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Global pork output declines amid the African swine fever in China


  • Overview of the global meat industry
  • Impact of the African Swine Fever on China’s pork and meat industry in general
  • Road ahead for the meat industry

 

The African swine fever (ASF), a virus that kills almost every pig it infects, was the biggest story in 2019 that impacted the global meat industry. The epidemic is sweeping through Asia, wiping out more than half of China’s pig herds (about half of the world’s pigs lived in China, before the epidemic) and sending ripple effects across the world. As per the Food and Agriculture Organization of the United Nations (FAO), the global meat production for 2019 is expected to be around 335 million tons, which is 1% lower than in 2018. This decline is a first in two decades: an impact because of the African Swine Fever that hit China (the world’s top pork producer and importer as well) and several other East Asian countries in 2019. This impact resulted in a dramatic decline in pork production in the world’s top pork producer China for 2019 to a 16-year low, as the fatal swine fever killed millions of pigs in the region. Between 2018 and 2019 the pork meat production in China declined by approximately 20% to 44,127 thousand tonnes, as per data by FAO. As per studies by INTL FCStone, China’s total swineherd has declined by about 45% since August 2018, when China notified the World Organization for Animal Health that ASF was detected in the country. The rapidity at which the ASF has spread across the Asian region is partly due to the buying habits in the region – live pigs are supplied to the markets since there is still distrust of frozen meat in packages unlike the western regions. And despite the efforts from the governments, the pig industry in the region is still dominated by the small backyard farmers.

Pork still dominates out of all the meat options in China. The average Chinese consumes 30 kg of pork a year as compared to people in the US and the UK with an average consumption per person consumption of 26 kg and 18 kg of beef, respectively. This decline in the production has surged the pork imports into China. The estimated figures of imports stood at 1,924 thousand tonnes, the ASF crisis has pushed imports to a forecasted 2,819 thousand tonnes for 2019 and increase of about 47% in between the period, and has the country now looking to certify farms and import from South America and some parts of Europe. China even lifted the ban on imports from Canada to cater to the shortfall. Also, while China had accounted for about 4.3% of the US’ pork exports in 2018, it had already accounted for 11% by September 2019 (till the first three quarters of 2019), as per data of US Census Bureau. China which stood as the sixth market for US pork exports, is on track to be the second most important market. This downfall in production in China has presented an opportunity for foreign producers of meat and meat substitutes across the world, which have been targeting the big Chinese market for expansion. The main countries that could stand to gain from this decline in production in China are the South American countries of Argentina and Brazil which have recently been approved to export pork to China including beef and chicken. In addition, countries of Europe also stand an opportunity to gain more access to China’s meat imports.

This decline in pork production in China because of the swine flu is contributing to the shortfall in overall meat supplies and this is expected to drive up the prices for chicken and beef in addition to the price of pork itself in 2020. In addition, the decline which led to an increase in beef and chicken imports in 2019 in China is further set to increase in 2020 for the country. As a result of this shortfall, the pork prices are rising outside China (pork price rose by 110% as of November 2019 in China from that of November 2018) as well, as per China’s National Bureau of Statistics. The impact of the ASF has also been felt across Europe, which has also seen an increase of 35% in November price since the beginning of 2019. The surge in the imports from Asia because of this crisis has also been cited as a major factor for the 10% rise in the United Nations global food index in November 2019 as compared to the same period in the previous year and also for the 4.6% increase in the meat price index between October and November of 2019, which has been the biggest leap in between months in more than a decade. Recovery is a top priority for China and in December 2019 China’s Ministry of Agriculture launched a 3-year action plan to expediate the recovery of the crisis and bring production back to stable. China says the worst of its pork crisis is over, as the number of breeding pigs has slightly stabilized and picked up as well, according to the data by its Ministry of Agriculture and Rural Affairs. But many Analysts are still not convinced of the situation being stable and expect the deficit to continue for the new couple of years. In fact, scenarios produced by Rabobank and European Commission predict a much slower recovery and expect stability only by 2025. The deficit in meat trade for 2020 will depend on how the African Swine Flu is contained and prevented from spreading further (as there is still no commercially available vaccine for ASF), and also on how the trade relations work out between China and the United States, considering the US is the biggest pork exporter in the world.

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