China's strong imports not ending any time soon

The Western Producer | 12/03/20


Pork prices in China in Octo-ber were three percent lower than the same month a year ago, marking the first year-overago, marking the first year-overyear price drop since February 2019.

The pig herd was up 27 percent from the year before and the sow herd up 31.5 percent.

That is significant because it shows China is making progress controlling its African swine fever outbreak, is rebuilding its breeding herd and is starting to generate more slaughter pigs.

However, it will likely be several years before its hog industry is back to pre-ASF levels, and the road to full recovery might yet be bumpy.

So the good news is hog producers in exporting countries, including Canada, will likely continue to enjoy the benefits of strong export demand in 2021 and 2022.

But they should also start to consider what the global market might look like mid-decade, once huge Chinese pork imports fade away.

Those imports came on suddenly and dramatically.

In 2017 and 2018, the two years before ASF hit, China imported about 1.5 million tonnes of pork or about 20 percent of total global pork trade of 7.5 to 7.6 million tonnes.

Imports jumped in 2019 as the country culled huge portions of its herd to limit the spread of the disease.

They soared further this year, driving global pork trade to unprecedented highs.

Full year Chinese pork imports are forecast at 4.8 million, or 46 percent of total global trade of 10.37 million tonnes, according to the United States Department of Agriculture October Livestock and Poultry World Markets and Trade outlook.

Canadian pork producers benefited from the increased demand this year but not in 2019 when China blocked this country's product from June to November.

This year, China is the largest export customer of Canadian pork.

In the year to September, it bought about 482,000 tonnes of Canadian pork valued at $1.27 billion or 34 percent of total exports.

By value, that's up 158 percent over last year at the same time and that helped push the total pork exports up 21 percent.

The increased business should easily make 2020 a record-smashing year for Canadian pork exports.

Alas, because of COVID-19 disruptions to hog slaughter operations, mostly in the United States, North American hog prices were not able to fully reflect the benefit of the increased demand.

As China rebuilds its herd, there will likely be at least one more year of strong imports, as long as there are no new trade disruptions, which are an ever present possibility. For example, China is testing more for traces of the coronavirus in imported frozen meat and packaging and occasionally finding it.

This raises worries that they might impose restrictions even though health experts say the potential to catch the virus from cold storage items is exceptionally low.

The USDA forecasts that China's pork production will climb to 41.5 million tonnes in 2021, up nine percent from the 38 million tonnes produced in 2020 but still far below the 54 million tonnes produced in 2018.

It expects demand will also climb. At 45.9 million tonnes, it will still far outstrip production.

It forecasts China's pork imports in 2021 at 4.5 million tonnes, down slightly from the 4.8 million this year but still a huge amount compared to 2018 when it imported only about 1.5 million tonnes.

The USDA did not make a forecast for 2022.

The agricultural investment bank Rabobank forecasts that China will be back to 95 percent self-sufficiency in pork by 2024-25.

Rabobank says the increased production is coming from new, top of the line, biosecure facilities that are replacing backyard production.

The new facilities should allow China to reduce ASF outbreaks and better manage any that do occur, it says.

Some animal health experts and analysts believe that is an overly optimistic view, noting backyard production will not disappear.

And even China's officials actions show there is much ground yet to make up.

The insightful producer of in October noted Chinese agricultural officials in one breath celebrate the hog industry's recovery but in the next demand provincial and local leaders not slack off from rebuilding efforts. They must facilitate new barn construction, ease up on environmental impact assessments, distribute aid money quickly and encourage banks to support the industry.

Ultimately, China will likely again reach near-self-sufficiency and its imports will fall. And self-sufficiency might be easier to achieve given Beijing's efforts since 2016 to get its citizens to eat less meat and, more recently, to curb food waste.

Growing import demand from other countries will take up some of the slack but there is a significant chance some exporting countries will have to scale back production.

To contact D'Arce McMillan, email [email protected]

CHINA BUYING PORK Huge Chinese pork imports should continue in 2021, according to a forecast from the U.S. Department of Agriculture. The level of trade in subsequent years will depend on how quickly China can recover from African swine fever.

Source : The Western Producer