The economics behind dead pig sales in China

In her article for FP today, Laurie Garrett wonders whether thousands of dead pigs washing up in Shanghai’s rivers and two Chinese citizens dying of a new flu strain are early symptoms of the next big pandemic. What’s more, she writes, the potentially contaminated pork has already entered the Chinese food supply. "On March 25," Garrett notes, "Chinese authorities seized manufactured pork buns that were found to be made from Zhejiang pigs that had died of the mysterious ailment."

The prevalence of dicey food products — including dead, diseased, or otherwise dodgy pork — has long been an issue in China. But the recent tide of dead hogs sweeping through Shanghai — said to partially stem from a crackdown by authorities on the dead-pig trade — has produced some fascinating reporting that gives us a more detailed look at the economics driving China’s market for illegal pig meat.

It’s pretty straightforward: farmers who can’t send a pig to be butchered once it has died don’t want to totally write off their investments — not when there’s a chance to still make some of the money back. But according to recent reports, Chinese authorities have some policies in place that aren’t exactly making the problem better.

According to this report, from the Oriental Morning Post, a 100-kilogram (roughly 220-pound) pig sells for about 600 yuan ($100) — still a hefty sum in rural China. Feed costs total at least 150 yuan ($25).

Since July 2011, the central government has had a policy in place to pay some farms — those that raise more than 50 pigs a year — compensation of 80 yuan ($13) for every dead pig, according to the South China Morning Post. But 89 percent of the pigs raised in the city of Jiaxing — thought to be the main source of the hogs that wound up in Shanghai’s Huangpu river — come from small farms, according to the report, and don’t qualify. Even those that do often don’t see the money.

To make matters worse, this thorough Shanghai Daily primer on the illegal pig trade says farmers in Zhejiang province were supposed to pay 50 yuan ($8) per carcass to so-called "dead pig collectors" hired by the local government who would then dispose of the carcass. Not surprisingly, most farmers opted not to pay this fee when illegal pig traders were around who were happy to pay 1 yuan per 500 grams of pig flesh. The result? Jiaxing pig collector Lu Gensong told Shanghai Daily he didn’t collect a single carcass between 2009 and 2012. ("You Shanghai residents just don’t realize how many dead pigs you have eaten before," one restaurant owner told Xinhua.) 

And those illegal pork butchers? They seem to be doing pretty well for themselves — perhaps well enough to pay even more than they’re already shelling out for dead pig flesh if necessary. A CCTV investigation into the dead pig trade found that three butchers — sentenced to life in prison last November — had processed 77,000 carcasses, making almost 9 million yuan ($1.5 million) in profit.

If you’re wondering why you’d pay to have your pig carcasses disposed of when you can be paid for them instead, well –it seems some farmers in Zhejiang province have been wondering the same thing.