The Chinese pork industry's slow recovery from ASF spells opportunity for Canada

Back in February, the opportunity for pork and beef protein exports from North America to China was so promising. The potential vacuum of demand for proteins after African swine fever (ASF) outbreaks in the Chinese pork industry could have been filled by North America, but COVID-19 has thrown a wrench in the whole prospect.

“The China ASF story is unbelievable. Half of the pigs in the world lived in China, before ASF,” says Brett Stuart, CEO of Global AgriTrends. “By my estimate, 60 per cent of them are gone, so that equates to 30 per cent of the world’s swine herd is now gone.”

That’s a staggering number. Stuart has followed the Chinese hog markets for almost 20 years, and used to make frequent trips to China to keep tabs on the markets; and for swine conferences, the most recent one he attended was last May.

Before ASF, pork was eaten every day in China, and now it’s only the wealthy that can afford it. In North America, if pork was unavailable in the grocery store and prices were up 100 per cent, politicians would be pounding the table saying they will fix it; but in China, nobody’s up for re-election and it is what it is for the people.

An enormous amount of meat is still flowing to China. “Before ASF, China imported about $750 million a month of beef, pork, and poultry, from the whole world. Right now they’re averaging $2.2 billion a month,” says Stuart. The vast majority of this is from the southern hemisphere, a bit is from Canadian sources, and they’ve just opened the U.S. export border into China.

Nobody knows how many hog farmers and hogs there are in China, so it’s hard to estimate when the hog herd will be rebuilt. Furthermore, the hog recovery plan set out by the government dictates that Chinese media only write positive things about ASF recovery.

“The production side is a myth, they estimate there are over 40 million Chinese hog farmers,” says Stuart. “That’s probably off by 10 million, who knows, so no one knows how many pigs there are and no one knows how many farmers there are.” (Story continues below player)

The last survey data showed that 85 per cent of Chinese hogs came from farms with less than 1,000 head. The large hog companies are building sow units all over the country, but are only responsible for weaner hogs, while the smaller farms finish them. Smaller farms that share feed mills, trucks, and packing plants, are still battling ASF.

While margins of $380 per head sounds great — until a 50 per cent death loss is included in that equation. Stuart thinks that over five years, the Chinese hog herd might be back to 80 per cent of where they were.

With such a high hog density, the prevention and battle against ASF is going to be difficult for China. “Swine disease is just endemic in China, there’s just no way around it, and ASF is a virus that’s very hardy,” says Stuart. “It’ll last 30 days in a contaminated pig pen, the virus is still active. In frozen meat it’ll last a year or more.”

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