China’s hog prices have climbed 25% since July and the escalating trade dispute with the U.S. has limited China’s import options. In addition to the import restrictions, a new report from CoBank’s Knowledge Exchange Division estimates that more than 70% of China’s hog production is being affected by the larger quarantine and hog movement restrictions in China.
“African Swine Fever in China may be the event that helps bring U.S. pork supply and demand back into balance for years to come,” said Will Sawyer, lead animal protein economist with CoBank’s Knowledge Exchange Division.
China is the world’s top producer and top consumer of pork. African Swine Fever has spread to 12 Chinese provinces over the past three months and about 70,000 pigs have been culled to prevent the spread of the virus, The Guardian reports.
In the past, when pork prices have increased, the Chinese consumer has switched to chicken as their main source of animal protein. 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. “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.”
However, these increased imports will come at increased cost as the Chinese source pork from the European Union and Canada, said Sawyer.
“The real opportunity here is for U.S. producers is to capitalize on reduced global competition in pork,” said Sawyer. “Pork producers could potentially climb back to breakeven and maybe to positive territory next year, but it will largely depend on how the ASF story unfolds in China.”