China adds to pork reserves to stabilize prices
BEIJING - The Chinese government has started to purchase frozen pork and add it to reserves to stabilize prices, which have slumped for three months, the country's top economic planning agency said Sunday.
Due to cyclical and seasonal factors, hog prices have fallen remarkably since January. The hog-to-corn price ratio, a major indicator of the industry's profitability, has stayed under 6:1, the break-even point for farmers, for four weeks.
In order to stabilize prices and prevent further damage to farmers' interests, the government has purchased the frozen pork at prices slightly above market price, the National Development and Reform Commission (NDRC) said in a statement.
The oversupply of hog is expected to continue for a period of time, the NDRC said, asking farmers to watch the markets closely and adjust their production plans.
Food prices have a one-third weighting in the calculation of China's consumer price index, a major gauge of inflation, with pork prices being an important component.Stabilizing pork prices is an important task for the government in taming inflation and deflation.