China is starting to eat into its emergency reserves of pork

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China’s pork crisis has gotten so bad that some of its cities are starting to tap into their precious strategic reserves of frozen pig meat.

At least four cities or provinces that are home to roughly 130 million people have begun drawing down stocks to flood the market with frozen pork in an attempt to stabilize prices and boost supply. Pork consumption is vital to Chinese culture, and availability is important this weekend when China celebrates its second biggest holiday of the year.

The release of local reserves is the latest example of how China is trying to deal with the crisis — but even that might not be enough to solve the problem, experts say. The world’s largest pork market has been ravaged by an outbreak of African swine fever, and it’s lost more than 100 million pigs in the last year, either because of disease or because farmers don’t want to restock pigs after they die. The decline in pig supply has driven pork prices up nearly 50% in the last year.

On Thursday, the eastern Chinese city of Jinan became the latest local government to announce that it would release some of its frozen pork reserves. The government began freeing up pork to coincide with this weekend’s holiday celebrations, according to state media reports. It will release another round of pork later this month ahead of the 70th Anniversary of the People’s Republic of China on October 1. In total, Jinan plans to release 1,500 metric tons of pig meat over the next month.

Hainan and Guangdong provinces have already begun releasing batches of reserves, according to local government announcements. The city of Guangzhou, the capital of Guangdong province, has also begun reaching into its supply of emergency pork.

An emergency supply of pig meat

The country’s strategic pork reserve was established in the 1970s as a way to deal with emergencies and stabilize prices when necessary. In addition to the meat that is kept in cold storage, the Chinese government also keeps a reserve of live hogs, which it releases to farmers in times of shortages.

China does not publish regular data about the the amount of pork it keeps in reserves. But Chen Wen, an analyst for Wanlian Securities, estimated that the supplies could amount to hundreds of thousands of metric tons.

While local governments have begun using up their supplies, China hasn’t touched its central pork reserves in the past several months. That would be a much more significant move, since it would signal a severe, national pork shortage.

But the central government could take such measures this holiday weekend if the demand is there. An official with China’s National Development and Reform Commission — the country’s top economic planning body — said Wednesday that the government is putting together a plan to release pork at important points over the next few months, including on holidays.

The last time the national government tapped into its central supply of pork was in January, when it released nearly 10,000 metric tons of the meat in time for the Spring Festival, based on public records posted by the Commerce Ministry, which manages the national reserves. That’s the most important Chinese holiday on the calendar.

A spokesman for the Commerce Ministry said Thursday that the government will release frozen meat “at the right moment to ensure stable supply” during the holidays.

‘Eat less pork’

Tapping into reserves is not the only way China is dealing with the worsening pork crisis.

Officials have also handed out subsidies worth about 3.2 billion yuan ($452 million) to low-income families who may struggle to afford pork at current prices.

Chinese authorities have also asked local governments to free up money that could be used for artificial insemination technology, a way to encourage farmers and producers to breed more hogs. Beijing has also discussed plans to increase subsidies, loan support and insurance coverage for pig producers nationwide.

Some state media outlets are even urging people to cut pork out of their diets. Life Times, which is run by the People’s Daily, the ruling Communist Party’s official newspaper, called on the public to eat less pork in an article published on its front page Tuesday.

“It’s good to eat less pork, because it’s very high in fat and cholesterol,” the article read. “Eating too much pork makes it easy to gain weight.”

Analysts warn, though, that China might not be able to do enough to solve the problem.

“China’s pork shortage will worsen in the rest of the year, but the government doesn’t have effective methods to fill the gap in the short term,” according to Chen, the Wanlian Securities analyst.

She estimated in a recent research note that China will face a pork shortage of around 10.8 million tons this year. Its supply of frozen reserves isn’t enough to make up for that, she added.

China also has to contend with outbreaks of swine fever in other countries. On Wednesday, it banned pork imports from the Philippines, which is struggling to contain the disease. China also banned pig imports from Slovakia last month for the same reason.

By Laura He and Serenitie Wang
CNN Business

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