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China announces subsidies for pork producers in light of rising prices

China's state planner announced today (9 September) it will issue subsidies of up to 5 million yuan ($700,000) to support the construction of large-scale pig farms in the latest measure to promote pig farming in the wake of African swine fever.

9 September 2019, at 9:49am

The subsidies - to be at least 500,000 yuan but no more than 30 percent of the total project investment - must be issued by the end of 2020, the National Development and Reform Commission (NDRC) said in a statement on its website.

They can also be issued to farms seeking to expand, with the funds aimed at helping producers cover the cost of equipment for disease prevention, waste treatment, environmental controls and automated feeding, reports Reuters.

The move comes as official figures show China's hog herd, the world's largest, has shrunk by almost a third since a year ago, after deadly African swine fever swept across the country.

Many people believe the losses to be much higher, however, at about half the herd.

young weaners running down a corridor

Pork prices began rising sharply in June in response to the reduced supplies, reaching a fresh record last month, and Beijing has warned that they will go higher, threatening to become a serious concern for low-income consumers.

"The top 40 or 50 producers will take advantage of this for sure," said Ron Lane, sales director at Big Dutchman, a German farm equipment firm with operations in China.

Construction of a modern farm costs between 10,000 yuan and 12,000 yuan per sow, he said, without including the costs for the pigs themselves or the land.

That means about 20 percent of the construction costs for a 2,000-sow farm could be covered, he added, although for the larger 5,000-sow farms more common among the leading producers, the subsidy would cover a smaller percentage of the costs.

China's vice premier has repeatedly urged provincial authorities to ensure sufficient pork supplies and boost a recovery in hog production.

But despite a series of new policies issued by ministries, including an easing of restrictions on land permits and offering farmers low-interest loans, risks remain high, say experts, with African swine fever still spreading in the country.

The NDRC document said the state planner will also subsidise 100 counties to set up facilities to collect, treat and reuse manure from pig and poultry farms.

The money, to be issued over two years, will be targeted at counties that are not major livestock producers but have at least 100,000 pigs. The subsidies will amount to no more than 50 percent of a project's total investment and be capped at 30 million yuan per project.