Although sow beginning stocks in 2011 declined three percent to 47.5 million head from 49.1 million head in 2010, pig crop production is forecast to stay marginally above the 2010 level because of slightly higher number of piglets produced per sow, which is partly due to a continued expansion in commercial swine farms. These operations feature superior with feeding management, which is believed to result in higher piglet survival. The lower sow stocks are partly a result of persistent low hog prices due to hog oversupplies in the first half of 2010. The 2010 slaughter weight was higher than expected because many hog producers were reluctant to slaughter hogs when prices were low in the first half of the year waiting for better price chances, as a result to keep hogs grow bigger.
Higher grain prices, combined with China’s 2010 decision to eliminate productive sow subsidies of RMB100 ($15.2) per animal in order to discourage hog oversupplies, as well as regional outbreaks of foot and mouth disease (FMD) and swine blue ear disease (PRRS), drove many small and backyard operators to slaughter sows and withdraw from swine production. Despite hog prices climbing in the latter half of 2010 due to slow growth in swine supplies, many small and backyard operators who gave up production are reluctant to restart swine production, as profitability is limited by higher production costs. Additionally, an uncertainty of FMD and PRRS control, government policy change in 2010 from subsidizing all productive sows to only high quality breeding sows on large commercial farms, and more difficulties for small and backyard operators to get bank loans will make small and backyard operators much less competitive to large commercial swine producers, thus dampening their interest in swine production. Higher salaries for migrant workers in urban areas due to short labor supplies are also discouraging growth in backyard operations. Meanwhile, new placements by commercial operations in the second half of 2010 will take time to impact pork production. According to the swine industry, it normally takes three months for newly placed sows to reach the stage of breeding, four months of pregnancy, and five months to fatten hogs. These combines will translate into relatively tight swine supplies and high pork prices at least through the first half of 2011. This will also translate into strong pork imports in 2011.