September 20, 2011


China's 2011 pork imports to hit record volume


Pork imports in China are likely to hit a record one million tonnes this year, but the surge will have limited influence on surging prices, analysts said.


"China imported about 400,000 tonnes of pork and pork offal in the first five months of this year, up 43% on-year, and imports will probably hit one million tonnes this year," said Ma Chuang, deputy secretary-general of the China Animal Agriculture Association.


An earlier report from the Netherlands-based Rabobank Group indicated that the potential gap between pork supply and demand would be between 2-2.5 million tonnes in 2012. The import volume of pork and pork offal was forecast at 1.1-1.4 million tonnes this year, up 25%-60% from 2010's figure.


China's pork prices, a key driver of inflation, rose 0.7% in the week ending September 11 from the previous week, hitting a new record, data from the Ministry of Commerce showed on Wednesday. It was the fifth consecutive weekly rise in pork prices.


"The imports of pork and pork offal will not have an actual influence on surging domestic prices because imports only account for a very small share of China's huge pork consumption, and it is not practical to turn to imports to curb the price," analysts said.


The price of pork will continue to be high in the foreseeable future owing to the rising cost of labour, corn and feed and the risks inherent in the industry, such as stock mortality. Analysts expected prices will begin to decline around the second quarter of next year, with supplies increasing from July onwards.


However, Ma said the central government will not rely on imports to regulate the price surge, although there is no limit on imports. He expects pork prices to have a "soft landing" as the market regulates itself and "steadiness and sustainability are key factors for livestock production".


China's imports of pork and pork offal reached their peak in 2008 with a volume of 910,000 tonnes. In 2010, the country imported 900,000 tonnes of pork, with Denmark being the major supplier, followed by the US, Canada and France.


About 700,000 tonnes of the imports comprised offal including pigs' heads, knuckles and haslet (a form of meatloaf) which are not eaten in Western countries but are common in the diets of Asian countries.


The cumulative volume of US pork imports was more than 91,000 tonnes during the first seven months of this year, a five-fold increase from 14,900 tonnes in the same period last year, according to the USDA. China is the fifth-largest market for US pork exports.


The country has been a net importer of pork and pork offal since 2007 and net imports will maintain their momentum over the long term, a factor that will further benefit producers in Western countries.


"China's surging demand for pork and pork offal implies an optimal export scenario because pork offal is not eaten in Western countries and is not allowed to be processed into animal feed," said Ma.


Moreover, farmers overseas can profit from pork offal exports and save money on disposing of the surplus, he added.


In general, it costs US$40 for US farmers to dispose of a tonne of chicken's feet if they were not exported.


Pork offal accounts for about 12%-13% of US pork production.


US pork exports are forecast to rise 4% to US$5.2 billion in 2012 because of robust demand, particularly from Japan, South Korea and China, according to the USDA.


Although China's 2010 imports of pork and pork offal accounted for less than 2% of the country's consumption of about 50.7 million tonnes, they still had a negative effect on domestic pig breeding and production.


"Imports of pork and pork offal usually come in large volumes and with higher quality but at a cheaper price, which is damaging the domestic industry," Ma said.


Another problem is the quality of pork offal, as there are no health and safety standards on these products in the US and Europe.

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