Study On The Fluctuation Of Hog Price In China

As an important part of the traditional diet in China, Pork has dominated meat consumption in long-term and the pig breeding has been a pillar industry of China's agriculture and rural economy. However, China's hog and pork prices have experienced drastic fluctuations in recent years, exerting great impact on the stability of residents "basket" and development of agriculture and rural economic, so it is significant to make an analysis on the hog price fluctuation in China.In this paper, we study the current situation of hog market and analyze the causes of hog price volatility in the past 10 years in China based on equilibrium theory of supply and demand, cobweb theory etc.. Using a variety of historical data and relevant survey data, we investigate the present situation of production and consumption in China's pig market to grasp the status of China's current hog market as a whole, and on this basis, we research the formation mechanism of China's pig price volatility in a combination of theoretical and empirical way.The results show significant differences in pig farming regions of China. Although the proportion of large-scale farming is growing, the percentage is still not enough and the overall production efficiency is low; there are significant differences of the number and structure of consumption between urban areas and rural areas, pork consumption has dropped but is still dominant; there are many factors resulting in hog prices fluctuations, and there is a long-term cointegration relationship among cost of production, prices of substitution goods, per capita income and hog prices, while a structure change took place in December 2008.We find that one step lagged prices of hog has the largest impact on the fluctuation of hog price, and the variations of fodder prices has the second largest and the prices of substitution goods and household incomes have the smallest impact on it, which demonstrates that the fluctuation of hog prices in China is mainly caused by factors on the supply side. Based on the conclusions above, we propose suggestions like improving pig subsidy system, encouraging large-scale farming, increasing pig slaughter rate, optimizing pig species, and establishing and ameliorating the alert mechanism of life set price.