The Chinese government typically offers subsidies to help small-scale pig breeders control diseases and encourage them to boost production when pork prices are high. Following a year-on-year 57.1 percent pork price surge in June, Beijing has resumed an RMB 2.5 billion subsidy to spur pig breeding and prevent future supply shocks, according to China Briefing, a Hong Kong-based China news service.
China is the world's largest pork producer, accounting for more than 50 million tons of production in 2010, or half of the world's total production. However, its pork industry is highly fragmented, with the majority of China's pig farms categorized as small-time breeders.
"Pork has historically been the primary animal protein source in Chinese diets and government subsidies to help increase and spur pork production at a time of record high prices are likely to help increase breeders' profits and growth in 2011," said Zhenyu (Jack) Shang, founder, chairman and CEO of Sen Yu International Holdings Inc. "Against a backdrop of record high prices for pork, we see government support continuing in the future as China grows its pork industry and expect to benefit from government subsidies that encourage breeders to raise more pigs.
"We believe strong demand from Chinese consumers coupled with rising middle-class incomes from China's economic expansion will continue to simulate demand for our products," he added.