By Bloomberg News
China’s efforts to normalize hog output by the end of 2020 may face hurdles as breeding costs have risen and most small- to medium-sized farms may not be active in restocking.
Those farms used to supply a lion’s share of China’s hog output before African swine fever outbreaks. The country’s pork output may drop 7.5% from a year earlier to 39.3 million tons in 2020. But production may return to close to normal by next year, according to the agriculture ministry’s outlook committee.
At present, a recovery in the hog sector is mainly driven by large farms, said Zhou Lin, chief analyst of the committee. Small- and mid-sized hog farms may not restock as quickly as expected due to surging piglet prices and potential risks from the swine fever, Zhou told a conference on Monday.
The likely slow pace of recovery coincides with weaker demand for pork by restaurants as well as households due to the coronavirus pandemic, with consumption seen dropping more in rural areas. Pork consumption fell 19% from a year earlier to 42.6 million tons in 2019, the ministry’s data showed.
However, China could face difficulties in supplying enough meat later as more and more factories and schools, shut due to the coronavirus outbreaks, resume operations, Yu Kangzhen, vice agriculture minister, said at the conference.
Pork shortages could boost poultry consumption this year, analysts said. China’s pork output fell almost 30% in the first quarter from a year earlier, as the swine fever cut herds and a lockdown due to the coronavirus disrupted transport and impacted the availability of labor.
The virus attack may also impact pork imports, said Zhou. The committee earlier expected China’s purchases, mainly from Spain, the U.S. and Germany, to grow by more than 30% to 2.8 million tons in 2020.
High pork prices will also increase demand for protein-rich soybeans, used to make tofu and other soybean-based food items, said Wang Yu, an analyst with the ministry. China, the world’s biggest buyer of the commodity, produces non-genetically modified soybeans, while imported beans are only allowed for making animal feed and edible oil.
Domestic consumption of soybeans rose 11% from a year earlier to 14 million tons in 2019. Output is expected to continue to grow this year after rising to the highest-ever level in 2019. Robust food demand has pushed up domestic soy futures, hovering near the highest level in seven years.