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China hog supplies to stay tight in 2016 as more pig farms close

BEIJING - China's hog supplies are likely to stay tight this year as more provinces shut down breeding firms due to tough environmental rules, keeping pork prices high in the world's top consumer and producer of the meat, the Ministry of Agricult...

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A butcher returns change to a customer at a market in Beijing. (Reuters)

BEIJING - China's hog supplies are likely to stay tight this year as more provinces shut down breeding firms due to tough environmental rules, keeping pork prices high in the world's top consumer and producer of the meat, the Ministry of Agriculture said.

Hog herds in China have been depleted over the past 37 months as rules - imposed in the wake of food safety scandals - banned breeding activity around major rivers and cities, while restocking by middle-sized farms has been limited by poor cash flows brought about by years of losses.

"Hog farms are cautious about restocking while the current breeding capacity is still at a low level," the ministry said in a statement posted on its website. ( www.moa.gov.cn )

Domestic retail hog prices surged 35 percent on year by the middle of this month to near a record high of 29 yuan ($4.45) per kg, which was reached in February before the Lunar New Year celebrations, the ministry said late on Thursday.

The higher prices were driven by a drop in local hog herds, particularly in 2014, the ministry said, adding that more provinces were closing down pig farms due to the country's tough new environmental rules.

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A wave of new farm closures has taken place in the provinces of Hunan, Shandong, Hebei and Shaanxi, the ministry said, after shutdowns earlier in the richer coastal provinces of Fujian, Jiangsu, Zhejiang and Guangdong.

More and more smallholder farms have been phased out due to low returns, it said.

The ministry, however, does not expect any "explosive rise" in prices because domestic pork consumption has not shown significant growth, it added.

A U.S. dollar equaled 6.5183 Chinese yuan Saturday.

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