With more than 10 Chinese providences reporting cases of African Swine Fever, a new report says this event could change the balance in the global protein sector.
With up to 200,000 pigs culled in an effort to control the virus spread, a report from CoBank’s Knowledge Exchange Division, say the disruptions have potential benefits for U.S. producers.
China’s hog prices have climbed 25% since July, CoBank says, and escalating trade disputes have limited China’s import options.
Overall, ProFarmer’s Jim Wiesemeyer says Brazil has now overtaken the U.S. as the top ag import supplier to China. Imports of food and agricultural products from Brazil totaled $3.6 billion during September 2018, about 30% of the total. Imports from the U.S. were $625 million — a 5% share.
In the past, when pork prices have increased, the Chinese consumer switched to chicken as their main source of animal protein, CoBank says. However, since 2014, China’s poultry sector has struggled with negative publicity.
“In 2016, when hog prices climbed to all-time highs, chicken prices barely budged,” said Will Sawyer, CoBank. “Consumer switching is always a possibility during price shocks, but with human fatalities and other food safety risks in China we think consumers will continue to demand pork, which will be met by imports rather than domestic Chinese production.”
If China did start importing pork, it would turn to Canada or the EU first, economists say, rather than pay the 62% retaliatory tariffs on U.S. pork imposed as part of the ongoing trade war. But if the highly contagious disease were to reach epidemic proportions, China would effectively be forced to buy from the U.S., even with the high tax on imports.
See a recap of pork export volume and values, as of August 2018, compiled by U.S. Meat Export Federation.
“If things got really bad, when Canada would run out of pork, and there might be a point where people would pay those kind of duties,” said Dermot Hayes, co-director of the Food and Agricultural Policy Research Institute at Iowa State University, told Politico. “But the situation would have to get extreme.”