Volatility in the animal protein markets is "here to stay" as the world continues to cope with African swine fever (ASF), particularly in China and Southeast Asia, Rabobank senior protein analyst Christine McCracken said during a presentation Sept. 17 at the Allen D. Leman Swine Conference in St. Paul, Minn.
McCracken, who is also executive director of animal protein at Rabobank, said China wants to be self-sufficient in pork and rebuild its herd so it doesn't have to import protein, but the tariff situation with the U.S. has been a struggle that remains "unclear."
While China's ASF outbreak has garnered the most interest, other important outbreak areas include Vietnam, the Philippines and South Korea (announced Sept. 17), because those nations have traditionally been large pork consumers and had been nearly self-sufficient in pork, McCracken said. She added that while 75% of the world's pork is at risk for ASF, the countries most at risk are Taiwan, Indonesia, Thailand and Japan.
McCracken noted that ASF remains "a threat" in Europe, even while Europe has the strongest case to supply pork China.
As far as China replenishing its pork supply goes (its strategic reserve of pork has been nearly exhausted through China's autumn holiday period), McCracken said there are three ways out: (1) produce more protein domestically, (2) import pork and (3) import other proteins.
She said a concern with China increasing its domestic protein production is that many producers who are repopulating their piggeries with poultry are backyard operations with very little biosecurity, which could in turn increase the risks for highly pathogenic avian influenza.
For China to import pork, the main supplying markets would be Europe (which is facing its own ASF outbreaks), Canada (which has been virtually boxed out of China due to ractopamine issues) and the U.S. (which still faces an uncertain tariff situation). According to McCracken, pork producers in Brazil are ramping up production to become a supplier to China, but Brazil is currently a small producer and lacks infrastructure.
She added that China's pork industry structure will change, with fewer small farms that will likely have a different geographic footprint. She said Chinese consumers have also been moving away from pork. Prices have doubled since June, so that shifting purchasing behavior is price driven and not out of concern for safety. In addition, McCracken said Chinese consumers are moving away from traditional wet markets and are favoring frozen product instead.