Local pigs ride on flu outbreak

A local pig farm-cum-retail business sees steady growth amid the African swine fever hitting mainland pork supply to Hong Kong.

Jasmine Poon

Monday, June 17, 2019

A local pig farm-cum-retail business sees steady growth amid the African swine fever hitting mainland pork supply to Hong Kong.

The resilience of domestic pig farm Hong Kong Heritage Pork, HKHP, and its vertically-integrated business model from farm to retail tides the business over during these difficult times.

Figures from the Food and Environmental Hygiene Department show that wholesale prices of pigs reached HK$3,405 a picul on June 10 and settled to HK$3,038 on June 12, more than double the average of HK$1,450 before African swine fever impacted pork supply in the city, says Hui Wai-kin, chairman of the Pork Traders General Association.

HKHP has just opened its seventh retail store on June 10 without increasing prices and aims to expand to 12 stores across Hong Kong by the end of 2019.

"We are just giving back to the supportive community", says John Lau Hon-kit, managing director of the farm.

After the second ASF outbreak, retail pork prices have only raised slightly, with retailers wary that loyal customers may be unwilling to purchase at too big of a price hike.

The farm specializes in rearing black pigs and supplies 30-50 pigs a day, accounting for 20 percent of the market share for domestic pigs. Even before the outbreak, their fresh pork would sell upwards of HK$60 per catty of lean meat versus the average of HK$40-HK$50 for the same cut from imported pork.

Lau expresses confidence in their steady sales, with no need for sky-high prices because there are no middlemen costs and their downstream reliance is reduced to just the government-certified slaughterhouse alone.

By selling directly to consumers, the farm can afford to invest in hi-tech equipment and rear pigs according to techniques from the Netherlands. Segregating the pigs by stages of growth eliminates the risk of spreading diseases and increases efficiency in production, while operating their own delivery trucks from slaughterhouse to store cuts down transportation delays. The pigs are not given antibiotics and their feed that is sourced from the United Kingdom does not contain any pork products, Lau shares.

Despite all the biosecurity measures, the second ASF outbreak prompted HKHP to open only three out of six retail locations on June 2.

The government said that in the Legislative Council's Panel on Food Safety and Environmental Hygiene meeting on June 11 that pork traders will be compensated for the 10,000 plus pigs culled. The payout is HK$40 million or about HK$3,700 for each pig.

"As long as there are pigs coming from mainland China, the industry is still at risk and a third ASF outbreak could very well break the industry. Compensation means nothing," says Lau, echoing the sentiments of many who are frustrated with the inexperience of Hong Kong authorities and their repeated failure to quarantine infected pigs from the mainland.

The hardest hit among the industry are small shops, eateries, and retailers who receive no compensation at all.

The first outbreak cut down store revenue by half, and the second outbreak shaved revenue by 30 percent, says the shopkeeper Lai of Mong Kok noodle shop "Pork King".

It's no longer a question of whether mainland imports will outcompete Hong Kong domestic produce, as 250-300 pigs from local farms are simply not enough to satisfy the city's daily demands of 3,500-4,000 pigs, says Hui.

With imported pigs constituting more than 95 percent of the market share, it's a dilemma for the industry as these necessary imports continue to pose infection risks to local hogs.

Hongkongers have always had an intimate connection with the staple foodstuff, with many grocery shoppers insisting on cooking with the freshest cut and nothing less.

Lau acknowledges a slight dip in HKHP's sales but has faith in expanding the business, because "pork is just as essential as rice for Chinese cooking, and a steady stream of loyal customers supports the retail business."

There is still hope for the industry's recovery despite uncertainties over fresh pork supply, as one thing is certain: Hong Kong's unwavering love of pork.