March 5, 2012

 

China's successful battle against outbreaks stabilises pig herd numbers

China's pig herd numbers will not drop due to the successful fights against disease outbreaks, which have increased the country's reliance on imports for pork.

   

While data on animal diseases are tightly supressed in China, sources have told US Department of Agriculture staff in Beijing that outbreaks were "about 60%" lower in the October-to-December quarter than a year before.

 

The decline seen down in part to a mild winter, which is the peak period for swine diarrhoea, which causes death rates of 30% on commercial farms, and 50% among backyard producers.

 

"Most cases occur in the winter, particularly south of the Yangtze River, where temperatures are cold and wet and no heating is available in pig pens," the USDA's Beijing bureau said.

 

However, inoculations are also seen as having supressed the spread of blue ear disease and foot-and-mouth disease, of which epidemics in the past have forced large-scale animal slaughter.

 

"Sources reported that no major foot-and-mouth disease or blue ear disease outbreaks have occurred to date for 2012," the bureau said in a report.

 

"China's improved veterinary service and new foot-and-mouth disease vaccination have helped the death rate remain at a relatively low level compared to previous years."

 

The USDA staff said that, with pig production also being encouraged by subsidies, China's sow stocks may be two million head higher than the official USDA figure of 47.3 million figures, lifting forecast piglet production this year to hit a record 680 million.

 

"China's policies for breeding animals and productive sows are encouraging farmers to increase their inventories, in order to help prevent another year of tight supplies and record high prices."

 

However, the bureau stuck by an estimate that pork imports will, nonetheless, reach 560,000 tonnes this year, the official USDA figure, and a highly sensitive estimate for the global hog industry given the price rises fostered by China's soaring imports last year.

 

China consumes, at more than 50 million tonnes, half the world's pork every year. While this is nearly matched by domestic production, even small variations either way have a huge impact on the world pork trade, and the profitability of hog farmers in exporting nations.

 

China's pork imports will be supported this year by consumption at a higher rather than had been expected, "mainly due to larger domestic supplies and lower prices", the report said.

 

China's pork prices are an issue of global economic importance, accounting for one-third of the food price index, which is in turn a major component of consumer price inflation.

 

World financial markets moved to China's tightening of monetary policy last year to curb inflation, and to the start of a reversal of that stance this year as price rises have eased.

 

China's pork prices in turn reflect the price of animal feed, including the soymeal processed from imported US soybeans. China is the biggest buyer of soybeans, accounting for more than half of world imports, a factor which in turn boosts farmers' enthusiasm for the crop, over alternatives such as corn.

 

Goldman Sachs has identified a close correlation between Chicago soybean prices and China's inflation rate.