China pork crisis
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A piglet looks for a spot at its mom’s table at a pig farm in Zhoukou, Henan province, in China on June 3, 2018. Photo: REUTERS

More piggies go to the market in China amid swine fever outbreak, leading to cheaper pork

  • Prices of wholesale pork down 15 per cent from January 2018
  • Farmers rush herds to market amid disease containment campaign

Efforts to contain an outbreak of African swine fever have rocked the Chinese pork industry, leading to an unexpected drop in prices during the Chinese New Year holiday season.

While pork lovers in the mainland may be celebrating lower prices during this week’s festivities, the party isn’t expected to last in the world’s largest pork-producing country.

With so many pigs having either been destroyed or taken to market early to avoid being swept up in containment efforts, a shortage of the Chinese staple is expected in the second half of the year, experts say.

As supplies drop off, imports of pork products can be expected to increase. The US, one of the world’s top pork exporters, could benefit, with or without a US-China trade agreement, as its farmers fill the drop in supply or simply get a boost through a rise in global prices.

The outbreak, first reported in early August, is severe, and could take years to get under control, experts say.

To try to contain the disease, Beijing has ordered more than 950,000 pigs be destroyed. That is a relatively small amount of the total number of pigs. What has depressed prices, experts say, is that farmers rushed their herds to market early. That led to a glut on the market, despite the extra demand during the holiday season.

The average wholesale price of pork in the last week of January was down 15.3 per cent from the same period in 2018, according to the latest government figures.

“[Pork] production expansion and replenishment are expected to markedly slow due to great concerns over biosecurity measures,” Rabobank senior analyst Chenjun Pan said. “While pork supply is believed to be sufficient in [the first quarter], the big supply issue will arise later in the year, with pork imports expected to increase substantially due to local supply shortages.”

In a research report, Pan said that pork production in China could drop by as much as 20 per cent in 2019. Meanwhile, the sow herd has declined by about 15 per cent across the country, she said. About 30 per cent of medium-sized farms in the north and northeast have liquidated sows due to financial stress as prices have dropped, she estimated.

African swine fever, which initially was documented in Kenya in 1921, has spread in recent years from Eastern Europe to Russia, and now, to China. Animals infected with the virus often exhibit a high fever, loss of appetite and a reddening of the skin, particularly around the ears and snout.

The disease also can live in cured meats for more than four months and in frozen meat for years, allowing its spread to other parts of the globe, according to the Centre for Food Security & Public Health at Iowa State University.

“It’s not going to disappear overnight,” said Juan Lubroth, chief veterinary officer with the Food and Agriculture Organisation (FAO) of the United Nations. “I would not be surprised if we have more [Chinese] provinces become infected, [and] possibly provinces or regions that have lifted their quarantine to be reinfected.”

The Chinese government has implemented a number of measures – including forced culling, buffer zones near areas where outbreaks have occurred and restrictions on movement of livestock within the country – to try to combat the spread.

“The institution of these directives have proven very useful, but … we don’t have all the tools in place to be able to eliminate and eradicate in a short period of time,” Lubroth, the FAO veterinary officer, said.

Lubroth noted that it took more than three decades to eradicate the disease on the Iberian Peninsula following an outbreak in Portugal in 1960 and China has a much wider variety of production methods for pork, ranging from small farmers to large industrial operations.

Prices for pork within China are varying more than usual, due to restrictions on livestock movement.

In mid-January, in the run-up to Lunar New Year, the prices of live pigs in southwest China, where more pigs are traditionally trucked in to be slaughtered, were more than double what they were in the northeast, according to government data.

Angela Zhang, head of the business intelligence division at IQC Insights, said that farmers in the north are losing money, compared with their counterparts in “pork consumption-lopsided areas, such as Guangdong and Zhejiang,” because they aren’t allowed to transport their pigs there.

In the northeastern provinces of Liaoning, Jilin and Heilongjiang, local farmers are losing 300 yuan for each pig of standard weights – about 115 kilograms – and as much as 500 to 600 yuan for each over-fattened pig, she said.

“It’s expected that there would be a short supply of pork in the second half of 2019, especially in southern pork consumption-lopsided areas,” Zhang said. That said, domestic pork consumption has been somewhat dampened this year by concerns over swine fever, she said, despite that it isn’t transmitted to human.

The swine fever outbreak has come as trade tensions between the United States and China have been at their highest levels in years.

The trade tensions have cut into the price of pork in the US, as American producers have been forced to look to other markets outside China.

According to the Ministry of Agriculture and Rural Affairs, China’s pork imports from the US and the rest of the world declined by 2 per cent to 1.19 million tons in 2018 and imports of pork offal, such as tongues, snouts and organs, declined by 25.1 per cent last year.

However, optimism has risen in recent weeks that the US and China will reach an agreement on trade by the beginning of March ahead of a Washington-imposed deadline, which could boost pork imports.

“Stronger second-half export demand from China could provide additional upside to [US pork] prices later this year, but the timing and magnitude remain difficult to estimate,” according to Pan, the Rabobank analyst.

This article appeared in the South China Morning Post print edition as: year of pig could see a pork shortage as fever spreads