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Monday, Sep 28, 2020

US chilled pork to help cool HK inflation

Share price of WH Group that sells the US chilled pork in Hong Kong surged on Friday
A new supply of chilled pork from the United States is expected to help ease inflationary pressure in Hong Kong, which has suffered from rising pork prices in mainland China this year.

The United States Meat Export Federation (USMEF) said in a media briefing Thursday that the first batch of US chilled pork had arrived in Hong Kong by sea and would be on sale in more than 100 supermarkets including ParknShop and Wellcome from Friday.

It took one year to prepare for the launch of this new supply channel, the federation said.

Joel Haggard, a senior vice-president of USMEF, said US pork was competitively priced as it was sent in bulk by ships in 20 to 25 days. Vacuum stored between zero and four degrees Celsius, the pork can remain fresh for 55 days. He said the live pork auction price in the US was about 20% of that in Hong Kong.

He said the costs were high in the past as US pork was transported by plane.

Although the import prices for US pork in China grew 72% due to an increase in tariffs, the US continued to export its pork to meet the huge demand in China, he said, adding that the US remained the world’s largest pork exporter and the largest supplier of chilled pork in Asia.

On Friday, the average live pig auction price was HK$2,450 (US$314) per 100 catties, 17% down from HK$2,946 on Thursday, according to the Food and Environmental Hygiene Department. In the past two months, the figure was fluctuating at about HK$3,000, double from the HK$1,500 at the beginning of this year.

Hanscom Smith, the Consul General representing the United States to Hong Kong and Macau, and Hugo Leung, a famous Hong Kong chef, also attended a media briefing in which Smithfield Foods, a Virginia-based meat-processing company and a wholly-owned subsidiary of WH Group of China, showed its chilled pork products and some Western and Chinese dishes.

According to a check by Asia Times, the US chilled pork, exported by Smithfield Foods, had been on the shelves of some Hong Kong supermarkets earlier this week.

In ParknShop, the retail price of the Smithfield chilled pork was HK$43 per pound, compared with HK$75.7 per pound for the mainland pork. In Wellcome, the mainland chilled pork was selling for HK$72.7 per pound. In a wet market, the fresh pork imported by three licensed wholesalers – Ng Fung Hong, Guangnan Hong Co Ltd and Hong Kong Agriculture Special Zone Ltd – from the mainland was mostly priced at more than HK$80 per pound.

The share price of WH Group increased 2.3% to HK$8.15 on Friday while the Hang Seng Index, a benchmark of the Hong Kong stock market, surged 693 points, or 2.57%, to close at 27,687 on the same day the US and China were reportedly going to sign a trade deal.

Mainland pork sellers did not see a boost in their share prices. Guangnan (Holdings) Ltd, which fully owns Guangnan Hong, closed unchanged at 77 HK cents on Friday. Yurun Food Group Ltd, another Hong Kong-listed pork seller, was also flat at 82 HK cents.

Lai Wai-hung, the owner of Hung’s delicacies, a Chiuchow cuisine restaurant, told Apple Daily that the wholesale price of pork from mainland China had grown 56% to HK$1,400 from HK$900 per 25 kilograms this year.

Lai said his restaurant had changed to use pork from European countries such as the Netherlands. He said if pork prices kept surging in 2020, his restaurant would have to increase menu prices.

A Hong Kong pork seller surnamed Liu was quoted as saying in a Wen Wei Po report that chilled pork had a better texture than frozen pork as it went through a tenderization process. Liu said a lot of sellers would join to distribute the US chilled pork due to its competitive price.

Genelyn Cadungog, a domestic worker from Manila, said she had checked many shops and found the Smithfield pork in a ParknShop in San Wai. She said the cheaper pork met the requirements suggested by her 90-year-old employer and was good for stir-frying. She also bought one pack with her own money and prepared to make Filipino pork adobo to share with her friends on Sunday.

ParknShop in San Wai. She said the cheaper pork met the requirements suggested by her 90-year-old employer and was good for stir-frying. She also bought one pack with her own money and prepared to make Filipino pork adobo to share with her friends on Sunday.

People used to buy fresh pork in wet markets. Photo: Asia Times
A Hong Kong woman surnamed Lee said chilled pork might not be as tasty as fresh pork, but it was suitable for some dishes such as braised belly pork and fried pork chop. She said she preferred to buy fresh pork from the wet market for Chinese soup.

Last Christmas, the Hong Kong government announced it was stopping imports of live pigs from Guangdong province for several weeks due to reports of African swine fever in hogs. In May this year, it ordered the destruction of 6,000 pigs after some tested positive to African swine fever.

Apart from this, the intensifying US-China trade dispute also resulted in a tariff hike in China against US agricultural products, causing a rise in pork prices in China.

In November, China’s consumer price index (CPI) jumped to 4.5%, from 3.8% in October, according to official data provided by China’s National Bureau of Statistics. The hike in the CPI was mainly driven by food prices, which grew 19.1% year on year last month. Pork prices rose 110.2% year on year, contributing 2.64 percentage points to the 4.5% CPI growth.

Larry Hu, Head of Greater China Economics at Macquarie Group, said in a report on November 18 that if pork prices had another round of rallies, the People’s Bank of China could tighten its monetary policy again after it adopted a dovish approach in October.

Such inflationary pressure has also spilled over into Hong Kong. CPI in the city grew 3.1% in October from a year ago, according to the Census and Statistics Department. Food prices increased 13.3% for the same period, mainly due to rising pork prices.

Analysts believed that the new supply of the US chilled pork to Hong Kong would help lower pork prices and the CPI in the city. Besides, China will also stabilize its pork prices by importing more pork from the US and using its pork reserves.
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