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Zhang, Guangxuan

Community Development and Applied Economics

2011

MS

China has the largest pork market in the world and has significantly increased its pork imports from the United States and several other countries in recent years. As China's pork consumption continues to increase, China's pork production is likely to have more influence on its pork imports as well as the potentials for U.S. pork exports to China. Understanding China's pork production is important for U.S. pork exporters in analyzing the current and future market potential for U.S. pork in China. However, the studies on China's pork production, especially on the household hog farms, are very limited. The major objectives of this study are to collect primary, data through a hog farm survey in two Chinese provinces, analyze the decision making of small Chinese hog farms, and examine the implications for U.S. pork exports.
Primary data of household hog farms were collected through a survey conducted in Jiangsu and Shaanxi provinces in February 2010. With 3,327 valid observations from 111 villages, this study first conducted descriptive analyses and then estimated a Heckman model to identify and analyze the factors that influence farmers' hog production decisions. Using the Heckman model, farmers' hog production decisions are analyzed in two stages: participation decision and scale decision. Whereas the estimation results from the participation decision provide information on the factors that determine the likelihood for farmers to raise hogs, the results from the scale decision identify the factors and their impacts on the scale of farmers' hog production.
The descriptive analyses show that small-scale household hog farms are still the major hog production model in the surveyed areas. Most of these farmers independently participate in hog production and raise hogs as a sideline prod:uction. Hog disease and hog death are serious problems in their production. The estimation results of the Heckman model indicate that (1) the availability of labor force positively relates to both the likelihood of a household raising hogs and the production scale of hog farms; (2) the opportunity to earn income from nonfarm jobs negatively influences farmers' decisions regarding whether to raise hogs and how many to raise; and (3) the existence of largescale hog farms may increase the production scale of other hog farms within the villages.
Considering the ongoing labor migration from rural areas to cities and the growth ofnonfarm economy in rural China, the analyses results imply that China's household hog production wil1likely concentrate with the decline of backyard hog farms and the increase of specialized hog farms. This structure change may increase the pork production cost in China and increase China's pork imports. The United States may be in a good position to capture pork market opportunities in China, but more studies are needed to identify the comparative advantages of and marketing strategies for expanding U.S. pork exports to China.