Marketing Structure and Stage Price Formation of the Pork Industry in China

Abstract

China is the biggest pork producing and consuming country in the world. Since 1978, with the introduction of the household responsibility system (HRS) and adjustments in government purchase price for agricultural products, the production and marketing structures are being transformed. Under the state monopoly management system from the middle of the 1950's, purchase prices were kept rather low until 1980s. With the introduction of the market mechanism, the pork marketing system became coexistent with state-operated, group-operated and the individually operated systems. The introduction of the present production form of the pork sector has strongly resulted in establishing a better performing mixed marketing system. At present, Chinese pork production has been an increasing trend due to the increase in household income. Per capita production of pork increased from 11.5 kilograms in 1980 to 30.1 kilograms in 1995. However, there are many factors which influenced the price reform of pork. The pork price isn't simply a reflection of the dynamic tension between the demand and the supply as seen in the pure market economy. When analyzing the price according to the marketing stage, the farmer's share to retail price, in the local market shipment, is as much as 65-77%; and this in the distant market shipment is about 50%. When considering the actual condition of the wholesale market and the retail market, it is not too much to say that the farmer's share to retail price is lower and the marketing margin is higher in China than in other countries such as Japan.