Losses of African swine fever are causing difficulties and opportunities for export

Production losses due to African swine fever (APP) have eclipsed initial estimates, Rabobank said Thursday. In 2019, Rabobank expects a 25% to 35% loss of Chinese pork production, which will create new challenges and opportunities for animal protein exporters.

"African swine fever has spread to all provinces of mainland China and currently affects about 150 to 200 million pigs," said Christine McCracken, an animal protein badyst at RaboResearch. "The expected 30% loss in pork production is unprecedented. These losses can not easily be replaced by other proteins such as chicken, duck and seafood. In addition, larger pork imports will not be able to fully offset the loss. "

Extreme losses of more than 50% are expected in confined areas of China. The disease has also spread to Vietnam, where production losses are expected to exceed 10%. ASF has recently entered Cambodia and could become more established in Southeast Asia, exacerbating further protein deficiencies around the world.

Rabobank said it was undeniable that significant losses in breeding herds would delay the recovery of the Chinese pork industry, which could take years. Reconstruction efforts will be further complicated by the risk of recontamination, despite the available financial resources.

"The evolution of global trade patterns to meet the demand for animal protein will be very dynamic," the report says. "This will create opportunities for companies with exportable surplus and access to China and Southeast Asia. It will also create logistical inefficiencies and increase costs throughout the supply chain. "

The endemic PPA in China
ASF currently affects between 150 and 200 million pigs. To put this into perspective, the expected 30% loss in pork production is nearly 30% higher than the annual pork production in the United States and is equivalent to the annual pork production in Europe.

Rabobank said these losses could not be easily replaced by other proteins or imports. This will likely result in a supply deficit of nearly 10 million tonnes in the total supply of animal protein by 2019.

"Inaccurate information on the liquidation of the Chinese herd and an early imbalance in regional supply disrupted the discovery of the original price, obscuring the impact of the production losses," Rabobank said. "When the government eased restrictions on movement of animals (and pork), regional prices converged, but increased with the loss of the herd. While the magnitude of herd losses is quantified, global protein customers are scrambling to secure their long-term protein reserves. "

How will the consumption of Chinese proteins change?
Global protein reserves should be reoriented to China to fill the growing protein deficit. A secular move towards lower Chinese pork consumption will support the increased demand for poultry, beef, seafood and alternative proteins that will shape global production trends, the report said.

"This unprecedented change in trade is likely to create unexpected product shortages in markets previously served by these suppliers, which will create short-term market volatility that will ultimately result in higher global protein prices," he said. Rabobank said.

Restrictions can complicate business response
Exporters of animal protein should benefit from the effects of PPP. The European Union, the United States and Brazil seem to be best placed to meet the growing demand for pork and other animal proteins in China and Southeast Asia, Rabobank said.

The PPP also crosses Europe and is endemic in some areas, such as the Baltic States and parts of Poland and Russia.

"One can not exclude the risk of outbreaks of restricting the exports of important pork producing countries, such as Germany. Such restrictions would complicate the commercial response to PPP in China and Southeast Asia, "the statement said.

Although the United States is a major producer and exporter of pork, the current tariff on US pork exports in China limits current trade.

In the spring, during the visit to the Legislative Assembly of the National Council of Pork Producers, a delegation of more than 125 pork producers asked Congress members to call the administration to end trade disputes with China, which limit export opportunities.

"Trade remains our biggest problem," said David Herring, president of the NPPC and hog farmer in Lillington, Nc.

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