THE National Development and Reform Commission (NDRC) said yesterday that central and local governments will start buying pork for State reserves to support prices that have plunged in recent months.

Prices entered an “excessive decline” last week, the National Development and Reform Commission (NDRC) said in a statement. It did not provide details on volumes to be purchased.

The move came after live hog prices in the world’s top pork producer plunged 65 percent from January to early June, eroding profits for farmers and raising concerns that many would stop farming, triggering shortages later on.

And the hog-to-grain price ratio, an indicator of farmer profits, hit 4.9:1 on average last week, breaching the 5:1 level set by the NDRC to trigger a level-1 warning, its highest.

Shares in China’s hog farming companies jumped yesterday on the stockpile purchasing plan, even though hog prices had already begun to rise.

Live hog prices bottomed out at 12.9 yuan (US$2)per kilogram June 21 and have risen sharply since then to reach 17.35 yuan per kg yesterday, according to Shanghai JC Intelligence Co.

The NDRC said earlier this month that increasing hog supplies and pork imports, as well as retreating seasonal demand, have combined to drive down hog prices.

The commission had previously pledged to closely monitor price fluctuations and adjust reserves to ensure stable operation in the hog market.

Chinese authorities earlier this month released a work plan to improve the mechanism for adjusting pork reserves as part of efforts to stabilize the market as it has seen frequent fluctuations.

The plan, released by several government organs including the NDRC, detailed multiple measures to avoid drastic movements in the pork market, with more indicators added for timely warnings of market changes.(SD-Agencies)