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As pork prices soar, Chinese put brakes on corn for ethanol
With a famine less than 50 years in its past, China remains sensitive about using food for fuel.
By Peter Ford | Staff writer of The Christian Science Monitorfrom the May 31, 2007 edition
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Beijing - Ethanol production has put the Chinese government in an unpleasant bind, as fears rise that the environmentally friendly gasoline additive is also fueling politically dangerous increases in the price of food – particularly pork, a key staple.
With the ethanol industry gobbling up a growing share of China's corn harvest, authorities have stomped on the brakes to slow what one official report calls "blind" investment in distilleries.
"China cannot sacrifice food security for energy: that seems to be the majority view in the government now," says Zhang Zhongjun, deputy head of the Beijing bureau of the United Nations' Food and Agriculture Organization (FAO).
Prime Minister Wen Jiabao offered the latest sign of government concern when he made a highly publicized visit last weekend to a piggery and a meat market in Xi'an, about 750 miles southwest of Beijing. The price of pork has gone up by 29 percent over the past year and the price of live pigs by 71 percent, according to the Agriculture Ministry.
In a country where people eat more pork than anywhere else in the world except Germany, that jump in the price of a staple has dominated recent headlines and sparked grumbling.
"The government is going all out to ensure the supply of pork and keep it affordable," Mr. Wen reassured a supermarket crowd, according to the Xinhua state news agency.
"The Chinese government is very sensitive to this," says Hu Xingdou, a political analyst at the Beijing Institute of Technology. "They are afraid that rising prices will affect social stability. They have not forgotten that inflation was an important reason for people to get involved in the events of 1989," when students led massive protests in Tiananmen Square.
Industry analysts blame the price rises partly on a shortage of pigs in the wake of outbreaks of "blue-ear disease" around China.
Though the authorities have publicly admitted to only 300 deaths, they have privately reported 100,000 mortalities to international agencies, and even that figure is not credible, say experts.
"Several million pigs may have died, we just don't know," says one international expert familiar with the situation. Chinese farmers raised 465 million pigs last year.
At the root of the problem, though, say agriculture analysts, is the rising cost of pig feed, which is comprised mostly of corn. Despite a bumper crop last year, corn prices have risen by nearly 30 percent over the past nine months on the Dalian Commodities Exchange.
That, says Luo Yunbo, head of the food-science department at China Agriculture University, is because "corn is being sought for industrial purposes, such as ethanol, not just agricultural use."
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