China to resume $386 mln subsidy scheme for pig farmers
Beijing. July 15. INTERFAX-CHINA - China's central government will resume a RMB 2.50 billion ($386.55 million) subsidy scheme this year intended to support large-scale pig farmers and encourage individual farmers to boost pig production, the State Council announced July 14.
Under the scheme, farmers will receive a subsidy of RMB 100 ($15.46) for every breeding sow they raise, while compensation for pigs culled to control epidemics will rise from RMB 600 ($92.89) to RMB 800 ($123.70), according to the announcement.
The measures are unlikely to have an effect on pork prices until April or May next year, Fan Yusheng, an analyst with Beijing Pro-Agri Communication Co. Ltd., told Interfax July 15. The measures will boost pork supply by encouraging more entrants into China's pig breeding industry, but piglets still require up to 13 months to mature before they reach slaughtering age, Fan said.
The government launched the subsidy scheme in December 2007 but suspended it after pork prices plummeted in 2009, said Wang Xiaoyue, an analyst with Beijing Orient Agribusiness Consultant Ltd.
Domestic meat processing giants such as Shuanghui Group and Yurun Group Co. Ltd. were the main beneficiaries of the initial subsidies, Fan Yusheng added.
The resumption of the scheme comes as the government struggles to tame rising inflation. China's Consumer Price Index (CPI) hit a three-year high of 6.40 percent last month on the back of soaring pork prices, which weigh heavily in the basket of goods used to calculate the CPI.
The surge in pork prices is due to strong demand from the expanding middle class and a number of supply-side issues. The country's pig population has fallen in recent years due to culling to halt livestock disease outbreaks and hikes in the price of corn, a commonly-used livestock feed. Rising corn prices in the first half (H1) of 2008 slashed into pig farmers' profit margins, dissuading them from breeding the animals.
- LYB