China’s pork industry is reeling from African swine fever, which has spread to every province in mainland China since its discovery last August and has taken 30% of its pig herd out of the equation.
With AFS now affecting 150 million to 200 million pigs of China’s roughly 500 million pig count, the country’s pork production this year is expected to be down 30%, Rabobank reported this week.
China typically produces 54 million metric tons of pork a year. The loss of 17 million to 18 million metric tons due to ASF will be difficult to replace, Christine McCracken, RaboResearch senior protein analyst, told Capital Press.
To put things in perspective, China’s expected loss of production this year is equivalent to annual pork production in the EU and is 30% larger than annual U.S. pork production.
By maxing out domestic production of other animal proteins, including seafood and eggs, China could make up 4 million metric tons of lost protein supplies. Imports of animal proteins could make up another 3 million metric tons, she said.
That would leave a 10 million metric ton gap in animal protein supplies for China, she said.
China could rebuild its pig herd, but that would take years, she said.
At this point, the Chinese government isn’t offering a lot of support for rebuilding. Private companies are looking at it, but it’s a huge financial risk given the threat of recontamination, she said.
The impacts of AFS will bring opportunities to countries and companies with exportable surpluses of animal proteins and access to Southeast Asia. It will also create logistics inefficiencies and raise costs through the entire supply chain, Rabobank analysts said.
How things play out for U.S. exports is uncertain, McCracken said.
“There’s a lot we don’t know,” she said.
There were some record orders of U.S. pork by Chinese buyers this week, but Rabobank’s outlook calls for a fairly slow filling of the supply gap as Chinese supplies run out, she said.
Some Chinese pork producers liquidated last fall before they could be hit with ASF. That flooded the market with product, and a lot of that meat went into freezers, she said.
The Chinese government is now requiring that meat to be tested for ASF by May 1 for large producers and July 1 for small producers. Whatever tests positive will be thrown away, she said.
“I think we’ll start to see these (Chinese) imports really pick up as we reach the end of the summer months,” she said.
But the U.S. faces trade barriers to China’s markets. U.S. pork is facing retaliatory tariffs, U.S. chicken was banned in 2015 due to avian flu and most U.S. beef is barred due to the use of growth promotants in cattle, she said.
But given the fairly minimal exports of U.S. pork to China last year, Rabobank is expecting a sizable increase this year — possibly triple the amount, she said.