Small farmers have greater flexibility in allocation of labor, and enjoy an advantage in production costs because they use inexpensive, locally available materials and utilize animal waste as manure for their crops. But they need support and fair treatment to overcome challenges, move to commercially oriented production systems, operate at an efficient scale and increase profits. Such policy support for the development of productive small farms will also help facilitate the transformation of China's pork industry.

Moving forward, innovative products that boost small farmers' demand for pig production insurance are needed. For example, an International Food Policy Research Institute study shows that a small change in the schedule of the premium paid by farmers can help them increase investments, including riskier, higher-return investments.

In addition to loss recovery, measures to assist small farmers in disease prevention and control measures, such as appropriate on-farm biosecurity practices and vaccination, are equally important. Pig farms with better sanitary conditions and waste management are critical to minimize animal health and environmental problems.

It is time to take stronger steps toward curtailing the increasing volatility in China's pork market. Inefficient price support measures, including subsidies, which distort the market must be eliminated and avoided. Stronger industry regulation will also be required to reduce supply and price fluctuations.

To expand market access and promote coordination among actors in the supply chain, small-scale pork producers should be linked to large-scale commercialized producers through institutional arrangements such as contract farming with self-enforcing agreements. These types of linkages also help small farmers to more easily access food safety and quality assurance standards, such as certification schemes, which would have otherwise been inaccessible.

Ultimately, the extent of small farmers' participation in the pork supply chain will depend on their ability to strengthen their voices and capacities. Accelerated growth of producer cooperatives or farmers' associations in China's pork industry is important for giving farmers greater access to information and raising their bargaining power in price negotiations.

The author is director general of International Food Policy Research Institute.

(China Daily 04/28/2014 page11)