African swine fever to hit Chinese pork supply

Analysts think China would need to acquire 20,000 to 30,000 sows to return its hog industry to normal, but it’s not clear where they would come from.  |  Reuters photo

Canadian pork exports to China are expected to jump as it continues efforts to address its massive need for product 

BANFF, Alta. — Video of people fighting over pork at Chinese meat counters will likely become more common as the fallout from the African swine fever outbreak in China progresses.

Brett Stuart, president of the market research and analysis firm Global AgriTrends, estimates that about two-thirds of China’s swine herd has been lost to the disease and contrary to official government reports of recovery, more pigs are dying every day as ASF continues to spread.

Stuart, who has visited China three times within the last 12 months, said the Chinese pork industry had been directed to do everything possible to ensure adequate supplies of pork, the country’s most popular meat, in time for Chinese New Year celebrations Jan. 25 and beyond.

However, he thinks that is impossible to achieve given herd losses, even if all stored, frozen pork is released to the market. He estimated China has more than 100,000 tonnes of frozen pork, but given that 30,000 tonnes are consumed every five hours in China, that won’t go far in addressing shortages.

“They will continue to be very, very short of pork,” Stuart told those at the Banff Pork Seminar Jan. 9.

“With a market of this scale, any reduction in self-sufficiency means imports are going to be huge for years and years to come.”

China is now the number one market for United States pork exports but contrary to what might be expected, the price received by producers of that pork is low because U.S. production is up and there are plenty of hogs available due to industry expansion in recent years, Stuart said.

The recent U.S-China trade agreement touted by President Donald Trump could change the market but that remains to be seen. China has less need for soybeans, for example, because it has far fewer hogs to feed. If it is forced to buy commodities it doesn’t need in order to satisfy a trade deal, China might trade them into secondary markets and affect market prices.

Even so, China buys about US$2 billion worth of beef, pork and poultry each month and is buying eight percent of U.S. pork production right now.

For Canada, May 2019 was the last full month of Canadian pork exports to China. Its ban on Canadian pork curtailed exports until mid-November, when 4,300 tonnes went to China.

Stuart said that number is likely to jump as China continues efforts to address its massive need for product.

In China itself, pork prices are at an all-time high at just under $300 per hundredweight and the country outbids Japan, which is usually the top bidder. Food inflation is soaring and some Chinese people have been unable to buy pork in six months.

The government is “going to be shooting every bullet they have at trying to keep inflation in check,” Stuart said.

There is a 24 million tonne gap between Chinese supply and demand right now, he said. The government has said it plans to subsidize farms, loosen land restrictions and ease up on environmental directives to address its problem and generate optimism.

It has directed Chinese media to report that policies to combat and control the illness are effective and that the hog industry might be back to 80 percent of normal by 2021. Stuart is skeptical.

“Optimism is really all they have. Until there’s a viable vaccine, there’s really no answer,” Stuart said.

A return to a semblance of normal will require China to acquire 20,000 to 30,000 sows, but where those would come from is anyone’s guess.

About 85 percent of China’s hogs come from farms with fewer than 1,000 head. Government efforts to consolidate the industry into larger, biosecure operations will thus be an expensive and lengthy process, said Stuart. It might be possible in 10 to 20 years, but not likely unless a viable vaccine is developed to protect the next generations of pigs.

As for the rest of the world, European hog producers are reaping the benefits of exports to China but ASF has been found at the western edge of Poland, putting Germany at risk that the disease will move there. Germany is now providing about 17 percent of China’s imports, said Stuart.

Even though China has ASF, it would close its borders to imports from any country that also got it.

If ASF makes its way to North America, “things go from fantastically wonderful to absolutely apocalyptically terrible.”

Export markets would close and even if zoning were implemented it would still take weeks and possibly months for any exports to reoccur.

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