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SCMP Reporter

Beijing housewife Li Wendi wandered from one pork booth to another in a Xuanwu district  market for 20 minutes.

She asked the prices and was offered unsatisfactory deals before giving up on the idea of buying ribs - the prices were just too high.

Ms Li  was halfway home when she decided to turn back and buy the pork for the health of her seven-year-old girl. 'I have not bought any pork this month,' she said. 'It's not necessary for adults to eat pork every day, especially when the price is up. Anyway, it's still affordable.'

Ms Li and her family live on her bus driver husband's 2,000 yuan monthly salary. They are the kind of people the country's leaders are worried will suffer  as a result of soaring pork prices.

Ministry of Agriculture figures show pork prices rose 29.3 per cent year on year last month, while the cost of eggs rose 30.9 per cent. In some cities, the pork price has doubled since the start of this month.

Economists have predicted the increases will fuel inflation, while political analysts have said their impact, especially on  low-income earners, could add to social unrest ahead of a key party meeting this autumn.

The 17th party congress will see a major reshuffle of the top leadership and consolidation of the power of President Hu Jintao  and Premier Wen Jiabao .

Highlighting the seriousness of the problem, Mr Wen visited a pig farm and wet market in  Shaanxi province  last weekend, urging officials 'not to lower their guard'.

'Some rises in pork prices can be good motivation for pig farmers,'  Mr Wen  told Xinhua. 'We hope farmers can make money raising pigs affordable to urban residents, especially low-income families.'

Ms Li said she could deal with higher pork prices if they did some good for farmers.

'Last year, the  price for pork ribs was 5 yuan per jin [500 grams],' she said.  'I think it was cheap. If the price rises help those poor farmers, I won't complain.  But if the price keeps rising, we will cut back further.'

However, farmers are not expected to benefit much from the increase, given that many have lost their livestock during the past year to  a fever. The price of feed corn has also been rising,  spurring higher pork prices.

Huang Minggui , a worker at a breeding  farm in Daxing district's  Li village, said most farmers had not recovered from the devastating blow dealt by the fever. 'No one knew what the disease was,' Mr Huang said. 'There was no medicine and no vaccine. Farmers watched helplessly as their pigs died.'

The agriculture ministry had said on its website  that the 'high fever' disease, discovered in 15 provinces since May last year had killed more than 20 million pigs and the death rate was between 40  and 80 per cent.

'Many farmers lost all their money to the disease and some still have debts to banks,' Mr Huang said. 'They have fears. Even when the market is good, it takes time for them to shed the financial and psychological burdens.'

Sun Fengzhi , a Shunyi district  pig farm director, said the disease was the most serious she had seen in pigs.

'It was more deadly than foot-and-mouth disease,' she said. 'There was no vaccine available until last month when agriculture authorities asked us to vaccinate pigs.'

Ms Sun said another reason for the pork price rises was the cost of feed.

'Feed corn accounts for 60 per cent of pig-breeding costs,' she said. 'In 2000, corn was 0.35 yuan per jin and pork was 3.8 yuan per jin. Now, corn is 0.72 yuan per jin and pork is 6.3 yuan per jin. Corn prices are rising faster than pig prices, which also discourages pig farmers.'

The mainland's corn output hit a record 144 million tonnes last year, of which 2  million  was exported. Domestically, 98 million tonnes was used as feed and nearly 30 million tonnes was bought by processing plants, with the remainder eaten,  the China Grain and Oil Information Centre  said.

Jilin Grain and Oil Economic Research Institute deputy director Liu Xiaoran   said corn prices had been recovering from a downturn, thanks to robust demand from processing plants where corn was made into ethanol, a petrol substitute, and starch, amino acids and hundreds of other products.

The capacity of plants had increased by 4 million to 5 million tonnes a year in recent years.

Although that was good news for the economy and corn farmers,  the mainland should prevent redundant investment in processing capacity because it could threaten the security of grain supplies, Mr Liu said.

In 2004, mainland authorities approved the establishment of four plants in Jilin , Heilongjiang , Henan  and Anhui  to convert rotten corn into ethanol in an attempt to further research on the  fuel substitute and help corn farmers.

One tonne of ethanol requires 3.3 tonnes of corn.   Ethanol is used in Jilin, Liaoning , Heilongjiang, Hubei , Hebei , Henan, Anhui, Shandong  and Jiangsu. The National Development and Reform Commission  plans to increase the existing plants' combined capacity from 1 million tonnes to 5 million  by 2010.

'As China banned new investment projects in ethanol production at the end of last year, the extra capacity will not be a big problem in terms of grain safety. However, the rotten corn has almost been used up,' Mr Liu said.

'There is no doubt the plants will later rely heavily on good corn. And other processing plants are expanding quickly. While grain output is unlikely to increase substantially, it's time for China to put priority  on human consumption, livestock feed and processed products.'

Mr Liu called for taxes, credits and other measures to 'adjust the processing sector before it threatens grain safety'.

Feng Lichen , general manager of China Maize website, an information provider for the Dalian  Commodity Exchange,  said farmers planned to increase land  for corn cultivation but might fall victim to forecasts that are too optimistic.

He said farmers should be cautious.

'The mainland's corn market was dominated by upbeat sentiment when  corn demand in the US was on the rise,' Mr Feng said. 'However, on the mainland, many alcohol plants have had a hard time surviving now that China has cancelled export tax rebates. And there are speculators who are happy to see bubbles.

'Farmers are disadvantaged groups in access to information. When they hear the price will go up, it's already too late.'

Swine decline

The Ministry of Agriculture said the number of hogs in China at the end of March was 467m



A few winners and many losers as pork prices soar