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A Case Study of China’s Commercial Pork Value Chain
Jacinto F. Fabiosa, Dinghuan Hu, and Cheng Fang

MATRIC Research Paper 05-MRP 11
August 2005

Midwest Agribusiness Trade Research and Information Center Iowa State University Ames, Iowa 50011-1070

Jacinto Fabiosa is with the Center for Agricultural and Rural Development at Iowa State University. Dinghuan Hu is with the Institute for Agricultural Economics at the Chinese Academy of Agricultural Sciences, Beijing, China. Cheng Fang is with the Food and Agriculture Organization, Rome Italy.
This paper is from the project “Cost of Production, Productivity, and Comparative Advantage of Feed and Livestock Industry: Comparison of Midwest of the United States and
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The per capita annual pork consumption level in mainland China, which is at 33.8 kilograms, is among the highest in the world; only Hong Kong, the European Union, and Taiwan, countries or regions with relatively higher per capita incomes, are higher. With sustained economic growth in the last decade in the range of 7.11% to 14.24% and with limited land area for feed grain production, China was expected to become a major importer of pork when, with its accession to the World Trade Organization, it would drop its duties on pork from 20% to 12%, and when it would allow foreign participation in pork distribution in the domestic market. But so far China has remained a small net exporter, averaging 40,000 metric tons from 1999 to 2003. Market penetration by foreign suppliers is believed to be modest because a large portion of China’s pork supply is still produced by backyard producers, whereby surplus family labor is mostly used, investment in animal housing structure is very limited, and feeding practices utilize table scraps, vegetables, green fodder, and unprocessed grains and oilseeds, keeping production costs low. In the last decade, the share of backyard producers has declined and growth in hog production has come mostly from specialized households with much larger operations compared with backyard producers, with 30 to 500 hogs in annual production. These farms still depend mostly on family labor
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