China has a new plan to solve its pork problem

Chinese authorities have announced new measures aimed at boosting the supply of live pigs and stabilizing pork prices.

Posted Updated

Michelle Toh
Laura He, CNN Business
CNN — Chinese authorities have announced new measures aimed at boosting the supply of live pigs and stabilizing pork prices.

An outbreak of African swine fever has decimated China's pig population in recent months, tightening supply in the world's largest pork market and sending prices soaring.

Dutch bank Rabobank has estimated that hundreds of millions of the animals could die in China this year from either the disease or culling — cutting the country's swine population by a third.

"[African swine flu] continues to spread in China, with new cases mainly reported in South China," Rabobank analysts wrote in a report released this month. "Live hog prices are finally moving higher, indicating tight supply."

The crisis has continuously pushed pork prices higher over the past six months, a government official recently told reporters. The price increased by nearly 30% over the previous year in July, according to official data.

Guangdong, a major pig-rearing province in southern China, has been hit hard. The measures announced this week would require 13 cities in the province to together produce at least 34 million pigs this year.

Authorities are asking city governments to help subsidize pig farms and requiring banks to ensure that pig farmers and pork processing companies have access to credit support or favorable insurance policies.

The mandate also orders mayors of cities within Guangdong to prioritize pig farmers and the owners of processing facilities for animals killed by the disease in their land use decisions.

The mayors will have to take responsibility if local production doesn't meet official quotas, the government notice added.

In another move aimed at regulating pricing, authorities said they would also reward city governments that help consolidate local butchering operations by merging or eliminating smaller players.

As much as 80 million yuan (about $11.6 million) will be earmarked from the provincial budget to subsidize such efforts, according to the statement.

The measures aim "to address the urgency" of the pork supply issue, said Chenjun Pan, a senior analyst of animal protein at Rabobank.

Investors cheered the new measures. On Friday, WH Group, a Chinese pork processing company that has become the world's largest, was the top performer on Hong Kong's Hang Seng index, briefly surging as much as 4.5%.

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