December 1, 2019

China Animal Health Update (November 2019)

An eFeedLink Exclusive
By An-ming LI and Ngai Meng CHAN

In November, while the central and southern regions in China were still in the autumn season, the northern regions had entered winter. African swine fever (ASF) continued to lead to uncertainties in the livestock industry, impacting consumer structure and Consumer Price Index.

1.  Swine

Due to the previous surge in pork prices which limited consumption, the Chinese government strengthened market regulation, leading to the turnaround and continued fall in pork prices in November. The recent incidences of ASF in the northern regions led to quick sell-offs which pushed down prices further than in the southern regions. Currently, average pork prices in Guangdong province stood at RMB40 per kilogram, while the average across China was RMB36 per kilogram.

Along with the recovery in swine production, the current practice is the conversion of commercial stock to sow inventory which had promoted recovery of the latter, but increased the tight supply of commercial piglets. We expect that the supply-demand gap in swine and pork would persist in the short term. The recent drop in swine prices were the result of government intervention and slaughterhouses pushing down prices. It is expected that swine prices would see a rebound with the approach of the year-end festive season.

In terms of diseases, ASF is of topmost importance. Due to the current low swine inventory levels and stocking densities, some otherwise common swine diseases have become low in occurrence, including blue ear disease, porcine circovirus disease, and porcine epidemic diarrhoea. However, diseases related to temperature and ventilation levels still exist to varying degrees, such as Mycoplasma pneumonia. Maintaining air freshness in the housing environment during the winter period is a challenging issue.

2.  Poultry

The continued decline in swine prices led to price volatilities in eggs, broilers, spent layers, and day-old chicks. Entering winter, disease incidences in flocks rise, but the biggest risk to the producer is still market volatility. Prices of eggs and spent layers continued to fall sharply from their previous peaks, while that of white-feather broilers remained weak.

Egg production across most part of China entered into the off-peak winter season, and egg supplies are generally sufficient. Egg prices adjusted downwards in November, accompanying the fall in pork prices, and there is room for further decrease. That said, as there is still a fundamental shortage in pork supply, coupled with the expected fall in egg prices, there is opportunity for a rise in egg prices afterwards.

Broiler prices remained weak in November, also affected by the decline in pork prices. Purchases made by slaughterhouses on the spot market were a major factor in pushing down prices. Coupled with the high costs of day-old chicks, significant production risks, and unstable sales, farmers were complaining. It is expected that in the short term broiler prices would fluctuate along with swine prices. And with the approach of the year-end festive season, government intervention is expected to strengthen, and it is more likely that broiler prices would remain weak.

Winter is the peak season for avian flu, when the accumulation of dust and waste gases in a closed housing environment increase bird susceptibility to chronic respiratory diseases. With farms currently operating at maximum capacity, and prices of day-old chicks at a high level, it is even more necessary to implement disease prevention measures. As drugs for respiratory diseases account for half of total drug costs, not to mention the associated food safety risks of drug use, it is important to invest in equipment to improve the housing environment for the long term.

3.  Government policies

On November 13 the Ministry of Agriculture and Rural Affairs issued a report on the situation of the use of veterinary antimicrobials in China for 2018. For the first time, a comprehensive statistical analysis of drug sales (domestically produced and imported) was provided for, representing a significant milestone in combating animal-derived antimicrobial resistance.

On November 18 the Ministry also announced that it will launch an investigation into the illegal production, sale and use of ASF vaccines in the country, supported by proper education of farms through respective veterinary departments.

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