Jun 04 2007

“Monster Hog” and the price of pork in China

National Geographic News Photo Gallery: Week in Photos: Monster Hog

Near Delta, Alabama, May 3, 2007—Hogzilla may be headed for horror-movie heaven, but the massive swine that became an Internet sensation in 2004 may have been bested, size wise, by this reportedly wild pig killed May 3 by Jamison Stone, 11, and reported by the Associated Press on Wednesday.

From tip to tail, the newfound hog—dubbed “Monster Pig”—measures 9 feet, 4 inches (284 centimeters) and weighs in at 1,051 pounds (477 kilograms), according to Stone’s father.

At a 150-acre (60-hectare), fenced hunting range, Stone said, he shot the huge beast eight times with a revolver before tracking it with his father and guides for three hours. Finally, the boy shot the hog at point-blank range, killing the animal, the AP reported.

While hunting by children is legal in Alabama, officials are investigating whether anyone had transported and released the live feral pig into the hunting preserve, which would violate state law.

Okay, so maybe this one’s a stretch for a blog about economics, but sometimes when you see something in the news this amazing, you just have to share it with the world! Let’s see if I can come up with some questions about this one!

Discussion Questions:

  1. What impact would “monster hog” have on the price of pork (assuming it goes to market)?
  2. What will happen in the beef market once “monster hog’s” meat reaches the market? Explain.
  3. Can you think of a product that might be a compliment to pork? Describe
    what will happen in that product’s market thanks to “monster hog”.

Looks like China could use a few monster pigs of its own to relax the steep increase in pork prices recently!

Tighter supplies lead to big price rises for pork, eggs-21food.com

THE prices of pork and eggs have soared in past weeks across China due largely to tighter supplies and increasing production costs…Food products account for 33 percent of the CPI in China with meat, poultry and related products making up about 20 percent.

According to the Ministry of Agriculture, live pigs nationwide were 71.3 percent more expensive than a month earlier, and pork, 29.3 percent higher.

In Beijing, the price of slaughtered pigs went up more than 30 percent in recent days…

An outbreak of blue ear disease, also known as Porcine Reproductive and Respiratory Syndrome, among pigs in Guangdong Province and the Guangxi Zhuang Autonomous Region, causing many deaths and a large amount of pigs to be culled, according to the National Development and Reform Commission…

“This sent a strong signal for distributors to jack up prices,” said Xu, adding that this exacerbated the unbalanced supply and demand.

“Pig raisers have lost money in the past couple years and they are reluctant to raise pigs. This led to a marginal decline in live pigs this year.”

Still worse, edible oil and grain prices rose at the beginning of this year, and feed prices followed suit.

Grain prices have risen largely due to an anticipated decline in output this summer and will continue to increase slightly in the coming weeks, boosting the prices of pork

Discussion Questions:

  1. What is the “CPI” and why has it risen in China recently?
  2. Does this article discuss the determinants of demand or the determinants of supply? Which determinant is being affected in the pork market?
  3. What is happening in the market for pork in China? Which curve is shifting, supply or demand?
  4. What “strong signal” led pork distributors to “jack up prices”?
  5. If the price of pork continues to rise, what should happen to the supply of pork? Explain.

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About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author

5 responses so far

5 Responses to ““Monster Hog” and the price of pork in China”

  1. Robert Wangon 26 Jun 2007 at 10:54 am

    First off, I must say that a 9 foot hog would be a site to see. Not sure why they decided to kill the animal though…

    The first group of discussion questions seems to mainly be based on supply and demand. The large supply of meat that the hog provides will increase the supple, thus decreasing the price of pork. I'm not exactly sure of the beef market, but I'd assume the prices of other meats will rise since there will be an abundant supply of pork. A product that could compliment pork… I'm not sure so I'm going to go with grills. Companies may have to begin creating larger grills to compliment the new sizes of pork. The grill market will then increase I guess.

    No clue what CPI is and not exactly sure what a determinant is. The supply curve is being shifted, which in turn will have to shift the demand I think. The death of many pigs was the strong signal for pork distributors to increase the prices. If the prices continue to rise, two options could possibly happen. One, if the population simply doesn't care for pork, no one will buy the pork, and the pork distributors will be forced to either drop the prices or quit raising pigs. The other option will happen if people continue to buy the expensive pork, which will probably cause an increase in supply as more and more people will want to sell pork.

  2. Robert Wangon 26 Jun 2007 at 10:54 am

    Whoops, just realized I used the wrong site. My bad, I meant sight.

  3. Caleb Liaoon 03 Jul 2007 at 10:19 am

    Monster Hog:

    1) Assuming that there was more than one monster hog going on to the market, the price of pork everywhere would immediately decline, except for the price of monster hog pork. The reason would be that everyone would be interested in trying out the meat of a monster hog and so those that wanted to or could eat pork would be more inclined to eat monster hog pork as soon as it came out onto the market. Even if pork was just pork, and there weren't different types of pork, the price of pork would immediately drop because there would be an increase in the global supply of pork, or at least in the U.S. So according the basic law of demand, the more pork introduced to the market would cause the price of pork to decline.

    2)The price of beef would be more expensive than the price of pork. Whether the market would experience a time of inflation no influx in prices, the price of beef would more expensive than the price of pork. This can be determined by the basic law of demand. Because beef and pork are under the same category of meets, their prices affect each other. An increase in pork supply would mean that the price of pork would decline. However, less beef in comparison to pork would either increase the price or have it stay the same.

    3) Sauces made to compliment meats would also decrease in price. The reason being, chances are that there es more than one producer of complimentary sauces, so because more people are buying pork, and the next step would be to buy a complimentary sauce, the companies producing the sauces would decrease their prices to compete for the business of the pork consumer. However, if there were only one company that produced sauces, and therefore had a monopoly over the market, the price of sauces would increase.

    Chinese Pork:

    1) CPI is the Consumer Price Index or also known as the cost-of-living index. It gauges inflation and deflation in a given market according to a fixed period.

    2) The determinant of the supply of pork is causing the inflation in pork prices. Increased regulations due to decease and decreases in overall market supply have contributed to the inflation of pork.

    3) Supply.

    4) The Porcine Reproductive and Respiratory Syndrome and the increased amount of labor associated with the need to separate healthy pigs from unhealthy pigs was the strong signal for Chinese pig farmers to increase the price of pork.

    5) The supply of pork should also continue to decrease. This would be directly related to the basic law of demand. A decrease in the supply of pork would cause an increase in the price of pork.

  4. Rebecca Sungon 31 Jul 2007 at 1:24 pm

    “Monster Hog:”

    1. If the “monster hog” meat does go into the market, pork prices would decline because the supply of pork increases. Since there is an abundant supply of pork available to consumers, in order for competing companies that produce pork to stay in business, competing companies would need to lower their prices to attract consumers. Also, “monster hog” meat would also be competition because it is a different type of pork; for companies who only sell “regular pork,” they need to stay in business by lowering their prices in order for consumers to continue to buy “regular pork.”

    2. The decline of pork prices due to the increased supply of pork might affect beef prices; with the incorporation of the monster hog meat into the market, the pork supply would increase, while the beef supply would remain relatively the same. The price of beef would possibly increase due to there being less beef in comparison to pork.

    3. I think seasonings would be compliment to pork like pepper and other spices…maybe the price of seasonings would slightly increase because with the increased purchase of pork, more people would have pork and more people would want to season it.

    “Price of Pork in China”

    I’m not sure what CPI or determinants are.

    3. With the deaths of the pigs in China due to the disease, the supply of pork decreased. So, I think the supply curve is shifting.

    4. The “strong signal” was the outbreak of blue ear disease which killed many pigs causing the supply of pork to decline; the decreased supply caused distributors to increase prices.

    5. If prices continue to rise to the point that not many people are willing to buy pork so expensively, the supply of pork might increase because nobody is buying the pigs. Or, if there is a significant amount of consumers who are buying the “expensive” pork even with the raised prices, the distributors are kept in business and the demand would cause an increase in the pork supply.

  5. Mond Guon 10 Aug 2007 at 8:40 pm

    1. If the “monster hog” does go onto the market, the price of pork would decrease by a tiny insignificant fraction as the pork meat supply would increase; one thousand pounds of pork is not enough to make a major impact in the pork supply market. However, the “monster hog” itself would have a very high pork price, as its meat is very limited in supply and people would pay high prices to get a taste of this “monster hog.”

    2. The price of beef would fluctuate in an insignificant amount due to the fact that one “monster hog” does not provide an abundant source of pork.

    3. A compliment to pork would be salt; used to season pork or to preserve it. Salt is a very common everyday used product in cooking to bathing products, therefore its’ price would not be affected. Millions of tones of salt are being used all the time, its hard to imagine how one pig can change that price.

    I’m not sure what “CPI” or determinants is.

    3. In the pork market in China there is an increasing demand for pork. The supply curve is shifting.

    4. The “strong signal” to “jack up prices” was the death of the pigs caused by some illness, this changes the supply to demand ratio. As we all know the less supply there is, the more valuable the material or in this case the pork meat becomes.

    5. If the price of pork rises than the supply of pork should be decreasing at the same time, because only the shortage in pork meat will cause this continual rise in price of the pork.