Can stabilizing pork prices rely on distant water to quench a nearby fire? Hog farmers holding back sales is the real solution.
By Liu Chih-wei, Chief Executive Officer, Taipei Grain Promotion Association
Recently, amid expectations of future pig shortages caused by the porcine epidemic diarrhea (PED) outbreak, prices at the live hog trading market have soared, with the trading price breaking past NT$83 per kilogram from a level of just over NT$60 per kilogram before the Lunar New Year. The Council of Agriculture of the Executive Yuan had earlier said it would not rule out coordinating with vendors to import pork to ease the immediate crisis; recently it even set up a "pig price stabilization team" and repeatedly urged pig farmers not to hold back their sales, as if the vast number of pig farmers were the chief culprits behind this fluctuation in pig prices.
The Council of Agriculture's intention in trying to stabilize pig prices is of course well-meaning, and under pressure from legislators' interpellations and criticism, the Council indeed has to take related measures. But what must be asked is this: when pig supply is already certain to fall short half a year from now, what problems can such practices actually solve by repeatedly demanding that pig farmers and Taiwan Sugar Corporation release hogs? Or will it merely consume manpower to no avail?
According to a Council of Agriculture survey, the number of piglets that have died from PED has already reached more than 200,000. Yet livestock industry personnel and pig farmers generally believe that this wave of epidemic has swept across all of Taiwan, and its severity far exceeds what the Council of Agriculture has grasped. Even Taiwan Sugar Corporation, which is large in scale and well managed, has already announced that 14 of its 19 pig farms have been hit, while private estimates put the number of piglet deaths at more than 500,000. Whether it is the Council of Agriculture's 200,000 or the private estimate of 500,000, both foretell that around the Dragon Boat Festival, a serious shortage of live hogs will inevitably appear on the pig market.
Although the Council of Agriculture previously forecast that it would not rule out importing pork, whether this method is appropriate remains very much open to question. On the one hand, the controversy over ractopamine in American pork has always affected domestic food safety and the interests of pig farmers; if American pork were imported rashly, it would instead produce unpredictable political and social effects. On the other hand, this wave of PED can be called global; not only Taiwan, but even South Korea, the Philippines, Canada and the United States have successively fallen.
In the United States, more than 3 or 4 million piglets have died from PED, and it likewise faces a shortage of pig supply and rising pig prices. Recently, the futures trading price of American pork belly even soared to a level of NT$103 per kilogram, clearly already exceeding Taiwan's. In other words, the import cost of American pork is no lower than domestic pig prices, and hoping that American pork can rescue Taiwanese pigs from crisis is clearly an impossible mission.
When you do not earn much money, of course you have to use it sparingly, lest you become a payday-to-payday spender; when there is not enough food to eat, of course you also have to eat a little more sparingly, otherwise you will starve later. Since importing American pork is not feasible and Taiwanese pigs will fall short in the future, the only solution is of course to reduce supply at this time. If the pig market still maintains the past level at this time, with a daily trading volume of 25,000 - 27,000 head, then around the Dragon Boat Festival there will certainly be a gap of 200,000 head, and by then there may even be a situation where pork cannot be bought even with money.
If pig farmers hold back their sales at this time, they can instead moderately ease the future crisis. In addition, on the surface, pig farmers holding back sales leads to a reduction in the number of live hogs traded, but now pig farmers all wait until pigs grow to 120 kg before selling them, which equals a 10% – 20% increase in pork per pig. Converted this way, the overall supply of pork has not shrunk drastically.
Pork occupies an important place in the diet of Taiwan's citizens, with each person eating an average of 39.48 kg of pork per year. Rising pig prices, although they will affect people's livelihood consumption. But the cruel reality facing all of Taiwan at this stage lies in this: Taiwanese pigs will certainly fall short in the future, and importing American pork is even less feasible. At this time, only by slowing the supply of live hogs can the future urgency be eased. If the government simply keeps condemning pig farmers, it will not only create confrontation between the two sides, but more importantly, if it is eager to maintain normal supply at this time, it will only let people across Taiwan taste even more bitter consequences at the Dragon Boat Festival.
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Large numbers of piglets die from diarrhea Pig supply will fall short around the Dragon Boat Festival