The influences of environmental regulations on hog production distribution and industry movement in China

With the gradual implementation of the livestock restricting and banning environmental policy, environmental regulations have become the primary challenge that affects the hog breeding industry in China. Based on a panel data of Chinese provincial hog breeding from 2004 to 2015, and the relevant theories of the Porter hypothesis, this paper empirically explored the mechanism of environmental regulations on the production distribution and spatial movement of hog industry in China. Results show that the hog breeding industry and environmental regulation intensity have a strong spatial correlation and a hierarchical aggregation on its spatial distribution. In addition, there exists an “inverted N-shape” relationship between the development level of the hog breeding industry and environmental regulations: under the environmental regulations, the development level of the hog breeding industry shows a declining-increasing-declining pattern. This paper also finds that Shanghai, Jiangsu, Guangdong and other five provinces have crossed the second inflection point on the inverted N-shape curve, where hog farming in the exiting stage has been declined. Other 10 provinces, such as Hebei, Hubei, and Hunan, will reach the second inflection point in a short time, where hog breeding industry is in a slow and saturated growth stage. While hog farming in the six central and western provinces, such as Guizhou and Guangxi, is in a period of rapid growth. The breeding levels of hog in Heilongjiang and Inner Mongolia are low but with a great potential growth in the future. The difference of environmental regulations makes hog breeding industry movement from the southeast to the west and the northeast with the following trends: “South hog northward, and east hog westward”. In summary, this paper also provides the following policy suggestions: to implement different levels of environmental regulations and policies in different regions, to strengthen environmental protection investment to achieve large-scale operations in response to environmental supervision, and to pay close attention to the supply of hogs to prevent pork price from soaring.