November 5, 2007
Hong Kong pork imports seen rising
Hong Kong's 2007 pork imports are expected to rise by 6 percent reaching 293,000 tonnes because of short supplies of live pigs in early 2007 and the continuing shifting of consumption of fresh pork to chilled/frozen pork, according to a US Department of Agriculture attache report posted Friday (November 2) on the Foreign Agricultural Services Web site.
Cheaper costs for chilled/frozen pork are contributing to the change in consumption. In 2008, pork imports are expected to rise by 2 percent reaching 300,000 tonnes.
US pork imports to HK have not been affected by ractopamine. In fact, traders report some increased trade to HK may be destined for grey channel. In addition, the HK dollar is pegged to the US dollar, therefore, the recent weakness of the US Dollar would help US exports to HK. The buoyant economy, price competitiveness of US low-end cuts, quality of premium cuts and local consumers' confidence in US food products are various key factors that contribute to the forecast 8 percent growth of US pork products in Hong Kong in 2007 and 2008. The US, HK's 3rd largest supplier behind China and Brazil, supplied US$24 million of pork products to Hong Kong in 2006, 58 percent of which were processed meats. As such, US processed pork exports to Hong Kong could be affected by the country's introduction of nutrition labelling and amendment of its Preservatives Regulation. HK expects to complete the legislative process for both regulations by the end of 2007 and is considering a grace period of 2 years. All US processed meat exports to HK will need to be relabelled as HK's nutrition labelling requirements will be different from the US In addition, with the upcoming amendment of the Preservatives Regulations, the maximum permitted level of sodium nitrite in preserved meats will be lowered from 200 parts per meter to 125 parts per meter.
Hong Kong had a chilled/frozen pork import market valued at about US$410 million in 2006. China was the largest supplier accounting for 51 percent of the market share, followed by Brazil with a market share of 20 percent. The US ranked as the third largest supplier, supplying US$24 million of pork products to Hong Kong in 2006.
The 2007 US pork exports to Hong Kong are expected to rise about 8 percent in quantity.
Hong Kong is undertaking the gradual trend to consume more chilled/frozen pork at the expense of freshly slaughtered pork as a result of changes in dietary and shopping habits. In 2007, chilled/frozen pork and freshly slaughtered pork accounted for 60 percent and 40 percent respectively. Back in 1998, the market share between chilled/frozen pork and freshly slaughtered pork were 45 percent and 55 percent instead.
On the production side, in May 2007 a year-long voluntary pig farming license surrender scheme ended. (Through the scheme, farmers were reimbursed by the government by giving up the license for pig farm operation.) As a result, the local pig population will decline drastically from 220,000 to 41,000 head when all the scheme licenses have been surrendered. Hong Kong will rely further on China for live pig supplies.
Currently, about 90 percent of live pig demand in Hong Kong is supplied from China. For decades "Ng Fung Hong", a mainland China corporation in Hong Kong was appointed by the Chinese government to be the sole agents for China's live pig exports to Hong Kong. The monopoly finally ended in early 2007 when the company failed to bring in adequate supplies of live pigs to Hong Kong. Since then, pork prices in China have been very high and farmers prefer to supply the domestic market rather than selling to Hong Kong through Ng Fung Hong when the company did not offer attractive prices. This resulted in short supplies of live pigs in Hong Kong. The monopoly system of supplying live pigs to Hong Kong was then blamed for the short supplies. In order to ensure adequate supply of live pigs to Hong Kong, the China and Hong Kong governments finally agreed to allow two more agents to export live pigs to Hong Kong from China. Time will tell if the live pig market will be more efficient through competition by adding two new agents.
There are two pieces of upcoming legislative amendments that would affect US processed meat exports to Hong Kong. They are the Preservatives Regulation and Nutrition Labelling Regulation. The Hong Kong government expects to complete the legislative process of both regulations by the end of 2007 and is considering two years grace period to the trade to comply with the new changes.
With the new nutrition labelling scheme, US exports of processed meat products would likely be required to change new labels for the Hong Kong market because Hong Kong's nutrition labelling requirements will be different from the US Meanwhile, post together with other consulate generals and trade are lobbying the Hong Kong government to provide exemption to small volume products (volumes = 100,000) so as to minimize the adverse impact of the labelling requirements on trade.
In 2006, local supplies accounted for about 20 percent of total supplies, while imports for 80 percent. With the closing up of local farms in Hong Kong, local supplies have dwindled to less than 10 percent of total supplies. When the applications for license surrender are approved and the licenses are expired, the local supplies of live pigs will be further decreased to 2 percent of total supplies. By then, 98 percent of the live pigs consumption in Hong Kong will be supplied from China by the three appointed agents.