Reform the Supply Side to Downplay the Hog Cycle

Mingquan LI

Nanchong City Committee Office of the Chinese People’s Political Consultative Conference, Nanchong 637000, China

Abstract Based on the analysis of the reasons for the periodic changes in the pig market in China, four measures are proposed in this article to reform the supply side to downplay the hog Cycle: guaranteeing the total amount to guarantee the supply; diversifying farming systems to increase redundancy; improving technology to promote transformation; and promoting the Internet+ to promote the balanced development of the pig industry.

Key words Supply side, Reform, Downplay, Hog Cycle

1 Introduction

Supply-side structural reform is the most urgent task in China’s current economic restructuring and transformation and upgrading. The pig industry is an important basic industry in traditional agriculture. The stable development of pig industry and the effective supply of pig products are important livelihood issues in China, affecting the harmony and stability of the society. The essence of "hog Cycle" formed in the cyclical fluctuations of live pig prices is still a manifestation of changes in the relationship between supply and demand of pork products. As the market’s role in resource allocation deepens, these fluctuations are still increasing. The underlying reason is that there are many problems on the supply side of the pig industry. This urgently requires us to accelerate the supply-side reform of the pig industry and stabilize the pig industry to guarantee the effective supply of meat products in China. Therefore, reforming the supply side to downplay the hog Cycle and guarantee the stable development of the industry and the effective supply of products is an important task for the development of the pig industry in the future. In this regard, the following suggestions are put forward.

2 Guaranteeing the total amount to guarantee the supply

Sufficient total is the basis for guaranteeing effective supply. At present, as China is in a period of industrial transformation, the development of the pig industry is transforming from traditional farming to modern farming. In recent years, some places blindly pursue high standards and large-scale, and have built a large number of pig houses with high standards. At present, a large number of these pig houses are left unused, resulting in a great waste of resources. The quantity of farming has also been reduced. Coupled with the acceleration of rural urbanization and strengthening of environmental protection, traditional farming methods have been rapidly reduced.

However, the increased amount of modern farming cannot supplement the decreased amount of traditional farming, which in turn leads to insufficient supply, leading to an increase in the price of pigs and their products. Market fluctuations have occurred many times. Therefore, to maintain a stable supply of live pigs and meat products, it is necessary to guarantee that the total amount of pork in China is sufficient and stable. We must do everything possible to grasp the foundation of pig production, and never relax the basic work. In the stable period of supply, it is necessary to strengthen the basic construction of the industrial system, formulate a response plan, strengthen the construction of production capacity, import carefully, and reduce the degree of dependence on imported meat products, thus letting the meat in the Chinese bowl always be in the hands of the Chinese themselves. When the supply-demand relationship of live pigs and their products is out of balance, we should take timely measures, such as organizing to increase or suppress production, so that the relationship between supply and demand can reach a new balance as soon as possible.

3 Diversifying pig farming systems to increase redundancy

We should promote various forms of farming to guarantee the meat supply in various ways for the people and increase the redundancy. Enhancing the price resistance of live pigs and their products can reduce the extent of market fluctuations and delay the occurrence of the hog Cycle. First of all, in recent years, as the construction of towns and new rural areas has accelerated, the traditional pig industry has been restricted by development bottlenecks. What’s more, local governments have delineated no-farming areas and farming-restricted areas, resulting in a decrease in slaughter of pigs in individual places, and leading to fluctuations in the market. In some live pig production areas, there has been a phenomenon of importing live pigs from outside. Secondly, due to the rapid economic development of China in recent years, the development of the pig industry also pays attention to scale and intensive development, but ignores the transition of production methods during the transition. A large amount of industrial and commercial capital is poured into the pig industry, and the traditional farming methods have been left out, and as a result, traditional production methods have been completely crushed before new production methods have yet been fully established. The increase in the number of farming is far from making up for the reduction in traditional farming methods, and thus the total supply is insufficient, leading to an increase in pork prices. Furthermore, due to the speculative and profit-seeking nature of industrial and commercial capitals, they enter quickly and exit quickly, and their scale is concentrated. Once one of them exits, the production quantity will be greatly reduced, which directly leads to fluctuations of market supply and reduction of redundancy that resists market changes and is bound to make the hog Cycle more frequent and violent. Therefore, to downplay the hog Cycle, it is necessary to increase the reform of breeding methods on the supply side. While implementing appropriate-scale, intensive and modern farming methods in accordance with local conditions, it is also necessary to strengthen the improvement and transformation of traditional farming techniques, and promote effective traditional farming methods in various regions according to local conditions, making multiple farming methods and factories of various scales coexist. We must also work hard to improve and optimize the internal structure of the livestock industry, reasonably arrange the farming and production of pork emergency products and other livestock and poultry, store meat for the people, increase the redundancy, and increase the difficulty of market changes, delaying the cycle of live pig price fluctuations.

4 Improving technology to promote transformation

The traditional pig-raising systems in agricultural areas has played a positive role in giving full play to the advantages of various regions and solving the supply of meat in the era of self-sufficient planned economy in China. However, these traditional methods have extensive management, scattered farming, simple facilities, serious feed loss and environmental pollution, not easy to form brand characteristics. Therefore, according to the requirements of the development of modern animal husbandry, in order to increase the stock of live pigs, in the promotion of the coexistence of various farming methods, it is necessary to increase the investment in the transformation of pig raising facilities in agricultural areas, standardize the construction of pens, strengthen environmental protection, strengthen the integration of pig farming and biogas production, separate establishment and construction of human-residential and livestock houses, and ensure that livestock and poultry enter the pens, achieving clean production and green development. This will speed up the reform of the supply side of the pig industry, and promote the upgrading and transformation of the traditional pig industry, stabilizing the quantity of live pigs in advancing the development of modern animal husbandry. The transformation of traditional farming methods not only meets the needs of modern animal husbandry development and industrial upgrading, and it can also stabilize the production base, increase the difficulty of catastrophic changes in the supply and demand market of live pigs, and enhance the resistance to the hog Cycle, thereby slowing down the occurrence of the hog Cycle.

5 Promoting Internet+ to promote the stable development of the pig industry

From the information level, the occurrence of hog Cycle phenomenon in the pig industry is due to the asymmetry and delay of information to a certain extent. In the process of transforming the pig industry from traditional farming to modern farming, the supply and marketing information platform is not perfect, and the information transmission is not smooth. In particular, production organizers and producers cannot fully and systematically understand supply and demand information, and they often rely on experience and subjective judgment to determine the production plan, and rely on delayed and incomplete information to organize production, making the production plan lack scientificity. After the production cycle is completed, the output products are either oversupply or in short supply, leading to cyclical fluctuations in market supply. Therefore, in the development of the pig industry, it is necessary to actively promote the "Internet+" technology, increase the construction of information platforms, and improve the information collection, sorting and release platform, to let the supply and demand parties keep abreast of industry trends. The competent government department shall release relevant early warning information in a timely manner to remind production organizers to prepare in advance to deal with market fluctuations. It is necessary to increase the development and application of information terminal products in the pig industry, strengthen the remote monitoring of the production process, and standardize the production process and operating procedures, so that people can truly eat "quality-assured meat". Through the development and application of information terminal technology, production, supply and marketing information release centers for agricultural products (including live pigs) are established with village as a unit in the vast planting and farming areas to publicly release relevant information about the pig industry across the country. With the help of multiple new media such as the Internet, mobile phones and APP, information of the entire pig industry is obtained, so that production organizers and producers can instantly understand the supply and demand information of the industry and then timely adjust production and supply plans to ensure a balance between supply and demand for meat products. When the quantity of live pigs has dropped significantly and the supply of products has tightened, it should remind the production organizers to adjust the farming plan in advance; and when the quantity of live pigs increases sharply, it should also remind the production organizers to adjust the farming plan early to take precautions and reduce fluctuations, thus downplaying the hog Cycle.

In short, strengthening structural reforms on the supply side to guarantee the effective supply of pork products in the market is a long-term task before us. Stabilizing the market and downplaying the hog Cycle is a hurdle we face. Only by increasing supply-side reforms, maintaining a balance between supply and demand, promoting the application of a variety of farming methods, increasing the redundancy, speeding up information transmission, improving information transmission channels and dissemination methods, and increasing the difficulty of market fluctuations, can the hog Cycle be downplayed, the continuous and stable development of live pig production be ensured and market supply be stable and effective.