Chinese pigging out?

[Ishmael]

I got a kick out of this article on many levels. It could have been written about almost any commodity in the US. It also seems to indicate that the Chinese cost of labor advantage is slowly coming to an end, as predicted.

Rise in China’s Pork Prices Signals End to Cheap Output
By KEITH BRADSHER

GAOYAO, China, June 1 — Few things are as essential to the Chinese as their pigs.

From pork spare ribs and mu shu pork to char siu bao — barbecued pork buns — pork is a staple of the Chinese diet. So in this Year of the Pig, an acute shortage of pork has been national news, as butchers raise prices almost daily and politicians scramble to respond.

Steep increases for pork loins and bacon are the most tangible sign that after a decade in which prices have fluctuated but not moved significantly upward, inflation is creeping back into China. In response to this pressure at home, Chinese companies are starting to raise prices for exports, removing what has been a brake on inflation in the West.

With the global economy expanding at a robust pace, and prices rising in fast-developing countries like India and Mexico, central bankers and investors are becoming concerned. Interest rates are inching up in the United States and Europe as lenders demand that borrowers pay more to offset the erosion of buying power over time.

Business executives say that with wages rising 10 percent or more a year in many Chinese cities, the country’s days are numbered as the world’s lowest-cost producer of many cheap labor-intensive products, like toys and shoes.

“People tend to underestimate the deflationary impact over the last 10 years” from Chinese exports, said Michael R. P. Smith, the chief executive of HSBC’s Asian operations. “It has got to the limit: you’ve had wage inflation, you’ve got rising natural resource prices. There’s just no more give.”

The crisis over pork prices in China, like the jolt many Americans feel when gasoline prices jump, offers one example of how prices can suddenly soar. The Chinese government is struggling to cope — including deliberating whether to sell a snuffling, smelly strategic reserve of hundreds of thousands of live pigs kept at special subsidized farms for precisely the shortage the country is now facing.

Chinese officials offer several reasons for the high pig prices. The cost of animal feed has risen by one-quarter in the last year, partly because more corn is being made into ethanol and partly because more prosperous workers are eating more meat, which requires more animal feed.

The cost of pig veterinary medicine has soared. Some pig farms, shut down because of low prices last year, were unprepared for strong demand this spring. And outbreaks of disease have killed many pigs, though no reliable estimates of how many are available.

The most recent statistics from the agriculture ministry show that prices for live pigs rose 71.3 percent in April from March, while pork prices climbed 29.3 percent. The price of pork followed pig prices higher in May as well, to the dismay of shoppers.

Some consumers showed irritation with pork prices on two recent afternoons at a busy street market in metropolitan Guangzhou, an area of perhaps 12 million in southeast China. A woman walked up to Zhang Hanbiao, a butcher standing behind an unrefrigerated counter of raw pork under the glare of two large light bulbs, and asked him the price of the dark red slab of pig liver.

Told the answer — 7.5 yuan a catty, or 89 U.S. cents a pound, up from 6 yuan a catty — she stalked off in silence without buying.

Her response angered Mr. Zhang, a butcher with a faint mustache who has followed a Chinese tradition of letting his nails grow long on the little finger of each hand.

“No business!” he exclaimed. “I’ve lost 1,000 yuan in three days because the meat goes bad before I can sell it.”

Another woman came to the counter, sniffed some pork suspiciously, then kept walking. “After it turns color, people won’t buy it,” Mr. Zhang said, adding that roadside snack vendors buy unsold meat at a discount each evening.

Wu Lijuan, a Guangzhou resident who bought a small plastic bag of lean pork from Mr. Zhang, said that she was eating less pork and more fish as pork prices rose. But prices for chicken, beef, fish and eggs are also increasing sharply this spring, along with the higher cost of animal and fish feed, although rising not quite as fast as pork prices.

In a move to head off any protests among sometimes volatile student populations, the education ministry has ordered colleges and universities to subsidize pork instead of raising prices on campus. The civil affairs ministry has instructed municipal governments to subsidize pork purchases by low-income families, while the railway ministry has given priority to pig shipments.

Prime Minister Wen Jiabao visited the pork counter at a supermarket in Xian in central China on May 26 and called for local governments to pay pig farmers to increase production. The commerce ministry has raised the possibility of distributing pork from China’s strategic pork reserves.

State-controlled television in Shandong Province in northeastern China carried a detailed report late last month on the reserves. The commerce ministry keeps a national reserve of frozen pork and live pigs, and local governments keep their own reserves as well, constantly selling older supplies and procuring fresh stock. Government agencies pay a pig subsidy to farmers to keep their animals in the program.

“The sties are very roomy, there is heat in the winter and fans in the summer,” the television program said, describing conditions very different from those endured by many other pigs in China, including those here in Gaoyao, 50 miles west of Guangzhou.

Yang Yuanji stood in sweltering heat next to his fetid, crudely built pigpens on a recent afternoon and contended that he needed high prices to pay for costly animal feed and medicine.

“Everyone says pork prices are high — I don’t think so,” he said.

One of his neighbors, Yang Ming, said he did not believe that farmers were withholding pigs from the market — as the state media occasionally hint — in hope that prices will keep rising. “I don’t wait, I sell a pig as soon as it reaches 180 catties,” or 200 pounds, he said.

Pork has been a cornerstone of the Chinese diet for centuries. Rows of 2,100-year-old terra cotta pigs were recently discovered near Xian, a city better known for terra cotta warriors. China’s 1.3 billion people eat more than 92 billion pounds of pork a year — a fifth of a pound a day for every man, woman and child.

And just as higher gasoline prices can lead to a political reaction in the United States, the Chinese government is particularly worried about soaring pork prices because of their impact on household budgets and the way they can exacerbate income inequality.

Pork is a critical source of protein for Chinese of all incomes, but particularly for low-income workers like those who keep American and European families well supplied with $49 DVD players and other popular consumer products.

Broader measures of consumer prices showed just 3 percent inflation in April, but Goldman Sachs now predicts that higher meat prices will help push this above 4 percent “very soon.”

Heavy investments in new factories, roads, rail lines and ports have helped limit inflation until now in manufactured goods, as productivity improvements mostly offset rising wages and higher prices for food, oil and metals. Economists and business executives say that manufacturers face growing pressure to raise prices as well, particularly with the torrent of money pouring into China, which has helped push up the prices of Chinese stocks and real estate.

But the price that many Chinese care about most these days is the price of pork. Not far from Mr. Zhang’s butcher counter is a small shop selling unrefrigerated barbecue. Cherry Zhou, a shop worker, said it had raised prices 25 percent in the last few days.

Blaming pork distributors, she added, “It’s more expensive by the week.”

And the decision of our congress to mandate ethanol has now spread it's tentacles across the Pacific. Just another indication of how much global economies are intertwined.

Who will the Chinese turn to for a source of cheap labor?

Ishmael

 

[Cap’n AMatrixca]

And as we saw with the recent storm, we have lessened our dependency on overseas oil not one wit.

If one-tenth of the effort had been put into shale oil...





If government got out of the oil business, do you think they could reduce the tax on it?

 

[Ishsubconscious]

What I mean is that I care deeply for pigs.

Ishsubconscious

 

[Cap’n AMatrixca]

Grow up LT...

 

[Ishsubconscious]

I always thought, if only you were a woman.

Ishsubconscious

 

[Ishmael]

And as we saw with the recent storm, we have lessened our dependency on overseas oil not one wit.

If one-tenth of the effort had been put into shale oil...





If government got out of the oil business, do you think they could reduce the tax on it?

Being rhetorical this morning?

Ishmael

 

[Ishsubconscious]

Being rhetorical this morning?

Ishmael

I mean of course that If I think that you are adorable.

Ishsubconscious

 

[Cap’n AMatrixca]

Aye...

History shows again and again how Congress acts out the folly of men...
Go go, Washzilla!

 

[Fagin]

JetBlue founder David Neeleman has it right in the coal to gasoline

http://www.libertypost.org/cgi-bin/readart.cgi?ArtNum=156655

Guaranteed funding at $35/brl would save a bundle of taxpayer money. Add to that the savings to the consumers. Add to that the reduction in dependence on foreign oil. A win-win situation all around.

 

[Ishmael]

Aye...

History shows again and again how Congress acts out the folly of men...
Go go, Washzilla!

Remember Pogo bro. Congress is merely reacting to the demands of the activist few and doing so in their own self-interest. The 'Blues' got to go back and tell their city dwelling supporters that 'we're reducing dependence on foriegn oil' while the corn belters got to go back and tell their constituents to, "plant corn, and lots of it, you're going to get rich boys." (And between the subsidies and the price of corn the corn belters are getting rich. I wonder if congress is going to have hearings about the 'obscene profits?') Meanwhile everyone else gets screwed.

Who'd of guessed that the cost of your next HDTV was tied to the price of corn?

Ishmael

 

[Ishsubconscious]

Remember Pogo bro. Congress is merely reacting to the demands of the activist few and doing so in their own self-interest. The 'Blues' got to go back and tell their city dwelling supporters that 'we're reducing dependence on foriegn oil' while the corn belters got to go back and tell their constituents to, "plant corn, and lots of it, you're going to get rich boys." (And between the subsidies and the price of corn the corn belters are getting rich. I wonder if congress is going to have hearings about the 'obscene profits?') Meanwhile everyone else gets screwed.

Who'd of guessed that the cost of your next HDTV was tied to the price of corn?

Ishmael

That is what I should do. I should have a corn roast. Nothing better than a corn roast.

Ishsubconscious

 

[Ishmael]

JetBlue founder David Neeleman has it right in the coal to gasoline

http://www.libertypost.org/cgi-bin/readart.cgi?ArtNum=156655

Guaranteed funding at $35/brl would save a bundle of taxpayer money. Add to that the savings to the consumers. Add to that the reduction in dependence on foreign oil. A win-win situation all around.

Bobby Byrd would back that.

Ishmael

 

[Ishsubconscious]

Bobby Byrd would back that.

Ishmael

I would invite you to my corn roast. I have corn holders that look like little corn cobs.

Ishsubconscious

 

[Ulaven_Demorte]

JetBlue founder David Neeleman has it right in the coal to gasoline

http://www.libertypost.org/cgi-bin/readart.cgi?ArtNum=156655

Guaranteed funding at $35/brl would save a bundle of taxpayer money. Add to that the savings to the consumers. Add to that the reduction in dependence on foreign oil. A win-win situation all around.

Producing and burning Coal-to-liquid fuel produces nearly twice the emissions of burning diesel and almost twice as much as burning gasoline. Thats not really an answer, unless you really don't give two shits about pollution.

Researchers at M.I.T. estimate that it will cost $70 billion to build enough coal-to-liquid plants to replace 10 percent of American gasoline consumption. Thats one hell of an investment for a very small reduction.

 

[Ulaven_Demorte]

Funny how you singled out part of one sentence from an entire article to try to drive home a point but leave out the rest of the possible explanation. Of course it's all about ethanol..

 

[Lavared]

I found it interesting that the government fears students would protest over expensive pork.

I've always seen pigs as a relatively inexpensive meat to grow at home. They'll eat anything and are pretty self-sufficient.

I too, come from a pork-loving society and country ham, liver pudding and sausage have gone sky high.

 

[Cap’n AMatrixca]

Remember Pogo bro. ...
Who'd of guessed that the cost of your next HDTV was tied to the price of corn?

Ishmael

We were too heavy to take off, so we dumped our fuel...

 

[Fagin]

Bobby Byrd would back that.

Ishmael

Now to get at least 51 Senators and 216 Representatives, and one President to back it.

 

[Cap’n AMatrixca]

I found it interesting that the government fears students would protest over expensive pork.

I've always seen pigs as a relatively inexpensive meat to grow at home. They'll eat anything and are pretty self-sufficient.

I too, come from a pork-loving society and country ham, liver pudding and sausage have gone sky high.

A government not of the people fears the people. I don't even find it mildly interesting. And food prices are going to go even higher. Tequila too...

But Ish, Congress gave me a CREDIT when they interefered with the entertainment market...

Man, I'll do ANYTHING for a credit or tax-break! Just like my Congressperson will do anything for a vote, even lie. And she gets so defensive when you call her a liar, why, why, why she's a congresswoman, above reproach, and I'm just a dirty, low-down citizen sent in by the Democrats to ruin her town-hall meeting...

 

[Cap’n AMatrixca]

Now to get at least 51 Senators and 216 Representatives, and one President to back it.

Fiddy. Timmy's still on holiday...

 

[Lavared]

And food prices are going to go even higher. Tequila too...

No, no, not tequila! We were counting on the tequila to help offset the anguish of no longer being able to serve country ham with red-eye gravy.

We are all completely doomed.

 

[Ishmael]

Producing and burning Coal-to-liquid fuel produces nearly twice the emissions of burning diesel and almost twice as much as burning gasoline. Thats not really an answer, unless you really don't give two shits about pollution.

Researchers at M.I.T. estimate that it will cost $70 billion to build enough coal-to-liquid plants to replace 10 percent of American gasoline consumption. Thats one hell of an investment for a very small reduction.

That appears to be old data.

First of all WRT pollutants, synoil has none of the trace pollutants of refined petroleum. The heavy metals, sulpher, etc are sequestered during refining. Further, the burn cleaner in current technology engines. These trace pollutants and lack thereof in the fuel as used are rarely factored in.

I have no idea what is factored into the MIT prospectus. Permitting and legal as well? Capitalization for modern coal to fuel plants has been estimated to be as MUCH as $2000/bbl/day. Current US usage is about 20 million bbls/day of petroleum so reaching 10% should be in the neighborhood of $4 billion capitalization. Or $40 billion for 100%. However those numbers do NOT factor in the sequestering of the facilities CO2 output. I find it hard to believe that that would drive the cost up by more than an order of magnitude.

Ishmael

 

[Cap’n AMatrixca]

Corn pays more than aguave...

Good thing corn doesn't do well in Idaho. Cheap Vodka!

Wow, speaking of which, what about the average Russian when the price of potatoes goes up? Will they riot?

 

[Fagin]

Producing and burning Coal-to-liquid fuel produces nearly twice the emissions of burning diesel and almost twice as much as burning gasoline. Thats not really an answer, unless you really don't give two shits about pollution.

Researchers at M.I.T. estimate that it will cost $70 billion to build enough coal-to-liquid plants to replace 10 percent of American gasoline consumption. Thats one hell of an investment for a very small reduction.

You are only mentioning part of the studies, the environmental groups are complaining that coal to gasoline plants at best would only slightly reduce output and at worst double output of greenhouse gases. Not enough to satisfy them. They don't like the idea and concept of how gases would be captured.

10% reduction in oil used relates to 1/3 of imported oil. This would drop the price of the remaining 90%. A big difference, not slight. The Air Force alone would use 3/4 billion gallons of coal produced jet fuel a year, under a current proposal, figure a savings of around a buck or so would equate to nearly a $1B a year. Add in savings from the enormous amount of fuel other Federal government agencies.The subsidized cost of construction of the plants would be recouped in little time. The costs of construction are completely negated by the savings. That's a small investment for a large savings, not the other way around.

Don't forget additional conventional oil refineries, which are needed, are $1B apiece.

 

[Cap’n AMatrixca]

It's still not the answer and we're still getting in John Galt's way and we'd better stop before he quits in frustration. It's The Invisible Hand...