August 16, 2005

China's live hog industry feels impact of pig bacteria outbreak

An eFeedLink exclusive report

Recent human deaths from the pig bacteria, streptococcus suis, in cities within Sichuan province such as Ziyang and Neijiang, have greatly affected the lives of local residents and dealt a terrible blow to the local live hog industry.

In a recent announcement by China's health ministry, the report from Sichuan's health department stated that, as of August 3, there were 206 human cases of streptococcus suis infections, including 43 laboratory diagnosed cases, 122 clinically diagnosed of the disease, and 41 suspected cases. Of these, 26 people have been discharged from the hospital, 18 remained in critical condition, and 38 have died. The cases were distributed across 26 counties, 96 towns, and 164 villages in nine cities.

Sudden, unexplained deaths of pigs were also dispersed across regions. The 459 dead pigs were distributed across more than 300 individual pig farmers with poor sanitary conditions, while no cases have been reported in medium, large and hog breeding farms. The agriculture ministry's laboratory, in using the Polymerase Chain Reaction (PCR) method, has ruled out other types of bacteria and viruses. It identified the pig bacteria, streptococcus suis, as the cause of the epidemic in its preliminary diagnosis. The disease's mode of transmission was still being investigated.

Since the first ten days of July, when news spread of human infections in Ziyang and other areas, locals in Ziyang and Neijiang have shunned pork. This was despite the fact that the disease has been identified and streptococcus suis vaccines have been flown into Sichuan for live hog inoculations. With uninformed locals panic-stricken and most city residents avoiding pork, local pork transaction volume fell, dropping between 20 and 30 percent in areas surrounding the epidemic site. The greatest fall registered was by as much as 40 percent. Many people turned to consumption of poultry or other types of meat.

Consequently, transaction volumes of domesticated poultry such as chickens and ducks, and aquatic products such as fish, have significantly increased with an accompanying rise in their prices. On the other hand, local pork prices plummeted. Transacted prices of foreign common cross-breed hogs in Sichuan and native common cross-breed hogs hovered at RMB5.60/kg and RMB5.20/kg respectively, a fall of RMB1.4/kg and RMB1.2/kg respectively from the pre-epidemic period. Both represented a price fall of about 20 percent.

Following the outbreak, other regions in China have temporarily suspended or restricted cross-province live hog and pork deliveries from Sichuan. As Sichuan was the largest live hog producer in China, cross-province deliveries totaled nearly 20 million hogs annually, or about one third of total cross-province deliveries in China. Thus, those measures were unfavourable to Sichuan's live hog industry. Consequently, Sichuan's live hog farmers have incurred great losses, especially for backyard farmers. Sichuan's neighbouring municipality, Chongqing, has set up 12 stations to conduct stringent checks on all live hogs delivered from Sichuan. Meanwhile, stringent checks were also carried out across Guangdong province on pork from Sichuan. 

Of greater concern was that Russian Customs that have banned Sichuan's live hog products since 2004 have not shown signs of relenting. To maintain its export volume to overseas markets, Sichuan relied on exports to North Korea, which eased sales pressure on the province's live hogs for this year's first half. During that period, Sichuan's hog exports reached 75,000 tonnes, or 50 percent of the previous year's export volume. However, analysts expected the impact on Sichuan's overseas markets to be severe, if the negative image from the recent outbreak was not properly addressed.    

Of paramount concern at this point, was the extent to which the Sichuan epidemic would impact live hog prices across China. Located in south-west China, Sichuan delivered its live hogs mainly to Chongqing and Guangdong provinces. With both regions stepping up quarantine checks on live hogs from Sichuan, live hog supplies in Chongqing and Guangdong were expected to fall consequently, which may prop up live hog prices there. However, since the beginning of the summer season, high temperatures meant that any increase in live hog prices in both regions were expected to be marginal only. Sichuan's live hog markets remained the hardest hit, with recent transacted prices of live hogs across the province plummeting.

Gripped by fears of the disease, consumers across China are now weary of eating pork. Analysts said if the outbreak was not brought under control effectively, it would not only heighten fears of pork consumption by Sichuan's consumers, but also that of consumers in other provinces. This would deal a big blow to the Chinese live hog industry. On the other hand, if epidemic control was effective, damage to the domestic live hog industry was expected to be localised and restricted.

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