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Following is a question by the Hon Tommy Cheung and a written reply by the Secretary for Food and Health, Dr Ko Wing-man, in the Legislative Council today (May 11):
Question:
In July 2007, the Food and Health Bureau and the State Ministry of Commerce reached a consensus on opening up the market for supply of live pigs to Hong Kong and bringing in competition. Since October of the same year, apart from Ng Fung Hong Limited (Ng Fung Hong) which was originally the sole agent for supplying Mainland live pigs to Hong Kong (import agent), two more import agents, namely Guangnan Hong Company Limited (Guangnan Hong) and the Hong Kong Agriculture Special Zone Limited (ASZ), have been appointed. Some members of the trade have relayed to me that although it has been some years since the introduction of competition in respect of import agents, the prices of live pigs and the retail prices of pork have not come down, and the operation of the slaughterhouses has all along been monopolised. In this connection, will the Government inform this Council:
(1) whether it knows the respective numbers of live pigs imported by the three aforesaid import agents in each of the past 10 years (set out in Annex 1);
(2) whether it knows the respective average auction prices of live pigs imported by the three aforesaid import agents in each of the past 10 years (set out in Annex 2);
(3) whether it knows the respective (i) average purchasing prices offered and (ii) amounts of commission charged, by the three aforesaid import agents in purchasing live pigs from the Mainland in each of the past 10 years (set out in Annex 3); if such figures are not available, of the reasons for that;
(4) whether it has reviewed the impacts on the supply and prices of live pigs in Hong Kong brought about by the opening up of the market and bringing in competition, and the reasons why the prices of live pigs have not come down; and
(5) of the names of the existing operators of the three slaughterhouses in the territory (i.e. Sheung Shui Slaughterhouse, Tsuen Wan Slaughterhouse and Cheung Chau Slaughterhouse), and the respective expiry dates of their operation and management services agreements; whether the authorities have examined if the existing mode of operation of the slaughterhouses is one of the reasons for retail prices of pork not having come down?
Reply:
President,
The Mainland is one of the most important food sources of Hong Kong. The Food and Health Bureau (FHB) has been maintaining close liaison with the relevant Mainland authorities on matters of food supply to Hong Kong. In July 2007, FHB and the Ministry of Commerce discussed and reached agreement on the opening up of the market for supplying live pigs to Hong Kong. Beginning in October 2007, the number of agents for supplying Mainland live pigs to Hong Kong was increased from one to three. Besides, to facilitate free flow of market information, starting January 2008, we release on the Internet daily information on the quantity and auction price of live pigs supplied to Hong Kong and the estimated number of live pigs that may be supplied the following day. This has helped enhance market transparency and facilitate the effective operation of the market. Since August 2015, we have been publishing on a daily basis charts showing the distribution of the number of live pigs sold at different auction prices to further enhance market transparency.
It is the policy objective of the Government to maintain a stable supply of various foodstuffs and to ensure food safety. Food price is determined by the free market.
My reply to the various parts of the question is as follows:
(1) Information about the respective number of live pigs imported annually by the import agents is shown in Annex 4.
(2) The respective average auction prices and the average highest auction prices of live pigs imported annually by the import agents are shown in Annex 5.
(3) The cost for purchasing live pigs from the Mainland and the amount of commission charged by the three import agents for the transactions are commercial information. Such information is not disclosed to the Government.
(4) As shown in Annex 4, the number of live pigs supplied to Hong Kong has remained stable over the past few years (take 2015 as an example, on average 4 338 live pigs are supplied to Hong Kong every day). The supply has been generally sufficient to meet the market demand. Since 2008, the auction price has experienced fluctuations on a number of occasions (please see Annex 5 for details). It is observed that the fluctuations in auction price largely correlated with the movements in the supply and demand situation in the Mainland market.
We have previously consulted the trade (including live pig import agents, buyers and pork retailers) about factors underlying the movement of the retail price of pork in Hong Kong. According to their commentaries, on top of the purchasing cost, other operating expenses such as transportation cost, wages of workers and rental are relevant factors for determining the retail price of pork. When the wholesale price of live pigs rises, retailers may not necessarily choose to pass on the increase fully to consumers since they would have to take other factors such as affordability into account. Likewise, when the wholesale price of live pigs goes down, retailers would have to consider other factors including the operational expenses, and may not be in a position to reduce the retail price by the same rate instantly. Such commercial considerations are no different from those applicable to other trades.
(5) Information on the names of the current operators of the three slaughterhouses in the territory and their operations is set out in Annex 6.
The Sheung Shui Slaughterhouse is the largest slaughterhouse in the territory. In 2015, it handles about 90 per cent of the slaughtering throughput of live pigs in the territory. The operator (Ng Fung Hong) charges fixed fees for the slaughtering services. The level of fees is subject to the approval of the Food and Environmental Hygiene Department (FEHD) which would carefully consider the operation situation of the operator before agreeing to any adjustment. FEHD will also require the operator to communicate with the relevant stakeholders before implementing any new fees to ensure smooth delivery of slaughtering services. In approving the application for renewal of the Operation Services Agreement lodged by the operator, we have carefully examined whether the operation of the slaughterhouse is meeting market needs. The current mode of operation has over the years been serving the purpose well.
The auction price of live pigs in 2016 is on an increasing trend, albeit with fluctuations. According to the information provided by the import agents, the recent increase in the price of live pigs stems mainly from supply not being able to meet demand on the Mainland. This has resulted in import agents having to raise the purchasing price of live pigs. Bearing in mind the law of market supply and demand, it is envisaged that the price may stabilise only after the supply of live pigs on the Mainland improves.
Ends/Wednesday, May 11, 2016
Issued at HKT 19:15
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