(Yicai Global) Feb. 9 -- China plans to start stockpiling pork for the first time this year to halt an alarming slump in prices, after the average hog-to-grain price ratio fell below the level needed for farmers to break even.

The ratio between live pigs and grain prices has stayed between five and six for the last three weeks, and it needs to be at 5.8:1 otherwise farmers are losing money, the National Development and Reform Commission said yesterday.

China is replenishing its national pork reserves to stabilize hog supply, avoid drastic price changes and give breeders more confidence, Lin Guofa, research director at agricultural product procurement website 16988.com, told Yicai Global.

Pork prices have been sliding since February last year due to weaker demand, larger herds and the impact of the Covid-19 pandemic, according to the Ministry of Agriculture and Rural Affairs. Yet, rearing costs remain high and farmers' losses have hit new records in some areas. In 2021, China replenished its reserves twice, in July and October, to help bolster prices.

Domestic pork prices are at risk of falling sharply in the first half, said Zhu Zengyong, researcher at the Institute of Animal Sciences of the Chinese Academy of Agricultural Sciences. Although prices are expected to rally in the second half, the rebound may be mild.

There is unlikely to be a turning point until 2023 at the earliest, Zhu said. There is a large number of fertile sows and pork production is expected to climb slightly this year to 56 million tons from 55 million last year.

Hog breeders need to focus more on cost management, Lin said. They need to gauge the market better, and not blindly raise pigs with target slaughter weights and then sell them in a panic as prices tumble. Rather they should increase efficiency and wait for the next boom.

Editor: Kim Taylor