China's massive purchase of pigs causes prices to skyrocket

The price of live pigs in Dong Nai is currently over 54,000 VND per kilogram, an increase of over 50% in just 2 months.

Mr. Nguyen Kim Doan, Vice President of Dong Nai Livestock Association, said that since February 15, the price of live pigs in Dong Nai has increased rapidly. If in mid-February the price of pigs was only 35,000-38,000 VND per kg, now it has increased to over 54,000 VND per kg, an increase of more than 50% in just 2 months.

“This is the highest price increase since 2012. With the high purchase price, farmers currently earn about 13,000 VND per kilogram of live pig. In other words, for every pig sold to Chinese traders with an average weight of 120 kg, farmers earn about 1.5 million VND in profit over a period of 5-6 months,” said Mr. Doan, at the same time.added that during the recent 4-day holiday, pork prices had leveled off, but then prices increased every day because the number of traders buying pigs to export to China was increasing. Every day, there were about 20-30 trucks transporting pigs to China, each truck carrying about 150-170 pigs. Thus, in Dong Nai, on average, about 4,000 pigs (weighing 120-150kg each) were purchased and exported to China every day, this number is equal to the number of pigs supplied to the Ho Chi Minh City market.

“However, most pigs sent to China have a back fat thickness of 2 to 2.5 cm because this market prefers them. Meanwhile, pigs in Ho Chi Minh City mostly have low back fat thickness, and are even super lean,” Mr. Doan added.

Every day in Dong Nai, there are 20-30 trucks collecting pigs to transport to China. Photo: Phuoc Tuan.

Confirming the massive import of pigs from China in Vietnam, Mr. Nguyen Dang Vang, Chairman of the Vietnam Livestock Association, said that currently, there are over 5,000 Vietnamese pigs exported to China every day. If pigs are purchased in Dong Nai at a price of 54,000 VND per kg, when transported to Hanoi, the price increases by 4,000-5,000 VND per kg. The reason for such a high purchase price is because food in China is more expensive than in Vietnam. In China, the price of live pigs is at 65,000 VND per kg, so when they see cheap Vietnamese pigs, they rush to buy them.

The Asia-Pacific Market Department (Ministry of Industry and Trade) said that according to the forecast of the National Development and Reform Commission of China, from now until the Mid-Autumn Festival and National Day of China (October 1), pork prices will continue to increase, but the increase range is limited.

According to Xinhua news agency, Beijing will release more than 3,000 tons of frozen pork reserves to the market to increase supply and keep prices from rising further. The decision will take effect from May 5 to July 4, 2016. About 50,000 tons of meat will be sold to 121 pork supermarkets at low prices. The government will also subsidize 9 yuan ($1.40) for every kilogram of pork sold to encourage retailers to cut prices.

Although the high price of pork is helping farmers make good profits after 3 years of losses and break-even, according to Mr. Nguyen Kim Doan, this will cause many consequences.

“Currently, many farmers in Dong Nai are rapidly increasing their herds by 20-30% compared to before. Therefore, there is a shortage of gilts and breeding pigs, causing prices to increase, leading to an increase in input costs for the upcoming pig crop. However, if China suddenly stops purchasing, prices will drop sharply and farmers may suffer losses,” said Mr. Doan.

As an expert in the industry, Dr. Kieu Minh Luc also said that the price of pork is increasing abnormally, so farmers need to be careful to avoid misunderstanding and massively increasing their herds. Meanwhile, the number of gilts and breeding pigs is lacking, if people rush to buy breeding pigs to increase their herds, the price of this item will increase sharply. In particular, gilts only reproduce after about a year, so if they invest in many gilts, in 2017, not only pig farmers will suffer losses, but also pig breeding sellers will have to suffer the same sluggish situation.

Regarding the retail market, producers believe that domestic meat prices are being pushed up too high, causing many units to worry. Previously, when China had not yet purchased massively, the price of live pigs was around 41,000-42,000 VND per kg. But now, purchasing businesses have to buy at 49,000-50,000 VND, causing retail prices to increase. If this situation continues, the domestic meat market will certainly be affected.

A survey at Ho Chi Minh City markets showed that retail pork prices have also increased by VND10,000 per kilogram compared to the previous month.

At Hoa Binh market (District 5), Thai Binh (District 1), spare ribs increased from 130,000 VND to 140,000 VND per kg; pork belly and pig's feet also increased by 10,000 VND, up to 100,000 VND per kg. Particularly at Thi Nghe and Ba Chieu markets (Binh Thanh), pork prices were cheaper than the above markets but also increased by 5,000-10,000 VND per kg compared to the previous month.

According to VNE