Chinese Gangs Use Drones to Spread African Swine Fever
Next, they buy pigs from terrified farmers for cheap and sell them at a premium in supposedly uninfected regions
I’m Jordan Schneider, Beijing-based host of the ChinaEconTalk Podcast. In this newsletter, I comment on and translate articles from Chinese media about tech, business, and political economy. If you were forwarded this email, please do
“Swine Stir Fry Syndicates” are using drones to spread African swine fever, according to Chinese state media, scaring farmers into selling their animals at a discount before trafficking these sick pigs across province lines and selling them in “clean” areas.
Three days ago, China Comment, an outlet affiliated with Xinhua News, published this sordid account, which we’ve translated below. Americans who fear China’s rise from afar often underestimate fundamental governance issues that plague Chinese society, and I think this story provides a valuable example.
Why would a state-controlled outlet publish a story about pig gangs? Likely as part of an effort to shift the blame for continuing high prices from the government handling of the outbreak onto isolated bad elements.
Caixin also conducted strong reporting on African Swine Fever (ASF). The respected independent news outlet argues that government failure on multiple levels allowed the disease to spread. The Dim Sum blog here provides a summary excerpted below.
Reporting disease became a ‘game’ as local officials worried about budgetary costs of compensating farmers for culling animals and their accountability for keeping the disease under control, Caixin said. All swine within a certain radius have to be killed when ASF is discovered. Compensation of 1200 yuan per head paid to farmers is financed by prescribed shares of central and local funds. However, local officials don't always get funds promised by central and provincial governments, so they worried that they would end up paying for compensation if they declared a disease outbreak.
Provinces held ‘ASF work meetings’ where local officials were warned that preventing spread of the disease was their ‘political task,’ and they were ordered to ensure ‘no new occurrences.’
The farmer who reported Shandong Province's only officially-acknowledged ASF case told Caixin he was cursed by his neighbors for reporting the disease. The farmer was due large amounts of compensation but he only received 20 percent of the promised funds (in eastern provinces like Shandong, the central government pays 20% and the local and provincial governments pay the rest). He said the central government promptly delivered their share of the funds, but the local government dragged its feet.
Panic liquidation of herds and quarantines created big profit opportunities for black market dealers who shipped millions of animals from one province to another to take advantage of huge geographic differences in price. According to Caixin, restrictions on transport of animals were "just pieces of waste paper." Where quarantines were in place, traders evaded them by changing license plates on trucks crossing provincial borders, using counterfeit ear tags on pigs, or taking back roads to evade inspectors. Trucking diseased pigs hundreds or thousands of miles was the primary means of spreading the ASF virus nationwide so quickly.
Americans who fear China’s rise from afar often underestimate fundamental governance issues that plague Chinese society.
This year’s rise in pig prices is a big deal, materially impacting every Chinese national and likely shaking confidence more than the trade war. These sorts of own goals are growing pains for any developing country, but at their roots lie issues inherent to a one-party system that can’t rely on transparency to surface issues and does not take kindly to dissent. China’s response to ASF stands in contrast to the professionalism that characterized how America handled the Ebola outbreak.
One note on language. 炒猪团 (chǎo zhū tuán), how these pig gangs are known, is a wonderfully evocative phrase. 炒 means to stir-fry cold ingredients with hot oil, mirroring these groups’ efforts to buy low and sell high. It echoes 炒房团 (chǎo fáng tuán), or people who hoard real estate only to sell at the peak of the market.
Lastly, later this week I’ll be turning on the option to subscribe to this channel. The money will go towards supporting this newsletter’s growing network of contributors and helping me put out six issues per month.
Profiteering! There’s Nothing “Swine Stir Fry Syndicates” Won’t Stoop To
By Yang Jing
December 13, China Comment
Since the beginning of this year, pork prices across the country have risen significantly. But presently, the African swine fever epidemic has still not completely passed, with a need to strengthen the prevention and control of the disease, to limit the illegal transfer of pigs across provinces, and to increase regulation to control rising pork prices.
But illegal traders see pig prices as an opportunity for huge profits. They disregard government bans and together form a “swine stir fry syndicate,” collecting and selling pigs across provinces, regardless of whether they’re sick or not. In order to smuggle the hogs, some have bribed supervisors and forged certificates; in order to lower the price of pigs, some have spread rumors of the swine fever epidemic, creating social panic, and even going so far as actively spreading the African swine fever virus.
Due to high pork prices, some provinces have ordered the suspension of the transfer of sick pigs in an effort to prevent and control the African swine fever epidemic and ensure the quality of pork products on the market.
Yunnan has always been one of the key provinces for the transfer of live pigs. In September, the emergency headquarters for the prevention and control of swine flu in Yunnan issued a directive that all hogs in Yunnan be temporarily transferred out of the province. Subsequently, the Yunnan Provincial Department of Agriculture and Rural Affairs, together with the Public Security Department, carried out a concentrated crackdown on the illegal transfer of pigs, seizing over 10,000 pigs.
In a China Comment investigation, reporters found that some businessmen have formed pig speculator groups, seeking opportunities for cross-province arbitrage, using a variety of illegal means to smuggle pigs, secretly trade, and make huge profits. In November, the Sichuan Highway Police intercepted four modified commercial vehicles and seized 79 live pigs from them.
An industry insider said that Swine Stir Fry Syndicates transfer more than 4,000 pigs a day. The average gross profit per head is around 1,000 yuan ($140). Since trucks can transit 100 heads per vehicle, one trip can make more than 100,000 yuan ($14,300). “However many you got, we can buy all of them,” one illegal hog vendor said.
Police efforts have been intensified at interprovincial highway intersections. However, some criminals work in transfer procedures, can create fraudulent quarantine certificates, and can even buy off the inspectors.
Spreading rumors about the epidemic and buying pigs at a low price is a common way for Swine Stir Fry Syndicates to profit.
In some places, Swine Stir Fry Syndicates first plant infected dead pigs in healthy farms, or plant contaminated pig feed, then spread news of the outbreak, and buy pigs at discount to flip them.
In interviews, some villagers said that pig traffickers often spread rumors of an outbreak of African swine fever in their villages to scare pig farmers into selling their pigs. In one of the top 100 pig breeding counties, the head of a breeding enterprise said that since the outbreak of African swine fever, the group’s branch has found drones in the pig breeding area dropping unknown items that were later found to contain African swine fever virus.
“Swine Stir Fry Syndicates make bank, and don’t care if the pigs they’re selling are sick or healthy.” The grassroots are concerned that if the infected pigs are not caught in time, control of the disease will be impossible.
At present, the central government has put frozen meat reserves on the market, issued directives to encourage pig production, and guaranteed the supply of pigs through subsidies and other policies. Grassroots animal husbandry experts and breeding technicians believe that these measures have played a positive role in stabilizing pork prices. However, there is still a large profit margin in pork speculation, which has had an impact on the export and import of pigs and has reduced the ability of the government to control prices.
Swine Stir Fry Syndicates have also hit the confidence of farmers, discouraging them from ramping up production. Wéi Guāngwěi 韦光伟, an official with the agriculture and science bureau of Funing County, Yunnan, believes that there is great pressure on the prevention and control of African swine fever. A technician who manages 20,000 fattening pigs in a region of southwest China said that with pork prices at record highs, rumors of an epidemic can cause breeding panic and discourage pig producers from resume breeding programs.
Before the outbreak of African swine fever, there was also a “pig cycle” within the industry, in which pork prices rose and fell every three years or so. The business cycle ran as follows: meat prices are high, sows increase; pig supply increases, meat prices fall, sows are culled; pig supply decreases, meat prices rise.
Experts believe that the current round of the “pig cycle,” along with African swine fever, will result in the continued rise in pork prices, thereby giving Swine Stir Fry Syndicates a golden opportunity.
Some pig farmers are annoyed by how hard it is to tell fact from fiction about African swine fever. They expect other countries to speed up the pace of their vaccine development in order to stabilize producer confidence.
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