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Pork Prices Driving Inflation in China

by 5m Editor
4 November 2011, at 9:11am

CHINA - The price of pork has risen so much in China that now it is the only driver of inflation in the country according to analysis by the Danish pig meat processor, Danish Crown.

The processor said that the Chinese middle class of 300-400 million people is growing, and with money in hand, they want more pork, not just pigs feet, heads and tails, as has typically been the export products to the country in the past.

The Chinese consumers' increasing demand for pork has increased prices on average by 30-40 per cent, and since the summer it has helped to push up inflation.

"In contrast to Denmark, when you have a very high proportion of household income spent on food, including pork, a price increase affects families' ability to buy other consumer goods. In fact, price increases in pork are so powerful that it has been seen as a very important factor behind the rising Chinese inflation. In this the way, pork has been a driver of inflation in China," said Soren Tinggaard, deputy director of Danish Crown.

In the past, Danish Crown's trade with China was in pig heads, a waste product, which mainly were sent for rendering. Today, heads are sold to China for a price that is twice as much as what they would be sold for in Europe. Since January, the price in China has increased by more than 100 per cent.

"The Chinese are very fond of pork. And when a country with so many people is looking for a specific product, you get a unique combination that has not been seen since we sold bacon to England in 1930," said Soren Tinggaard.

He estimates that China next year will be the second largest market for Danish Crown behind England.