China is likely to stop providing subsidies to hog farmers as previous government interventions in the market have failed to curb sharp fluctuations in pork prices, the Economic Information Daily reported Monday, citing sources close to policy-makers.
In the past, the government offered subsidies to pig farmers to stabilize pork prices, but the move has only had the opposite effect. The government assistance has attracted speculators in the market and sparked volatility in pork prices as producers frequently entered and exited the market, the report said.
Pork prices have experienced sharp fluctations since 2010, with the highest at 20 yuan per kilogram and the lowest at 9 yuan, representing a variance of more than 200 percent.
Professional pig raisers said government interventions have made it hard for them to predict price trends, and have called on the government to allow market forces to decide hog prices.
Instead of providing subsidies, the government can help pig farmers by introducing preferential policies on land and financing.
Pork, which represents about 70 percent of meat consumption in China, is the largest single component in the country’s consumer price index basket, according to the newspaper.
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