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Following is a question by the Hon Frederick Fung kin-kee and a reply by the Secretary for Food and Health, Dr York Chow, in the Legislative Council today (November 5)
Question:
Although the price of live pigs from the Mainland has recently dropped by 20% to 30% from the peak price recorded early this year, the retail price has not dropped correspondingly, resulting in a situation of "quick-in-going-up but slow-in-coming-down". The Food and Health Bureau has called on the public to consider buying other meat products such as chilled pork. Besides, the report of the Consumer Council's Study on Live Pig Pricing on August 7 came up with similar findings and pointed out that a small number of buyers were involved in making unusual "aggressive" bids in the auction of live pigs, and the trade alleged that these are acts of market-boosting by buyers of large syndicates or big supermarkets. In this connection, will the Government inform this Council:
(a) of the average monthly wholesale, import and retail prices for fresh and chilled pork from the Mainland in the past ten months, and the changes in price, including whether there is a corresponding drop of the retail price; whether the retail price of chilled pork has dropped along with the import price; whether the difference in the retail price for fresh and chilled pork has widened; if not, whether it has examined if such situation reflects that similar price-boosting activities are happening in the trading of chilled pork;
(b) whether it has studied why the price of fresh pork from the Mainland has not dropped correspondingly; if it has, of the study results; whether it has uncovered cases of buyers or retailers engaging in price-boosting activities for profiteering; if it has, what immediate counter measures are taken by the authorities so as to urge the retailers to lower the price expeditiously; and
(c) whether it has studied if any structural problem exists at any level of the supply chain of pork from importing to retailing, resulting in situations such as the market becoming less competitive and conducive to price-boosting; if it has, of the study results and the long-term improvement measures to be put in place; if not, whether it will examine ways to reform the pork market to ensure that consumers benefit in the end?
Reply:
President,
(a) The wholesale price of live pigs (i.e. the price of live pigs paid by live pig buyers to live pig import agents) and the retail price of fresh pork in the past ten months are shown in Annex 1.
For chilled pork, as the Administration does not keep statistics on the wholesale price of chilled pork, we can only calculate the import price (not the wholesale price) of chilled pork based on the information on the import quantities and value of chilled pork.
The import and retail prices of chilled pork from the Mainland in the past ten months are shown in Annex 2.
Difference in the retail prices of fresh and chilled pork is shown in Annex 3.
As shown by the price information, the retail price of fresh pork did not drop along with the wholesale price of live pigs. According to the figures in October, the average wholesale price of live pigs was $10.4/catty, a drop of over 23% when compared with the wholesale price of $13.6/catty in January. However, the retail price in October was 2.2% higher than that in January.
For chilled pork, adjustment in the import price has been generally consistent with that in the retail price. We do not find any substantial deviation between the two.
A comparison of retail prices of fresh pork and chilled pork shows that the retail price of chilled pork is more stable. As such, any surge in the retail price of fresh pork will widen the difference between the two retail prices. For instance, while the retail price of fresh pork increased to $40.2/catty in June, the retail price of chilled pork still remained at $28.6/catty. As a result, the difference widened from $10/catty to $11.6/catty. With the recent drop in retail price of fresh pork, such difference narrows down to $10/catty.
(b) We have approached retailers to find out why the retail price did not drop along with the wholesale price. Some retailers explained that they were unable to lower the retail price because their operation cost had increased as a result of the increases in transport cost, staff salary and rental.
The policy objective of the Administration is to maintain a stable food supply and ensure food safety. Food price should be determined by the free market. What the Administration can do is to improve market transparency and enhance market efficiency so as to help consumers make a wise choice.
We have introduced measures to improve the flow of market information. Starting from mid-January this year, we have made public on a daily basis the quantity and auction price of live pigs arriving at the slaughterhouse and the estimated number of live pigs to arrive at the slaughterhouse the following day. Our aim is to enable the live pig buyers, retailers and the public to have a clear picture about the supply of live pigs.
At present, the Consumer Council releases information on the retail prices of various products and food (including fresh pork) on a weekly basis for reference by the public. Later this month, the Consumer Council will also release information on the price of goods in wet market so as to enhance price transparency.
(c) The Consumer Council conducted a study on the local live pig market and price of live pigs earlier this year. The study report, which was published in August, did not find any direct evidence of restrictive practices or abuse of market power that hindered the competitive environment of the live pig trade. It was found that as a whole the live pig bidding process was open with improved information transparency in the operation of live pig auction market. As noted in the report, there were many retail outlets selling fresh pork. Big supermarkets only accounted for a small share of the fresh pork market. In other words, no single entity has a dominant share of the market.
Although the report observed that a few live pig buyers with a very small market share were involved in aggressive bidding that could have caused the maximum auction price to substantially deviate from the average auction price in the market, we have not detected any unusual fluctuation in the auction price of live pigs since the Government made public the auction price from mid-January this year.
Ends/Wednesday, November 5, 2008
Issued at HKT 12:12
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