China produces and consumes two-thirds of the world’s pork, but output is plunging as Beijing destroys herds and blocks shipments to stop African swine fever. Importers are filling the gap by buying pork as far away as Europe, boosting prices by up to 40% and causing shortages in other markets.
This year’s Chinese pork output might fall by up to 35%, according to Rabobank, a Dutch bank.
Global supplies will be “redirected to China,” the bank’s researchers said in an April report. It said the “unprecedented shift” in trade will likely cause shortages in other markets.
China’s shortfall is likely to be so severe it will match Europe’s annual pork output and exceed U.S. production by 30%, industry researchers say.
“Everyone wants to import as much pork as possible,” said industry analyst Angela Zhang of IQC Insights. She said the trend is likely to accelerate as Chinese production falls.
The U.S. Department of Agriculture expects China’s pork imports to soar 41% this year over 2018 to 2.2 million tons. There’s no immediate end in sight as “evidence mounts that China will be unable to eradicate ASF in the near-term,” it said in a recent report.
The jolt to the global meat industry highlights China’s voracious demand for food for its 1.4 billion people, the potential for wider disruptions if its own production falters and its growing ability to outbid other customers for supplies.
In Vietnam, the government said in mid-May that 1.2 million pigs, or about 5% of its total herds, had died or been destroyed. Rabobank expects Vietnamese pork production to fall 10% this year from 2018.
U.S. pork sales to China have been disrupted by Beijing’s tariff war with the Trump administration.
Chinese buyers canceled orders for 3,300 tons of American pork the week of May 6, according to the USDA.
Chinese companies are investing in farms and food processors abroad to capitalize on strong demand. New Hope Group said it plans to invest 1.1 billion yuan ($170 million) in three pig-breeding farms in Vietnam.
The disease, and resulting culls, have led to a sharp decline in China’s pig population, which is the world’s largest. The statistics bureau says the country’s hog population has fallen by 40 million from a year earlier, or about 10%, to levels last seen in the late 1990s.
Pork and Trade Tensions
The virus is devastating for China’s pork industry at a time of trade tensions with Washington. Last month, importers were forced to pay up for more meat purchases from the U.S. to help satisfy domestic demand, even though last year China raised tariffs on U.S. pork to as much as 70%. Prices of U.S. hog futures have surged nearly 60% since the start of March, partly thanks to Chinese buying. Many farmers aren’t buying new sows to expand their herds for fear that they may be carrying the disease.
A Chinese government official last week predicted prices for pork—the country’s most widely consumed meat—could rise by more than 70% this year.
Posted: May 26, 2019 (Herb Cochran)