China’s record pork imports of 4.3 million metric tons in 2020 is expected to drop by 14% in 2021 to 3.7 million metric tons due to increasing domestic supplies, USDA said in its most recent Foreign Agricultural Service (FAS) report.
“COVID-19 continues to directly and indirectly constrain pork imports, including the Chinese government taking regulatory action against foreign facilities,” the report noted. “China’s opaque policies towards imported meats will create a significant amount of business uncertainty among the meat industry.”
Overall swine production and slaughter in China will hit record lows in 2020 as African swine fever (ASF) continues to leave its mark on China’s hog industry. Since the first ASF case reported in August 2018, China’s Ministry of Agriculture and Rural Affairs (MARA) has reported 171 ASF outbreaks to the World Organization for Animal Health, as of March 20, 2020. However, in the first half of 2020, only 16 outbreaks (mostly on small, backyard farms) were reported, the report noted.
“MARA now claims that ASF is generally under control and the swine production recovery is better than expected. Industry reports that confidence in MARA’s guidance and support is growing and industry attributes much of the recent success to the government assistance,” the report said.
Beginning hog and sow inventories are forecast up in 2021, at 339.8 million and 31.0 million, representing increases of 9% and 15%, respectively. Comparatively, the 2020 beginning hog and sow inventories started from low levels at 310.4 million and 27 million, respectively.
Since 2019, MARA has tracked nearly 14,600 swine farms that have built new facilities or expanded construction of existing facilities, the report says. During the second half of 2020, MARA predicts 120 million head of the current inventory can be attributed to new capacity. MARA expects that number to increase moving into 2021.
MARA reported that sow inventory grew during the last eight months, with cumulative growth up 23.3% from October 2019 to May 2020. In April 2020, all provinces reported growth of live pig and sow inventories from the prior month; this growth continued in May for 29 out of 31 provinces.
Robust slaughter in 2021 will drive pork production up to 41.5 million tons, the report said, from the record low level of 38 million tons in 2020. The 2021 ending pig inventory is forecast up at 370 million head, equivalent to over 80 percent of pre-ASF levels.
The Lasting Impact of ASF on Demand
Although pork production will continue to increase through 2021, the effects of ASF will persist and create challenges from a demand perspective for three reasons, the report explained.
1. The overall demand for pork has decreased in China.
While pork has traditionally been the primary meat for Chinese consumers, other proteins like poultry, beef, seafood, and mutton have seen sizeable gains in their share of the Chinese diet.
2. Consumers have become more accustomed to eating chilled/frozen pork.
In order to combat the transmission of ASF through live animals, China encouraged slaughtering and processing to take place outside of urban areas, limiting the availability of freshly slaughtered “hot meat.” ASF accelerated this shift across the country.
3. Pork prices will likely remain elevated above pre-ASF levels.
After reaching record high levels in the latter half of 2019, prices fell for several months in 2019 and 2020, but have resumed an upward march as demand has increased following the reopening of schools and businesses across China. Even as the “pork supply gap” is eliminated and production reaches equilibrium with demand, prices will remain high due to the increased production costs.
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