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China’s Pig Predicament: Pork Shortages, Rising Costs, and Fluctuating US-China Sentiments

Nov 15, 2019

China’s African swine fever outbreak has had complex and diverse implications domestically, regionally and bilaterally. For Chinese consumers, pork shortages have equated to price increases, leaving producers scrambling for solutions. Regionally, China’s neighbors are feeling the slipover effects of the out, with varied capacity to limit its impact. 

The small bright spot? A boon for US pork producers looking to fill the gap created by widespread herd culls. However, the US-China trade war has spelled trouble for American producers’ clamoring for greater access to the Chinese market. While pork producers were exempt from the September round of tariffs, they were slammed with fluctuating costs over the course of the last year alone. China’s pig predicament communicates the complex range of priorities in US-China trade tensions: when it comes to putting pork back on people’s plates, both American and Chinese stakeholders are aligned. 

The Domestic Impact of African Swine Fever

As China’s pig herds are dying, consumers are taking the hit. Since its onset in 2018, African swine fever has been devastating Chinese herds. Chinese pork production was down 5.5 percent during the first six months of 2019. China’s live hog population comprised about half of the global total in 2018, and fell 41.1 percent at the end of September from 2018. While reliable data is sparse, outside evaluations estimate that 30 percent or more of Chinese herds have been depopulated, with the potential for that number to skyrocket to 50 percent by the end of 2019.  This figure may not accurately reflect the number or pigs that have been slaughtered or died of infection.

The end result: skyrocketing pork prices and shortages across the country. Prices shot up nationwide by 69 percent in September from a year earlier. The direct and widespread impact of ASF on Chinese pork production shows no signs of stopping – with reverberations felt across markets and regions.

As the world’s largest producer and consumer of pork, Chinese customers and producers are scrambling for alternatives as pork prices arise and shortages emerge. Beijing has urged poultry producers to boost output to help supplement the fall in pork production. The Chinese government has adopted emergency measures to boost pork supply, primarily supporting expanded domestic production while increasing imports. China’s pork imports increased by 43.6 percent to 1.32 million tons over the first nine months of 2019, while auctioning off stockpiled pork reserves.

Costs and Opportunity: The International Impact of ASF

On the international level, China’s pig predicament presents challenges and opportunities. While pork shortages are impacting countries across the region as the fever spreads, the ASF outbreak is also stress-testing response readiness and presents a window of opportunity for pork exports.

Its immediate impact is the rapid spread within China to six neighboring countries, including South Korea, Cambodia, Myanmar, and Mongolia. As no cure exists, neighboring nations have little choice but to cull any infected livestock. Disease response readiness systems among these countries varies widely. While some nations, like South Korea, have more hi-tech capabilities and tested response systems, other nations, like Myanmar, have more rudimentary systems, which impacts their capacity to address outbreaks. Despite being on high alert since mid-September, South Korea still recently ordered a cull of 1% of its swine population following discovery of new cases.

For the US, China’s widespread shortages presents a strategic opportunity – one complicated by existing geopolitical realities. While ASF is devastating to Chinese producers and consumers, it presents a large, underserved market for US pork producers. As American herds have thus far remained unaffected by the outbreak, tapping into a market that accounts for roughly half of global pork consumption is an appealing prospect. American global pork exports are faring well, expecting to grow by 12 percent in 2019 and 14 percent in 2020.

Further increases are anticipated given the recent lifting of Chinese retaliatory tariffs in mid-September, but tariffs disruptions have already significantly limited export opportunities. Successive rounds of tariffs since 2018 have levied a 72 percent tariff on American-produced pork, in comparison to a 12 percent tax on US competitors. This level of uncertainty limits producer capacity to evaluate and access the Chinese market, with direct negative repercussions for producers and consumers alike.

ASF Meets Trade War 

US-China trade tensions are often discussed as a standalone, even monolithic issue. While trade war tit-for-tat measures do affect consumption patterns, the complex takeaway from China’s African swine fever outbreak is that this vital relationship is highly reactive to external and unanticipated forces. Natural disasters, unseen fluctuations, and market downturns exacerbate existing trade measures, but also drive stakeholders to new concessions and resolutions. While pork was initially on the chopping block as a tariff target, compounding pressures from African swine fever and enduring demand were likely factors in easing tariff measures. The takeaway: US-China trade war measures don’t exist in a vacuum, but are affected by very human needs and events.

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