An outbreak of foot-and-mouth disease recently reported by Chinese officials could not come at a worse time. If not quickly controlled, the disease could seriously complicate the nation’s hopes to reduce record-high pork prices.

The disease outbreak, reported by officials July 21, occurred in China’s Guizhou province and 124 pigs were culled. China has faced ongoing FMD outbreaks in the nation’s livestock herds since February, 2010.

While China is the world’s largest producer and consumer of pork, the country’s industry devoted to hog production is stretched to the limit to produce adequate supplies of the nation’s favorite meat. The country is having increasing difficulty keeping pace with the 100,000 tons of pork consumed by the Chinese population each day.

Getting China’s pork industry stabilized is a top priority for the nation’s leaders. Significant obstacles, such as price fluctuation and industry structure however, stand in the way.

Record pork prices are pressuring the Chinese government and leaders have declared that distribution from the nation’s 200,000-ton pork reserve will be made to ease high prices. China consumes more than 40 million tons of pork a year, so 200,000 tons amounts to only about two days of demand and the move is seen as a token gesture.

China's pork prices surged 57 percent this summer over year-ago levels leading to fears of a potential shake-up in the industry. Some Chinese producers fear overproduction will result from the high pork prices and eventually cause hog prices to plunge. "If history is any guide, a price plunge (always follows) a price surge, and that's why many farmers have not been super excited about this year's windfall," said Shang Yudong, a pork producer in central China's Henan province.

Several factors limit China’s pork production ability. Land and water resources are in short supply and the scale of many Chinese hog operations is not economical. “About 60 percent of Chinese hog operations are small ones that produce fewer than 50 hogs each year," according to Li Binglong, professor at China Agricultural University.

Other limitations are self-imposed. China quickly halted U.S. pork imports after H1N1 influenza was found in the U.S. swine herd despite extensive proof that transmission of the disease was not possible through consumption of pork. The disease was mis-named “swine flu” by the media.

China’s modernization efforts aimed at the country’s pork industry are slanted in favor of large farms, which leaves the majority of Chinese producers lacking the benefits of larger operations. As a result, biosecurity is often inadequate to prevent disease transmission and other health challenges from rising. Outbreaks of swine diseases such as foot-and-mouth disease have been occurring recently and are a frequent challenge. The most recent FMD outbreak was reported July 21.

Some see modernization in production facilities and marketing techniques the main priority in development of a more stable pork industry. “The pork market would stabilize more quickly if every hog farm produced at least 500 hogs a year and had supply agreements at fixed volumes and prices with retailers and slaughterhouses,” said Zhou Wangjun, deputy director of the national development and reform commission.

Experts suggest that central regulators develop a long-term approach and establish a price guiding mechanism that can help restore and maintain lasting stability.

Source: Dow Jones,,