China is in the middle of a pork crisis, with prices hitting record highs thanks to waning supply within China and a boom in consumption of the country’s favourite meat.
The spot price of a kilogram of pork hit 20.9 renminbi on Tuesday, up more than 4% since the same time last week, and nearly 25% since the start of the year.
Pork is now even more expensive than during its last peak in 2011. The news was first reported by the Financial Times earlier on Wednesday.
Along with growing spot prices, wholesale costs for pork have spiked higher in recent months. According to the latest numbers from the Ministry of Agriculture, wholesale pork costs 26.45 renminbi per kilo, up 0.8% since Friday last week.
The cost of pork in China is a massive concern as it is consumed in huge quantities and is effectively a staple food for many Chinese citizens. Demand for pork has boomed in recent years thanks to a growing population and increasing affluence among Chinese citizens. Consumption growth has slowed in the last couple of years, but farmers simply can’t keep up.
As a result of the pork price spike, Beijing is taking action and, according to a report from news agency Xinhua, will release more than 3,000 tonnes of its frozen pork reserves into the market. That move is designed to address the supply problem in the markets, and stop prices jumping even more.
“The decision, which comes into effect on Thursday and will last until July 4, will see 50,000 kg of pork sold cheaply to 121 major supermarkets on a daily basis. The government will also provide subsidies of up to 9 yuan (1.4 U.S. dollars) per kilogram of pork sold to encourage vendors to decrease prices,” Xinhua’s report adds.
Keeping the price of pork down is not only in the interests of the people but also in terms of controlling inflation. Pork features heavily in the basket of good used to calculate the country’s consumer price inflation numbers, and pork’s surge has helped push inflation sharply higher in recent months.
According to the National Bureau of Statistics, consumer prices rose by 2.3% in March from 12 months earlier, easily beating expectations for an increase of 1.9%.
Outside of China, the price of pork is also on the rise, with the cost of Lean Hogs — the main pork-based future traded on the Chicago Mercantile Exchange — up more than 50% since the final months of 2015.