April 27, 2021

China's plan to control live swine transport could reshape domestic pork industry

China's plan to control live swine transport in the country, to prevent the spread of African swine fever (ASF), could reshape the market and establish price differences between regions in the country, Bloomberg reported.

China's Ministry of Agriculture and Rural Affairs said last week that it would divide the country into five regions from May, with live swine prohibited from being transported between different regions.

This move could potentially drop pork prices in the north, where most of the country's pork is produced, and increase pork prices in south, where the meat is in high demand.

If the movement restrictions remain in place over a long term, swine companies may be forced to open swine farms in the south.

Lin Guofa, a senior analyst at consultancy Bric Agriculture Group, said 20% of swine in China or 140 million live animals, are transported mainly from the northeast to the south to meet pork demand there.

Lin said these areas in the south would have to build swine farms, but movement of frozen meat over live swine will be promoted, resulting in the cold-chain industry's expansion.

The top swine producing region in China is based in the northeast because of plentiful corn supply and easy access to land. Xinjiang, based in the northwest region, has also been identified for pork production expansion.

Wang Zhong, chief consultant at Systematic, Strategic & Soft Consulting Co, said movement restrictions will drop pork prices in the north over the short term while prices in the south go up. He said these will spur major swine producers such as Muyuan Foodstuff Co, New Hope Liuhe Co, and Wens Foodstuff Group Co to construct more swine farms in the south and more slaughtering plants in the northeast and northwest.

China's Ministry of Agriculture and Rural Affairs said the measure is similar to systems developed in Spain and Brazil that are successful in eradicating ASF, adding that regional controls are an inevitable choice.

- Bloomberg