BEIJING - Cao Xianli, the owner of a 'ribs and rice' restaurant in eastern China's Qingdao city, is facing his biggest test in a decade of running the eatery.
Not only have costs doubled in the last year because of soaring pork prices, but he's not even sure he'll be able to secure enough of the meat needed for his signature dish.
"My concern is how much longer I will still be able to buy pork. If I can't buy pork, I have to close my shop," Cao told Reuters. China's rocketing pork prices come after a deadly disease ravaged its huge hog herd, leaving the world's top consumer of the meat short of about a quarter of its usual supplies. That's about 13.5 million tonnes, more than the entire pork production of the United States.
With pork by far the most popular meat in China, food inflation is running at its highest in almost eight years, surprising both seasoned economists and restaurateurs.
"In the past year, both we and the market underestimated the pace of pork price inflation," wrote analyst Lu Ting and colleagues at Japanese bank Nomura in an October report, revising up their forecast for inflation next year.
PURCHASING POWER
Sky rocketing pork prices are impacting the entire supply chain. Wholesale chicken prices are up 33 percent on a year ago, driven by widescale substitution of pricy pork with cheaper poultry, meaning China's popular fried chicken chains are also feeling the heat.
Industry leader KFC has managed the surge in costs by forcing suppliers to take much of the hit, keeping inflation under 10 percent, executives with the firm's owner Yum China Holdings said on an Oct. 28 earnings call.
To absorb the rest of the increase, it has increased the number of non-chicken items on its menu, adding a duck meat wrap and a Portobello mushroom burger. Duck is China's cheapest meat.
KFC is also using cheaper chicken parts, replacing wings with 'strips' of breast meat, and offering a 'wing tip bucket' in July and again in October.
Though little more than skin, bone and cartilage at the end of the chicken wing, the fried wing tips proved popular, said chief executive Joey Wat on the recent call.
"There are a group, not a huge group, but there's still a group of people who just love it", she told analysts.
The company warned that 2020 will be "another challenging year for commodity inflation" but said it will be "prudent" on the portion of costs passed on to customers.
NO ROOM TO DIVERSIFY
The millions of smaller players in China's 4 trillion yuan ($568 billion) catering sector have fewer options to cope with soaring costs and limited supplies.
Though imports have surged this year, an expected 3 million tonnes of pork from abroad can't plug domestic needs, and Beijing only has small volumes of frozen pork in state reserves.
"The impact on us is huge. We sell ribs, that's it. For us, there is no room for diversification," said Cao, owner of the Qingdao restaurant.
Cao hiked his prices by about 10 percent to 19 yuan per serving and managed to retain his customers.
"People still come as they also have no choice. If they go to the market to buy pork, they'll find it's no cheaper," he said.
But others have struggled to keep customers while raising prices. Xishaoye, a Beijing-based chain that specializes in 'roujiamo', the traditional Chinese pork bun, had to lower prices again after a small hike hurt business, said Ji Chen, a manager at one of the chain's outlets.
"It's a highly competitive market, you can't raise your price more than by a low single-digit," said Lina Yan, consumer analyst at HSBC.
Xishaoye has resorted to promoting chicken and vegetable variants of the pork bun, and offering a set menu with pork-free side dishes to steer customers away from their bestselling item.
That helped to halve pork consumption at their 43 restaurants but it has still racked up losses of more than 6 million yuan this year, said chief executive Meng Bing.
"Ingredients usually account for about 30-40 percent of costs, so if the cost of ingredients increases by 20 percent to 30 percent, the company is highly likely to lose money," said Meng.
China's Vice Premier Hu Chunhua has urged farmers to restock empty farms and called on provincial authorities to do all they can to guarantee pork supplies, particularly ahead of the important Lunar New Year holiday next month.
The agriculture ministry says pig production should return to about 80 percent of normal levels by late 2020, but many others believe that forecast is overly optimistic, particularly as swine fever is still spreading.
After dipping last month, pork prices are rising again and even larger companies could come under greater pressure if inflation doesn't soon subside.
An executive with one of China's largest mass-market catering companies said it may soon be forced to raise prices.
"Increasing the price is really the last resort as our consumers are price-sensitive. But if pork prices stay high in 2020, we will have no choice," he said, declining to be identified because pork supplies are a sensitive topic.
source: news.abs-cbn.com
BEIJING - China's consumer inflation accelerated at its fastest pace in almost 6 years in September as African swine fever sent pork prices soaring nearly 70 percent, official data showed Tuesday.
Authorities have gone as far as tapping the nation's pork reserve to control prices of the staple meat, as the swine fever crisis could become a political and economic liability for the state.
The consumer price index (CPI) -- a key gauge of retail inflation -- hit 3.0 percent last month, the National Bureau of Statistics (NBS) said, up from 2.8 percent in August and the highest since since November 2013.
Analysts in a Bloomberg news poll had forecast 2.9 percent.
The rise was caused by food price inflation, particularly disruptions to pork supply, Capital Economics said in a note.
The price of pork soared 69.3 percent on-year in September, the NBS said.
Beijing's official statistics say around one million pigs have been killed since the first outbreak of swine fever in August but that is widely considered to be an underestimate.
This in turn has also pushed up prices of other meats including beef, chicken and duck and eggs by up to 19 percent as consumers switched to other sources of protein.
"Looking ahead, consumer price inflation should continue to accelerate in the coming months as supply disruptions continue to push up pork prices and as the drag from lower oil prices eases," said Martin Lynge Rasmussen from Capital Economics.
Producer prices, however, continued to slide for the fifth straight month, hit by weakening demand and mounting trade tensions with the US.
The producer price index (PPI) -- an important barometer of the industrial sector that measures the cost of goods at the factory gate -- contracted 1.2 percent in September from the previous year, the NBS said.
A slowdown in factory gate inflation reflects sluggish demand, while a turn to deflation could dent corporate profits and drag on the world's number two economy.
This in turn could lead to a drop in prices globally.
source: news.abs-cbn.com
* China has released 30,000 tons of reserve pork this month
* Aims to keep lid on soaring prices ahead of holidays
* Consumers say volumes too small, frozen meat not appetizing
BEIJING - China's supermarkets are topping up their meat counters with frozen pork from state reserves, after prices of the nation's favorite protein source surged to budget-busting levels, threatening to mar this week's National Day festivities.
Pork, which has a prominent place at nearly every Chinese dinner table, is in short supply after a deadly virus infected and killed millions of hogs across China over the last year.
Beijing has stepped in to try and quell prices that have jumped to almost double what they were a year ago and are still climbing, releasing 30,000 tons of pork in three batches over the last fortnight.
That appears to have dampened further price increases for now and helped sales, at least in the capital Beijing.
"Pork is selling much better compared with three weeks ago," said a butcher at the Qianxi Street branch of Yonghui Superstores in southwestern Beijing.
"Today we have very cheap frozen pork belly, it's only 17.98 yuan (per kg, or $2.52 per pound) compared with 35.98 yuan for fresh," he said. "We're not sure where the meat is from but it must be from Beijing's reserves."
Cheaper meat will be a relief to many ahead of the holidays. Chinese typically gather for elaborate meals during festivals, and most of the repasts will feature pork in some form.
Sufficient pork supply is a "most basic requirement" for the people's welfare, said Vice Premier Hu Chunhua in a televised message to officials in late August. He urged them to guarantee supplies and increase the scale of reserves.
Shoppers in Beijing said they will not skimp on meat during the National Day holiday, whatever the price, although they have been reducing their intake at regular mealtimes.
"Before I would buy four or five ribs, but now I only buy two or three, as long as it's enough for a meal," said a retiree surnamed Wang shopping at the Yonghui store.
Many people are substituting chicken, duck or beef for some of their pork intake, with pork so pricy that even more expensive meats now appear affordable.
For some, however, it is hard to stomach a change in diet.
"My family doesn't like beef, it's a heating food, so I can only buy pork," said Wang, referring to the classification of foods as either "heating" or "cooling" in traditional Chinese medicine.
DROP IN THE OCEAN
State sales will have limited impact on prices overall, said Miranda Zhou, an analyst at Euromonitor, with total reserve volumes sold in recent weeks just a "drop in the ocean" in a country that eats about 40 million tonnes of pork a year.
News of the latest sale from state food stores was trending on Weibo, China's popular microblogging site, with many users commenting on how reserve pork had done little to cool prices.
Others questioned the quality of pork that had been in storage, describing it as "zombie meat".
"In addition to the small volumes, in the south they like fresh pork, so frozen pork really isn't appealing," said Zhou, the analyst.
A man surnamed Zheng shopping in a wet market in downtown Nanning, 2,000 km (1,250 miles) south of the capital, said he had not seen any frozen meat on sale there.
"We don't eat that kind of stuff here," he said.
"Even if there was frozen pork, we wouldn't buy it. We only eat fresh meat."
source: news.abs-cbn.com
SEOUL, South Korea—South Korea has confirmed a third case of African swine fever at a hog farm in a city near Seoul after the country’s first outbreak of the deadly virus last week, the agriculture ministry said on Monday.
The new case occurred at a pig farm with about 1,800 pigs in the city of Gimpo, nearly 14 km south of the city of Paju where the country’s first case was confirmed on Sept. 17, the Ministry of Agriculture, Food and Rural Affairs said in a statement.
Since the first outbreak, over 15,000 pigs had been culled, according to the agriculture ministry data. That makes up 0.1 percent of the country’s pig population of above 12 million pigs.
South Korea, Asia’s fourth-largest economy, has raised the country’s animal disease alert level to the highest following the outbreak and ramped up disinfection measures to keep the virus spreading further.
African swine fever is highly contagious among pigs and nearly 100 percent fatal, but does not affect humans. It has spread across China including Vietnam and the Philippines.
source: news.abs-cbn.com
HONG KONG—Hong Kong will cull 4,700 pigs after African swine fever was detected in an animal at a slaughterhouse close to the border with China, the second such case in a month in the crowded financial hub.
The animal came from a farm in the southern Chinese province of Guangdong and importation from mainland China has been suspended until further notification, Sophia Chan, Secretary of the city's Food and Health Department said Friday night.
The government-run slaughterhouse in Sheung Shui will be closed for cleansing and disinfection, she added.
Last month around 6,000 pigs were culled after the virus was detected in a pig imported from a farm in the same province. Supply from across the border was temporarily suspended for a week during the disinfection of slaughterhouse.
Pork is a staple of Chinese cuisine, with space-starved Hong Kong importing the majority of what it consumes from the mainland.
After African swine fever spread across more than half of China's provinces last year, Hong Kong banned imports from any Chinese farm where the virus had been detected.
Chinese officials have said hundreds of thousands of pigs were culled in a bid to stop its spread -- an effort that has also seen restrictions on transporting pigs from affected areas.
With some of the world’s most densely populated streets, Hong Kong remains on high alert to diseases. In 2003, some 300 people died during an outbreak of severe acute respiratory disease.
The virus is not dangerous to humans but is fatal to pigs and wild boar.
source: news.abs-cbn.com
* WH Group ordered to shut Zhengzhou plant for 6 weeks
* 2nd outbreak in 2 weeks in China of African swine fever
* Previously undetected in China or East Asia
* Authorities ban movement of pigs, pork in affected area
* Stirs concerns about spread across world's largest pig herd
BEIJING - China has ordered the world's top pork producer, WH Group Ltd, to shut a major slaughterhouse as authorities race to stop the spread of deadly African swine fever (ASF) after a second outbreak in the planet's biggest hog herd in two weeks.
The discovery of infected pigs in Zhengzhou city, in central Henan province, about 1,000 kilometers from the first case ever reported in China, has stirred animal health experts' fears of fresh outbreaks - as well as food safety concerns among the public.
Though often fatal to pigs, with no vaccine available, ASF does not affect humans, according to the United Nations' Food and Agriculture Organization (FAO).
ASF has been detected in Russia and Eastern Europe as well as Africa, though never before in East Asia. It is one of the most devastating diseases to affect swine herds. It occurs among commercial herds and wild boars, is transmitted by ticks and direct contact between animals, and can also travel via contaminated food, animal feed, and international travelers.
WH Group said in a statement that Zhengzhou city authorities had ordered a temporary six-week closure of the slaughterhouse after some 30 hogs died of the highly contagious illness on Thursday. The plant is one of 15 controlled by China's largest pork processor Henan Shuanghui Investment & Development , a subsidiary of WH Group.
Zhengzhou city authorities have banned all movement of pigs and pork products in and out of the affected area for the same six weeks.
Shuanghui said in a separate statement on Friday it culled 1,362 pigs at the slaughterhouse after the infection was discovered.
The infected pigs had travelled by road from a live market in Jiamusi city in China's northeastern province of Heilongjiang, through areas of high pig density to central Henan. Another northeastern province, Liaoning, has culled thousands of pigs since a first case of ASF was reported two weeks ago.
The pigs' long journey, and the vast distance between the two cases, stoked concerns about the spread of disease across China's vast pig herd - and into East Asia.
"The areas of concern now involve multiple Chinese provinces and heighten the likelihood of further cases," the Swine Health Information Center, a U.S. research body, said in a note.
'A LITTLE SCARED'
As Zhengzhou city froze pig movements, Heilongjiang authorities were also investigating whether the pigs involved were infected in the northeastern province bordering Russia.
Meanwhile comments on the country's Twitter-like Weibo highlighted worries about the safety of eating pork, a staple in China's diet with retail sales topping $840 billion each year. The relationship between people and pigs in China is close, with the Chinese word for "home" made up of the character "roof" over the character for "pig".
Posts expressing concern that infected meat may enter the food stream and fears about whether it is safe to eat pork garnered the most attention.
"A little scared. What will happen if you eat (pork)?" said one poster.
WH Group said on Friday it did not expect the closure of the Zhengzhou slaughterhouse to have any adverse material impact on business, helping its shares rise 1.6 percent after slumping 10 percent on Thursday. Shuanghui shares were up 1.3 percent on Friday afternoon.
The Zhengzhou operation accounts for an "insignificant" portion of WH Group's operations, the company said, adding it does not expect any disruption to supply of pork and related products as a result of the temporary closure. On Thursday, Shuanghui said it had diverted sales orders to other operations.
source: news.abs-cbn.com
