September 22, 2020

German pork exporters face significant impact from China's import ban, analysts say

China's suspension of pork imports from Germany will significantly impact German meat exporters and affect prices across Europe, according to analysts.

As China attempts to fulfill purchase pledges made under a trade deal with the United States, German companies could lose market share to US suppliers. Under a phase one trade deal between China and the US signed in January, Beijing agreed to boost its purchases of US agricultural goods.

China banned German pork imports after Germany reported its first case of African swine fever (ASF) this month. Other countries that have also imposed ban includes Japan, South Korea and the Philippines.

Pork prices in Germany dropped by about 13% to €1.27 (US$1.50) a kilogramme on September 18.

"A price about €1.25 (US$1.47) per kilo is just not feasible for us, and would push us into negative margins," said Bernhard Krüsken, general secretary of the German Farmers Association. "China has grown to be a very important customer for Germany and European pig farmers in recent years."

Germany recently said that China had overtaken the United States as the biggest foreign market for German pork, buying about €1 billion (US$1.2 billion) worth of it every year.

Germany sold 233,300 tonnes - more than a quarter of its total exports of the meat - to China in the first six months of 2020.

Jim Monroe, spokesman for the National Pork Producers Council in the US, noted the potential "market opportunity for US pork producers as a result of German pork being banned in several countries due to the African swine fever outbreak, but we can't speculate."

Feng Yonghui, chief analyst at Chinese pork industry website Soozhu.com, said firms in export-dependent Germany might have to cut jobs and could be pushed to bankruptcy.

"The effects are likely to be felt across Europe. But the ban will not have a very big effect on the price of locally reared pork in China," he said.

Pekka Pesonen, secretary general of Copa-Cogeca, a union of European farmers, said the discovery of infected wild boars in Germany was a cause for concern for all.

"At a difficult time for the European pig meat sector, it is essential that European and national authorities take efficient and quick measures to support the sector," he said.

- South China Morning Post / Reuters