Sun Haoyu, a hog farmer in Dalian, in northern China’s Liaoning Province, first noticed pork prices beginning to tumble late last year.
With 3,000 hogs to care for, Mr. Sun said, he had “no choice but to tough it out,” relying entirely on loans and borrowed money to keep his operation afloat. But prices kept plummeting, and last month they hit a 16-year low. Now, across his region, many small farms are on the brink of collapse.
“Many hog farmers can no longer hold out,” Mr. Sun said in an interview. “After all that backbreaking work raising hogs, we can barely afford the feed anymore.”
China’s plunging pork prices are more than an agricultural problem. In a country where the commodity is treated as a bellwether of inflation, the decline is an ominous sign for the economy.
Not long ago, pork prices were soaring after an epidemic of swine fever devastated the nation’s hogs. That prompted Beijing to ramp up production, creating a glut just as Chinese consumers were looking to save rather than spend.
The pork industry is another casualty of China’s economic slowdown. The property market is in a yearslong slump, dragging down spending, including at restaurants, a big driver of pork sales. Construction activity has also weakened, reducing demand for pork, long a staple for workers on building sites, according to a report from Nomura, the Japanese bank.
“The construction site workers and then dining out are the two cohorts that we see have a higher pork consumption,” Hannah Liu, a China economist at Nomura, said in an interview. “When we see a collapse from these two cohorts, we definitely see demand crater.”
China has endured years of deflation across much of the economy, and pork prices are down 39 percent over the last four years, according to data from China’s National Bureau of Statistics. That deflationary trend began to reverse only in recent months, when rising energy costs from the war in Iran pushed up prices.
While the government has sought to boost major pork producers, offering them heavily subsidized bank loans and credit to expand, smaller farmers like Mr. Sun have received far less assistance.
Even with government support, the industry’s biggest players are struggling. Wens Foodstuff Group, one of China’s biggest hog producers, saw profits fall 43 percent last year. The company said prices for its pigs in April fell about 38 percent from a year earlier.
Dabeinong, another pork giant, sold more pork this year than last year but still reported a decline in profitability, citing “market conditions and fluctuations in hog prices.”
The downturn is a stark reversal from the soaring prices after the 2019 swine fever epidemic. In an attempt to lower prices and promote agricultural self-reliance — a priority championed by China’s leader, Xi Jinping — the government encouraged the construction of massive, multistory pig farms.
But now, farmers find themselves with too many hogs and not enough demand in a country that consumes half of the world’s pork.
In China, the meat is a staple in everyday meals and in dishes served at celebratory events or fancy dinners. Because it is so frequently consumed, pork is especially susceptible to the weaknesses of an economy gripped by stubborn youth unemployment, a shaky property market and a strained pension system.
Diners at restaurants have been spending less money per meal than just a few years ago, according to Canyin88, a Chinese website that collects data on the restaurant industry. Even the lavish banquets and business dinners once held by government officials have been reined in. Some local governments have barred civil servants from dining in groups of more than three, after several reports of excessive drinking at official banquets.
In a symbolic effort to reassure markets, Beijing has repeatedly bought meat for its national strategic pork reserve, an emergency government-run stockpile stored in warehouses across the country. In 2019, when pork prices skyrocketed, the government tapped those reserves to help ease grocery costs.
Beijing has also prodded local governments to buy more pork, because prices have fallen beyond the “warning zone for excessive price drops.”
And last month, during a pair of high-level meetings, including one led by Mr. Xi, officials stressed the importance of addressing “the profound shifts currently taking place in the supply-demand dynamics” of the pork industry.
The authorities have already urged farmers to reduce the pork entering the market by culling breeding sows. Regulators have also set stricter weight standards for each hog, effectively limiting the volume of meat available for sale. At the same time, the government has scaled back the subsidized loans it once offered to large-scale pig farms seeking to expand.
Those efforts, Ms. Liu said, could help stabilize prices. But without a stronger recovery in consumer demand, she didn’t expect them to rebound significantly.
“There is little to do from the demand side,” Ms. Liu said of further government interventions. “You cannot order other enterprises to purchase more pork.”
Li You contributed research.
Catie Edmondson covers Congress for The Times.
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