Farmers in most regions of the world are expected to increase their production of livestock, poultry and seafood in 2020 in response to massive losses in China’s pork production due to African swine fever.
ASF has already generated additional trade in animal protein, and further growth is expected. But trade disputes and other issues continue to cause uncertainty, with the U.S.-China trade war the most apparent, Rabobank analysts said in their annual global animal protein outlook.
China lifting its ban on U.S. poultry “helps a bunch,” Don Close, Rabobank senior animal protein analyst, told Capital Press.
The ban has been in place since January 2015 following the outbreak of avian influenza in the U.S. in December 2014. USDA estimates the U.S. will be able to export more than $1 billion in poultry and poultry products annually to China.
But the importance of lifting the ban is not so much in quantity or product but because the issue has been resolved, bringing the U.S. closer to a trade agreement with China, Close said,
A new agreement would be a big deal for U.S. pork, given the value of pork purchases that China made in 2019. China bought up everything available globally, he said.
China’s total imports of pork increased 44% year over year in the first nine months of 2019, Rabobank reported.
U.S. pork exports to China increased 89% year over year from January to February and represented 18% of U.S. pork shipments, according to USDA.
The view is U.S. pork production will grow in the next two to three years, but there’s some hesitation, Close said.
“If we ramp up production and we get ASF, there’s nowhere to go but domestically,” he said.
And if Chinese production suddenly returns, expanded U.S. production wouldn’t be needed and there’d be a huge oversupply, he said.
No one wants to be “overloaded with pork the day the music stops,” and that’s true for all exporting countries, he said.
China’s lost pork production has also created opportunity for other animal proteins, with total imports up 54% for beef, 51% for poultry and 27% for seafood, Rabobank reported.
While U.S. beef exports to China rose 35% year over year from January through September, they accounted for less than 1% of total U.S. beef exports, according to USDA.
The U.S. is “the shop at the end of the line” for China’s beef imports, but the country’s purchases elsewhere opened other markets for U.S. beef, Close said.
There have been real opportunities, including growth in the volume of U.S. beef exports to South Korea — where the U.S. is the largest supplier and growing, he said.
There’s also been solid growth for both U.S. beef and pork in Japan. Even more growth is expected now that Japan has put U.S. beef and pork on an equal tariff footing with Trans-Pacific Partnership countries, he said.
In addition, the recent U.S.-EU tariff agreement gives U.S. beef more access to European markets with better opportunity for growth in the EU than the U.S. has seen in decades, he said.