Beijing is increasing subsidies to pig farmers in an attempt to contain soaring pork prices that are adding to inflation woes.
The State Council decided that farmers would get 100 yuan (HK$120) for every reproductive female pig, along with other subsidies, to stimulate growth in pig supply.
Some of the subsidies were previously offered from 2007 to 2008, the last time the mainland encountered high inflation triggered by pork prices, an important gauge of food prices. The latest decision followed the National Bureau of Statistics saying on Saturday that the consumer price index in June rose to a three-year high of 6.4 per cent.
Instead of just rewarding local governments of 421 major porkexporting counties, cash incentives would be offered to 500 of them.
Other preferential policies include giving subsidies and compensation to pig farmers and butchers to pay for the treatment of sick animals and to offset losses resulting from any culling over diseases. The subsidy for killing a pig because of anti-epidemic purposes will be raised from 600 to 800 yuan per pig.
However, some analysts and pig farmers don't think the measures will encourage farmers to raise more pigs, which would help curtail price rises.
Feng Wei, a farmer who raises about 1,000 pigs in Jining, Shandong province, said the 100-yuan subsidy for reproductive female pigs did not help farmers much in 2007 and 2008. He said at that time, when pork prices reached record highs, farmers expanded their businesses because of the subsidies, but they ended up losing money.
'Usually you can't make a profit until 10 months after you buy more female pigs, but by that time, the price usually drops,' he said. 'After the ups and downs since 2007, pig farmers are much more rational, and I don't think the measures will change anything.'
He Zhonghua, an analyst at industry website chinameat.cn, said that instead of administrative intervention, the government should put more effort into letting big farms expand so that the market could become more stable. 'The latest round of price rises were triggered by short supply after a large number of small-sized pig farms got out of the business,' he said.
The average wholesale price of fresh pork hit a historic high of 26 yuan per kilogram last week.