May 1, 2020

 

Pork shortage from ASF helped China avoid killing piglets

 

 

Due to the overall shortage in the Chinese market from last year's ASF, Chinese pork producers did not need to euthanise baby pigs to avoid excessive supply amid falling demand in the current COVID-19 crisis, industry analysts told Sputnik.

 

After more than two months of strict lockdown measures to fight COVID-19, domestic pork prices in China have dropped for the 10th consecutive week to RMB44.27 (about US$6.26) per kilogramme this week, officials from China's Ministry of Agriculture and Rural Affairs said Tuesday.

 

However, unlike many farmers in the US who were forced to kill thousands of piglets this week due to the disruption of the meat supply chain caused by COVID-19, Chinese pork producers never had to cut back their production capacity because of the overall supply shortage in the market, industry analysts said.

 

"From the fourth quarter of last year until now, the overall market for pork in China has always been still rather short on supply because of the African swine fever epidemic. But the COVID-19's impact on consumption has helped balance the situation a bit," said Zhu Zengyong, a researcher at the Pasturage Institute under the Chinese academy of Agricultural Sciences in Beijing.

 

According to official figures from the National Bureau of Statistics, China's pork prices jumped 42.5% on-year in 2019, and the nation's pork production fell by 21.3% from the previous year to 42.55 million tonnes.

 

Chinese pork producers were forced to kill millions of hogs last year to halt the spread of the African swine fever, a disease that would sicken pigs without affecting human beings.

 

Zhu pointed out that the current pork prices in China could be a good indicator of the supply shortage.

 

"Under normal conditions without adverse impact from epidemics like the African swine fever, the domestic prices for pigs should be around RMB14-18 per kilogramme. But the nationwide average price for pigs is still around RMB33 per kilogramme today," he said.

 

The analyst suggested that the relatively high prices for pork gave Chinese producers no reason to cut back their production capacity, as US farmers did.

 

"Although pork prices in China have fallen for over 10 weeks, the profits for pork production is still relatively high even compared to the previous peak in 2016. Even when the pig price was at RMB21 per kilogramme, the profits for each pig reached RMB1000-RMB1200. That's why the profits [under the current price of RMB33 per kilogramme] are much better today," he said.

 

Zhu explained that China's decentralised pork supply chain also helped the nation avoid similar disruptions the US faced because of the COVID-19 epidemic.

 

Nevertheless, other Chinese industry analysts expect pork prices to continue to fall as consumption recovers slowly.

 

"In the short term, pork prices in China will continue the trend of decline. That is because many private Chinese companies will continue to face the challenges of shrinking exports amid the global COVID-19 pandemic. That is why the domestic consumption will stay lackluster," Feng Yonghui, the chief analyst at pork industry consultancy Soozhu, said.

 

The lockdown measures have not only hurt pork consumption in restaurants but also led to people eating less meat at home, Feng pointed out.

 

"The drop in pork consumption in restaurants was very obvious. But even for households, as most people stayed home and did not have the chance to exercise, many chose to eat less meat in their diet. That is why overall pork consumption was lower," he said.