FEED Business Worldwide April, 2012

 

 

by Eric J. BROOKS

 

 

Among the world's three major meat lines, pork has by far the most unusual, concentrated and yet unbalanced production and consumption demographics.  After falling 3% due to disease outbreaks in South Korea and China (with piglet shortages in the latter), pork output should rebound some 2% back to slightly over 105 million tonnes. 

 

Supply-wise, two countries, the United States and China account for approximately 60% of pork's worldwide production, yet the larger of these two is a net importer.

 

On the demand side, some culture's absolutely forbid its consumption, in other societies, it accounts for over 60% of their entire meat consumption. In sum, pork's production, consumption and income levels are disconnected contradictions united by rising international trade flows.

 

Per capita consumption ranges from near zero in nations with religious prohibitions against its consumption to the 12kg to 15kg range in developing countries such as Thailand and the Philippines. Even however, we find contradictions and unbalanced extremities within individual countries.

 

For example, Indonesia's overall 1kg per capita consumption co-exists with per capita consumption of greater than 30kg per person in its wealthy 10-million strong Chinese minority. As you would expect, wealthy countries such as the United States, Canada, Singapore, Norway and Australia have relatively high per capita consumption levels of 25kg to 30kg.

 

But then comes an even bigger surprise: Despite having substantially lower per capita incomes than either Thailand or Philippines, let alone the west, on average, Vietnamese and Chinese consume 32kg and 38kg of pork per capita. In fact, only the much wealthier EU's pork consumption can equal or exceed that of China.

 

Given their scope for further gains in personal incomes and ongoing rural to urban migrations, both Vietnam and China's pork consumption has a long way to rise yet. Yet, this does not take away from the more obvious point: For pork, more than any other meat line, the relationship between personal incomes per capita and meat consumption completely breaks down.

 

Furthermore, pork's imbalance between income and consumption is complimented by equally large misfits between production and trade. With less than 20% of the world's population, China accounts for over 50% of the world's hog population and pork consumption. America, the second largest producer only accounts for just under 11% of the world's pork production.

 

Even so, China despite its vast production, accounts for approximately 20.6% of world pork imports, and has seen this share skyrocket in recent years. China pork imports went from an eFeedLink estimated 132 thousand tonnes in 2009 to 902 thousand in 2010 and 1.349 million tonnes last year. Hence, the world's pork producing superpower is also a leading net importer.

 

At the same time, Canada's produces only 1.8% of the world's pork but supplies 17.7% of the world's exports, second only to the United States –all this while Canada's pork loses market share at home to US imports.

 

Consequently, among major pork producers, only America is both a very large exporter and a large producer, exceeding third ranked Brazil's production by a factor of three.

 

And pork certainly has its disadvantages. Like its cousin red meat beef, it has poor feed conversion ratios relative to chicken or farmed fish. Hence, even in societies where it is traditionally favoured, pork's high price is flattening out its consumption growth, and making it lose market share to chicken and sea food.

 

But having said that, pork has much more going for itself than any other red meat. When consumers tire of white meat, pork has superior cost fundamentals to beef. Both for this reason and for its deep cultural roots, this makes pork the red meat of choice for developing Asia's prospering masses.

 

Hence, the real question is not pork's prospects but the bridging of its many contradictions: Amid strange disconnects between supply and demand, incomes and consumption, the swine sector's contradictions are being increasingly bridged by trade flows: Today, only 6% of pork demand is met through trade flows but with demand growing in feed poor Asia and supply expanding in North America, this proportion will rise in years to come. We cover them in the pages to follow, where we survey leading pork's leading exporters, importers and producers.