Zhongpin Inc., a leading meat and food processing company in the People's Republic of China, commented on the outlook for hog and pork prices in China, given the recent measures issued by China's State Council.
Mr. Xianfu Zhu, Chairman and Chief Executive Officer of Zhongpin Inc., said, "We noticed that China's State Council issued 16 measures to stabilize consumer prices and to ensure market supplies. Excluding direct price intervention items, the 16 measures (listed below) focus on production development, stabilization of supply, reduction of delivery costs, standardization of market order, and enhancement of market supervision."
Since early October 2010, hog prices have maintained a slight rise and in that period have hit a high for the year to date. Pork prices have generally also risen during this fourth quarter of 2010.
Looking at the hog breeding sector, during the second half of 2010 the hog breeding industry in China is now profitable. Rising hog prices further increases breeders' profits and encourages farmers to replenish hog stocks. Currently in the hog market, supply and demand are essentially in balance. Therefore, the trend for hog prices is expected to be steady by the end of this year.
Mr. Zhu continued, "China's pork market is market-oriented and heavily influenced by demand and supply, so the Chinese government generally adjusts the market by implementing policy using its frozen pork reserve instead of imposing direct price intervention measures. As a pork reserve participant, Zhongpin should benefit from changes in China's frozen pork reserve."
Below is related information released by the Xinhua news agency, Beijing branch, on November 20, 2010.
"The State Council announced 16 measures to stabilize prices, and government will issue temporary subsidies prices"
"The State Council has released a notice ordering local governments and related ministerial agencies to take 16 measures to stabilize commodity prices. The measures include increasing the supply of agricultural products, reducing the logistics costs of agricultural products, ensuring chemical-fertilizer supply, coordinating the supply of coal, power, oil and natural gas, offering price subsidies to low-income families, and developing a mechanism to adjust social security payments for inflation.
"Local governments and departments must boost production and ensure supply while checking irrational demand and punishing illegal activities that push prices up.
"From December 1, road-toll stations are forbidden to collect fees from vehicles transporting fresh agricultural products, including vegetables, fruits, aquatic products, meat, eggs, and milk. Potatoes, sweet potatoes, fresh corn, and fresh peanuts are new items added to the free-from-road-toll list, as the notice said.
· "Hereby notified as follows:
· "First, boost agricultural production.
· "Second, stabilize supply of agricultural products.
· "Third, reduce the delivery cost of agricultural products.
· "Fourth, ensure supply of fertilizers.
· "Fifth, coordinate coal, power, and oil and gas supplies.
· "Sixth, disburse temporary price subsidies.
· "Seventh, establish coordinated social-security mechanism linked with price rises.
· "Eighth, continue to implement the provisions for standardizing charges.
· "Ninth, actively and steadily push forward price reform.
· "Tenth, standardize management and processing of agricultural products.
· "Eleventh, intensify supervision on futures and electronic transaction market of agricultural products.
· "Twelfth, improve laws and regulations for price supervision.
· "Thirteenth, strengthen price supervision and inspection and anti-price monopoly law enforcement.
· "Fourteenth, enhance price information release system.
· "Fifteenth, hold provincial governors accountable for the prices of 'rice bags' and make mayors responsible for 'vegetable baskets.'
· "Sixteenth, establish inter-ministerial joint conference system for market price control."