falling production is driving up prices, leading to higher inflation rates.

The pork price was up 7.7 percent in the first half, data from the NBS showed.

Dong Yaxiu, an official with the NBS, said that the pork price was up 21.1 percent year-on-year in June, with a gain of 2.9 percentage points month-on-month, pushing up the Consumer Price Index by 0.45 percentage points.

Significant slowdown

However, the MARA said the spread of the outbreaks has "significantly slowed down", and the production and distribution of pigs is gradually getting back to normal.

The MARA on Friday said that some criminal gangs in China had deliberately made up and fanned outbreaks of ASF on farms that had been free of the disease and thus forced farmers to sell their remaining healthy pigs at lower prices. The ministry said that such behavior violated farmers' rights and affected normal pig production.

"Culling pigs has proven to be an effective way to prevent the disease from spreading," Li Guoxiang, a research fellow at the Rural Development Institute of the Chinese Academy of Social Sciences, told the Global Times on Monday.

Li said that because there is no vaccine for ASF, or any clear understanding of how the contagious disease spreads, it is hard to stop the problem. "The disease could be around for a long time," he warned.

A report released by the UN Food and Agriculture Organization in May showed that the ASF outbreaks are likely to depress pork output in China by at least 10 percent, and the overall meat output may record a 5 percent (4.3 million ton) contraction in 2019.