LCQ17: Pork price
*****************

     Following is a question by the Hon Frederick Fung and a written reply by the Secretary for Food and Health, Dr York Chow, in the Legislative Council today (November 23):

Question:

     It has been reported that the statistics of the Ministry of Commerce of the Mainland revealed that the nationwide pork prices have been decreasing continuously since October this year, and the decreasing rate accelerated in late October, and as at October 30, the weekly average purchase price of live pigs has dropped for the sixth consecutive week, down by 9% in aggregate. In addition, Ng Fung Hong Limited (NFH) announced earlier a 23% downward adjustment in the wholesale price of live pigs supplied to Hong Kong, but some local pork retailers indicated that there is limited room for downward adjustment of the current retail pork price, and rebutted that live pigs offered at a discount of 20% to 30% in price by NFH are of poorer pork quality. On the other hand, some members of the trade also indicated that as the prices of live pigs have gradually dropped, there is definitely room for downward adjustment of the retail pork price, and the pork retailers were only using various excuses to not agree to reduce the price.  In this connection, will the Government inform this Council:

(a) of the average monthly wholesale, import and retail prices of fresh and chilled pork imported from the Mainland since January this year, as well as the changes in such prices; of the difference in the retail prices of fresh and chilled pork;

(b) whether there has been a corresponding downward adjustment of the retail price of fresh pork imported from the Mainland as a result of the considerable drop in the wholesale price for live pigs supplied to Hong Kong recently; if not, whether the authorities have looked into the reasons for that, and have proactively investigated why the drop in the wholesale price has not been reflected in the local retail pork price, as well as whether there are members of the trade profiteering through price-gouging; what measures the authorities have in place to urge pork retailers to lower the pork price as soon as possible, and to curb members of the trade profiteering through price-gouging, so as to enable the public to buy pork at a reasonable price that reflects the cost; and

(c) whether the authorities have looked into the aforesaid situation of poorer quality of pork sold at a discounted price as mentioned by local pork retailers, and have taken follow-up actions?

Reply:

President,

     The policy objective of the Government is to maintain a stable supply of various foodstuffs and to ensure food safety. Food price has always been determined by the free market. It is the Government's responsibility to improve market transparency and enhance market efficiency so as to help consumers make an informed choice.  

     My reply to the various parts of the question is as follows:

(a) The wholesale price of live pigs (that is, the price of live pigs paid by live pig buyers to live pig import agents) and the retail price of fresh pork (i.e. fresh lean pork mentioned below) from January 2011 to the present are shown in Annex 1. However, the wholesale price of live pigs is not equal to the wholesale price of fresh lean pork because the weight of a live pig includes not only the weight of pork, but also that of the head, bones, skin and offals.  Auction price of live pigs is determined by auction.

     As regards chilled pork, the Government does not compile statistics on the wholesale price of chilled pork. We can hence only work out the import price of chilled pork based on the information on the import quantities and value of chilled pork declared for customs purposes. This is however not the wholesale price. The import and retail prices of chilled pork from January 2011 to the present are shown in Annex 2.

     The difference in the retail prices of fresh and chilled pork is shown in Annex 3.

(b) As shown in the price information, the wholesale price of live pigs had been on a rising trend since January 2011 but started to turn downward in October. The change in the retail price of fresh lean pork generally follows that of the wholesale price of live pigs, but at a lesser extent. Take the figures in July as an example, the average wholesale price of live pigs was $16.8/catty, an increase of 35.5% over that in January, while the average retail price of fresh lean pork was $41.6/catty, marking an increase of 22.4% when compared with that in January. In October, the average wholesale price of live pigs was $15.4/catty, an increase of 24.2% over that in January, and the average retail price of fresh lean pork was $42.1/catty, showing an increase of 23.8% when compared with January.

     As regards the prices of chilled pork, the latest statistics for September showed that the average import price was $15.6/catty, representing an increase of 36.8% when compared with that in January. The average retail price of chilled lean pork for the same month was $36.5/catty, representing an increase of 38.8% over that in January.

     Since January 2011, the difference in the retail prices of fresh and chilled pork has been narrowing from an average of $7.7/catty in January to an average of $5.6/catty in October.

     We have approached the trade (including live pig import agents, buyers and pork retailers) to find out more about the composition of pork price. The trade advised that in addition to the purchase price, other operational costs such as transport cost, wages of workers and rental had to be considered in fixing the price of pork. When the wholesale price of live pigs keeps rising, retailers may not be able to pass on all of the increase to consumers. They will also take other factors into consideration, such as the affordability of the public, etc. Likewise, when the wholesale price of live pigs goes down, retailers will also need to take into account other factors including the operational cost, and therefore may not be able to make the same level of reduction at the same time.  Such commercial considerations are no different from those of other trades.

     Live pigs for public consumption mainly come from the Mainland (the rest are supplied by local farms). To maintain a stable supply, the Food and Health Bureau has all along liaised closely with the relevant Mainland authorities and live pig import agents. In July 2007, the Food and Health Bureau and the State Ministry of Commerce agreed after discussion that market for supplying live pigs to Hong Kong should be opened up for healthy competition.  Subsequently, the number of agents for supplying Mainland live pigs to Hong Kong increased from one to three in October 2007.

     To maintain a stable supply of food and provide consumers with more choices, the Government also encourages the trade to explore different sources of food supply. In August 2006, the trade started importing chilled pork from the Mainland to offer the public an alternative. The consumption of chilled pork increased from around 4,600 tonnes in 2006 to around 15,000 tonnes in 2010.

     We have introduced measures to improve the flow of market information. Starting from mid-January 2008, we have announced online on a daily basis the quantity and auction price of live pigs arriving at the slaughterhouse on the day and the estimated number of live pigs to arrive at the slaughterhouse on the following day. In September 2011, the Food and Environmental Hygiene Department (FEHD) further enhanced the relevant website by providing more detailed information for the current month and the past 12 months. This enables the live pig buyers, retailers and the public to have a clear picture about the supply of live pigs.

(c) All live pigs supplied to Hong Kong must be imported from the registered farms approved by the State General Administration of Quality Supervision, Inspection and Quarantine for supplying live pigs to Hong Kong. They are subject to stringent monitoring by the Mainland animal quarantine authorities and have to pass inspection before delivery to Hong Kong. The FEHD has been monitoring the sources in the Mainland supplying live pigs to Hong Kong.  There was no substantial change regarding such sources before and after October this year.  The FEHD also performs ante-mortem and post-mortem inspections on all imported live pigs, so as to ensure that they are wholesome and fit for human consumption before delivery to markets.

Ends/Wednesday, November 23, 2011
Issued at HKT 17:56

NNNN