"Pig Cycle" Affects The "One Pig" Arch In Zhongnanhai, Which Has Hurt The Macro Economy.

Over the past 30 years since the reform and opening up, the macro-economy has experienced 8 fluctuations in pig prices, of which 4 of the 50% higher prices. Why can not cultivate a stable and healthy pig industry in a big market of 12.3 billion people and about 50000000 tons of annual consumption?

In July 9th, the June statistics released by the National Bureau of statistics showed that in June, China's CPI rose 6.4%, a 36 month high, of which pork prices rose 57.1%, contributing 21.4% to the CPI increase. Three days later, Premier Wen Jiabao chaired a State Council executive meeting to study and determine policies and measures to promote sustainable and healthy development of pig production, so as to slow down the periodic fluctuation of pig production and prevent the ups and downs.

This is the third time Premier Wen Jiabao has questioned pork prices in two weeks. "Pig cycle" affects the Zhongnanhai, "a pig" arch injured the macro economy. Prior to July 3rd and 9th, Premier Wen went to Liaoning and Shaanxi for intensive research. Last year, the price of meat plummeted. People still remember that pork prices have reached a new high in the past year. Why does the price of meat rise and fall? Is the world's second largest economy facing a pig *? To this end, the "Outlook" Newsweek reporter on the "pig production cycle fluctuations" conducted an in-depth investigation.

Production and consumption "Injury"

"Incredible, even the pork has risen to 14 yuan a catty, only 7 yuan last year." "It's never been so expensive in 20 years. Pork prices are just like roller coaster," said Gong master of Red Valley beach in Nanchang, Jiangxi. Pork price "roller coaster", which is known as "pig production periodic fluctuation" in academic field, is referred to as "pig cycle". That is, the development rule of pork industry that is widely considered in the industry: the price of pork has risen sharply - the sow population has increased greatly - the supply of live pigs has increased sharply - the price of meat has declined - a large number of farmers have eliminated the sows - the supply of live pigs has decreased - the price of meat has gone up again.

A study of the Ministry of agriculture's research on pig fluctuation regularity shows that from the reform and opening up to 2007, pig production in China showed a fluctuating growth trend. In 1985, 1988, 1994, 1997, 2004 and 2007 experienced 6 distinct price fluctuations, mainly marked by an annual growth rate of over 10%. Among them, in 1988, 1994 and 2007, there were 3 big fluctuations, and the annual price growth rate was over 50%.

Research also shows that from production and Price fluctuation According to the historical situation, the average cycle of the two fluctuations is about 6 years, and the average period of rise and fall is 3.5 years and 2.5 years respectively. Due to the oversupply of labor and the deepening of scale, the pig cycle showed a trend of decreasing amplitude.

However, after 2007, the price of pork has gone through 2 fluctuations. The period of pig cycle is obviously shortened, with a period of about 3 years, and the amplitude is aggravated. Especially after the Spring Festival in 2011, pork prices continued to rise, forming the fourth major fluctuations in the past 30 years of reform and opening up. In the same period last year, pork prices rose by 70% over the same period last year due to the low price and epidemic situation.

"Pigs are expensive, but pigs are cheap." Zou Changyi, a low-income household who lives in the North Community of Shanghai road in Qingshan Lake area, Nanchang, is a laid-off worker. He obviously feels the pressure. "In order to keep two nephews and nieces going to school to keep up with nutrition, buy meat once a week, even if they buy meat, they dare not buy pork and pork chops, and only buy pork or chopped meat."

At the same time, Zou Xinghong, who lives 10 kilometers away from Jiangxi's Xinjian County breeding farm in Xinjian County, told the reporter, "don't look at the high price now, we thought we made a lot of money, at the very best, it was in the middle of last year's losses." He said that in September last year, his pig farms were affected by the epidemic, sows lost more than 30%, and 30~60 kg of piglets also had nearly 50% mortality.

Generally speaking, the pig industry chain is composed of many links, including pig breeding, pig slaughtering, pork deep processing, feed processing, pig research and pork sales. For small-scale farmers, the "pig cycle" is most damaging to them because they are low in the industrial chain and weak in risk bearing capacity. "Over the years, they have made a lot of losses and earn less. The price increase this year is actually making up for the losses in previous years." Xu Zhanghai, member of Xinjian County Agriculture Bureau, explained to this reporter.

　　 Pig cycle Why is it hard to avoid?

The pig growth cycle has contributed to the formation of the "pig cycle" objectively. Wu Tiexiong, a professor at the school of economics and management of Beijing Forestry University, told the correspondents: "because pork is an agricultural product like other agricultural products, it has the characteristics of long growth cycle and difficult to change on the way, and farmers always take the existing market price as the standard to anticipate the future benefits. This often falls into the" spider web dilemma "and can not catch up with the rhythm of market changes.

In fact, the cyclical concussion of pork prices is not unique to China. Zhong Xinfu, director of the information center of Jiangxi Animal Husbandry Bureau, told reporters that when he visited Germany in 2010, a German pig farmer told him that when a lot of profits were made, a pig could earn 40 euros and lose 20 euros at the time of loss. "In fact, their fluctuation is also very large, so the price fluctuation is actually very normal, but the fluctuation of pork in China is too big."

The reasons for the rise in pork prices this year include the decrease in the number of sow stocks, the withdrawal of scattered households, the increase in feed costs by 10%, the increase in labor costs by 25%, the doubling of piglets' cost, and the side effects of over money in recent years, all of which have contributed to the rise in pork prices. This is also a common formation factor of all previous pig cycles. But from the industry itself, experts interviewed believe that the sharp fluctuations in meat prices have exposed the three "soft rib" of pig industry in China.

First of all, the epidemic is aggravating, boosting the price fluctuation. In recent years, high pathogenic blue ear disease, swine fever, foot and mouth disease, epidemic diarrhea and other diseases have appeared one after another. In addition to the direct loss of live pigs, epidemics also cause miscarriage or stillbirth of sows, and the production performance of fattening pigs is seriously reduced. The biggest problem is the psychological panic of pig farmers, so that the size of households does not make up for hurdles, and retail investors simply quit.

Recently, blue ear disease has not yet subsided. Experts interviewed began to worry about the new epidemic. This year's swine epidemic diarrhea began to affect Guangdong, Henan, Sichuan, Hunan and other places. The disease directly caused sows to produce only one or two offspring, and the survival rate of piglets was very low. The mortality rate of pigs was not even less than 30%.

Secondly, the level of scale is low and the degree of organization is low. Pig production in China has many production units, and its structure is complex. Take Jiangxi, a large pig producing province, for example, Zhong Xinfu said that if the number of slaughtered more than 500 years is counted as large-scale operation, the scale of Jiangxi will only be around 60%, and it has increased by more than 10% annually. The industry believes that when scale farming accounts for more than 80% of the market, pork prices will tend to be stable, and the "pig cycle" amplitude tends to be stable.

Every cyclical price shock, there will be "scattered households running fast, scale households can not keep up with" phenomenon. The Ministry of agriculture has investigated the 20 major pig producing provinces in the country. In July 2007, the number of live pig farmers was reduced by 20.5% compared with the same period in the past year. The pig farms in scale farms increased by 7.3% over the same period last year. "Retail mentality" exacerbated changes in supply and demand.

In addition, although there are many production cooperatives in China's pig breeding industry, the scale is often very small and the operation is not standardized. Comparatively speaking, the West has a very good production cooperation organization. For example, the Danish pig cooperatives provide 80% of the market supply. They organized "planned production" through co-operatives, unified breeding of pigs, unified feed production, unified drug deployment, joint slaughtering factories and even banks, so as to reduce risks.

Third, the market information asymmetry, there is no corresponding effective information early-warning mechanism. "Although the government has also strengthened the work of information early-warning and monitoring in recent years, there are still many problems." Zhong Xinfu admitted that due to the fact that many production units were difficult to survey, and there were errors in the pumping test, it was difficult to collect basic data.

Producers and local governments are hard to ensure that the data are provided for the sake of their own interest factors such as taxes, epidemic information and policy dividends. The government departments responsible for specific operations need to shoulder corresponding responsibilities and lack corresponding incentive mechanisms. The growth cycle of live pigs is long and requires at least 3 months early warning, which is more difficult than industrial information warning.

Preventing excessive intervention to stimulate "pig cycle"

The industry generally believes that in recent years, the "pig cycle" time in China has been shortened and the scope has increased. One reason is that the government intervenes too much when prices are high, and the support is not strong when prices are low, leading to "more disorder". In recent years, government regulation has become more and more prudent. Yao Jian, a spokesman for the Ministry of Commerce in June 15th, said that although the recent rise in pork prices was relative to the same period last year, the Ministry of Commerce will not introduce policies to control pork prices. This shows that the government respects the market rules more and makes the market itself play a moderating role.

Historical experience shows that rising and falling often lead to mutual cause and effect. In the short term, pork prices have * * * ed a signal of increasing returns to pig farmers. At this time, relevant departments have introduced policies to promote pig production, giving subsidies, which will only make the signal of expanded production stronger, and foreshadow the next round of overproduction. Tan Yanwen, a professor at the school of economics and management of South China Agricultural University, suggested that "the government should support policies to guard against excessive expansion of production and avoid a new round of excess production."

"Let the market return to the market, and the government is in charge of the government." Li Jingyang, a farmer in Shanggao County, Jiangxi, has recommended to this reporter that he has fundamentally eased the "pig cycle" with his own breeding experience. He needs to increase scientific research into disease prevention and control, cultivate and develop large-scale production, improve the degree of organization, and establish a sound and effective information early-warning mechanism.

The reporter visited the farmers to find that the cyclical rise and fall of the price of the pig could be tolerable, while the risk of disease was the most helpless and worried. Some farmers said that because some towns did not have enough funds to build refrigerated facilities to store vaccines, the free vaccine was invalid in the process of issuing farmers.

Experts interviewed suggested that the government should increase capital investment in disease prevention and control and scientific research, increase the coverage of vaccine immunization, deepen the reform of veterinary management system, establish a sound quality and safety guarantee system, improve epidemic surveillance, epidemic reporting and epidemic disposal system. "If possible, the government should support pig breeding enterprises to carry out scientific experiments and research, and increase investment in control of epidemic diseases that affect public safety."

Wu Tiexiong believes that the way to stabilize agricultural production in Europe and the United States is to take state subsidies: for example, the EU's agricultural subsidies per hectare are 300~350 dollars, and the United States is 100~150 dollars. We should implement the policy insurance system as soon as possible for the pig industry and offer discount loans to the pig industry, especially the large-scale farms.

"It can neither be big nor small, nor can it be sprinkled with pepper." In Li Jingyang's view, the policy should be tilted to the appropriate scale of farmers, with the help of the award, especially the small-scale farmers who support 500 or so, and develop to 1000~3000 moderate scale households. At the same time, we should pay attention to quality. For example, by developing professional cooperative organizations, we can improve the degree of organization of rearing households, and raise the level of scale raising through the development of feeding areas.

We should improve the monitoring and early warning system of pig and formulate corresponding incentive mechanisms to ensure the effectiveness of information collection. Wang Jimin said, "at present, the Ministry of agriculture has monitored 200 counties in the country (including 100 of the main production counties, 100 of the non major production counties), 2000 of the townships and 6000 households, but the error is still relatively large. The data of the main production counties are relatively accurate, but the sample size of the non major production counties is small, at least the scale of the 500 counties should be reached, and the error should be controlled within 5%.

The executive session of the State Council, which was held in July 12th, has proposed that the periodic fluctuation of pig production should be slowed down and a series of policies and measures to promote pig production have been promulgated. The experts said, "whether these measures are right for the remedy to the case, whether they can play a practical role, whether we can solve the current high price problem and prevent future price collapse will take time to test. People will wait and see."