By Hu Yuanyuan (China Daily)
Updated: 2007-08-02 08:58

The government is to contribute 1.15 billion yuan ($152 million) toward sow insurance payments in a bid to curb the soaring pork price, the Ministry of Finance (MOF) said yesterday.

"We've embarked on the project in central and western areas," the ministry said in a statement. "And the first subsidies, 558 million yuan, will be in place very soon."

Under the new rule, the central government will pay 50 percent of breeders' sow insurance premiums, with a further 30 percent coming from the municipal government. Farmers will then have to contribute just 20 percent.

Pork production has fallen dramatically in recent months, mostly because of pig breeders' dampened enthusiasm due to rising food costs and falling prices. Many were also hit by the massive pig culls that followed outbreaks of blue-ear disease.

With fewer pigs being reared, pork prices have escalated.

In June, the wholesale price was up 74.6 percent year on year, while the average retail price for lean pork exceeded 22 yuan per kilogram.

Such hikes, along with other food price rises, pushed the consumer price index to 3.4 percent in May, higher than the 3-percent target set by the government for the whole of 2007.

In response, the government has introduced a number of measures to control the soaring index.

Also yesterday, the China Banking Regulatory Commission (CBRC) said banks and financial institutions should create a favorable environment for pork breeders.

"We must make it easier for pork breeders to access loans," Jiang Dingzhi, vice-chairman of the CBRC, said.

Meanwhile, the government has said it will pay 470 million yuan to low-income families and 277 million yuan to college students to help offset the higher pork prices.