Cargill Inc has closed animal-feed mills in China in recent months partly because of the devastating spread of African swine fever (ASF) that has reduced demand.
“This is not a six-month trend for China to recover,” Chuck Warta, president of Cargill’s animal nutrition and pre-mix business, said in an interview with Reuters. “This is a 24-month, 36-month kind of resetting of the world’s population of animals.”
ASF has killed more than a million pigs in China since the nation’s first reported case last August, dropping demand for soymeal, pre-mixes and other feed ingredients.
The outbreak accelerated closures of Cargill animal-feed mills in coastal regions of China that were also prompted by a westward shift over the past decade of the areas in which livestock are raised, Warta told Reuters. He said most of the facilities will not be re-opened even if China gets ASF under control.
Cargill closed three feed and animal-nutrition plants in the second half of the fiscal year that ended on May 31, representing an approximately 150,000-metric-tonne reduction in capacity, according to the company.
Warta said that Cargill still sees a bright future for its animal-nutrition business in China. For example, it is spending $65 million to replace a pre-mix plant in Nanjing and is also buying land to develop a similar facility in Henan province.
“We’re idling some assets, but we’re shifting those resources into a different type of production that is more positioned to serve the market,” Warta said.
Reduced hog feed demand in China, combined with the ongoing U.S.-China trade war and flooding in the U.S. Midwest, has resulted in a 41% slide in adjusted quarterly profits, Cargill reported on Thursday.
ASF is a highly transmissible, deadly disease of swine that does not have a cure or vaccine at this time. The virus does not impact humans and poses no food safety risk.
For more information on the spread of ASF, visit porkbusiness.com/ASF.
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