It is now well recognised across the globe that the biggest pigmeat market in the world, China, has suffered a catastrophic collapse in its pig industry due to African Swine Fever (ASF). The first outbreak was officially announced in August 2018 and since then 40% of their sow herd has been culled. This equates to a quarter of the global pig production at 15m sows.
Pig population
The scale of this decline is simply astonishing when we consider that the total European sow herd is 10m.
This devastation will result in an estimated 180m fewer Chinese pigs being produced, affecting the livelihoods of countless pig farmers.
The accuracy of the 40% herd decrease was confirmed last month by the annual reports of the three biggest Chinese pig companies (Wens, Muyuan, and Zhengbang) who reported a combined drop in sales revenue of 39%.
Consumption
Pigmeat has traditionally been the most consumed meat in China, comprising 65% of the total meat consumption.
Pigmeat is associated with holidays such as Chinese New Year. Because of this, it usually has a low elasticity of demand, ie demand is not sensitive to price increases.
Chinese pig price
The Chinese pig price is obviously based on supply and demand.
However, although extensive sow culling began in August 2018, the Chinese pig price did not start to increase until July 2019, due to a liquidation of government stock.
The Chinese pig price only began to rise rapidly in July 2019, by 60% (81%YOY) due to the supply shortage. This has now had a significant effect on the volume of pigmeat imports.
Pigmeat imports
Traditionally, the Chinese pigmeat market was largely self-sufficient at 97-98% of total requirement.
However, due to the pigmeat scarcity the level of imports has risen dramatically.
The Chinese Vice Premier, Hu Chunhua recently acknowledged that China’s pork supply situation will be “extremely severe” during the fourth quarter of this year and first half of 2020. He added that the government estimates that “the country will have a 10m tonne deficit in pork supply in the coming year”. This is more than the total amount of pigmeat traded in international markets.
Market outlook
There are two reasons why the recovery of the Chinese sow herd will be slow. Firstly, the sheer volume of sow culling, combined with deaths from ASF mean that there simply isn’t enough genetic damline stock available worldwide to replenish the destocked units. It will take time build these stock levels to respond to this shortage.
The other issue is that ASF is still circulating in the country and new pig units are reportedly still becoming infected.
If the Chinese sow herd size can be stabilised over the next 12 months through high biosecurity, then restocks can begin on a large scale.
On this estimation, it will be a minimum of four years before a significant volume of the pigmeat deficit will be replaced by Chinese domestic production.
What’s beyond the recovery?
When the country’s pig herds recover, it will cause downward pressure on pigmeat prices.
High value products will also suffer a price decrease, but the intrinsic higher margin in these products will give a buffer to these pig producers eg Parma ham, high welfare, etc.
We are only a small, wet rock on the edge of Europe, with only 1% of the European sow herd. Is there any point in the Irish pig industry even trying to compete with the big players?
I believe there is, because our compact size is our big advantage. This could allow the industry to use close linkages to develop a ‘bespoke’ high value-added pigmeat product, ensuring our pigmeat moves up the value-added chain to avoid competition.
Such a programme would focus on utilising linkages and reducing industry silo know-how through a partnership between Irish pig farms, genetic suppliers, feed mills and slaughter plants under the combined multi-agency guidance of Teagasc, DAFM, Bord Bia and Enterprise Ireland.
The ultimate aim is to produce a pigmeat product from the ‘DNA to the dinner’, of high taste and high health credentials that can be independently verified and therefore difficult to copy.
A proposed outline of the programme is as follows:
Genetic: identify AI boars which have the genotypic and phenotypic potential required to generate high marbling intramuscular fat and therefore to potentially deliver high succulent, flavoursome pigmeat.Pig Farms: identify suitable pigs though in-herd farm BLUP genetic systems which will select the sow & AI to deliver the progeny characteristics required.Feed Mills: identify and deliver diets that will allow the chosen genetics to deliver their potential for meat quality and enhanced health Slaughter plants: enhanced lairage resting time to ensure exceptional meat PH levels. Increased chill time (96 hours) to maximise the tenderness of the final pigmeat product.If 10% of Irish pigmeat was produced by this programme, within five years and this high-value product generated three times the profit margin of commodity pigmeat, then this small output is the equivalent of 30% of the national herd profitability.
When the cold wind of low pig price blows, this extra insulation will be very welcome by Irish producers to keep their feed valves whistling.
Read more
Pig farmers call for greater scrutiny of imports
Pigmeat drives EU agri-food exports hike
It is now well recognised across the globe that the biggest pigmeat market in the world, China, has suffered a catastrophic collapse in its pig industry due to African Swine Fever (ASF). The first outbreak was officially announced in August 2018 and since then 40% of their sow herd has been culled. This equates to a quarter of the global pig production at 15m sows.
Pig population
The scale of this decline is simply astonishing when we consider that the total European sow herd is 10m.
This devastation will result in an estimated 180m fewer Chinese pigs being produced, affecting the livelihoods of countless pig farmers.
The accuracy of the 40% herd decrease was confirmed last month by the annual reports of the three biggest Chinese pig companies (Wens, Muyuan, and Zhengbang) who reported a combined drop in sales revenue of 39%.
Consumption
Pigmeat has traditionally been the most consumed meat in China, comprising 65% of the total meat consumption.
Pigmeat is associated with holidays such as Chinese New Year. Because of this, it usually has a low elasticity of demand, ie demand is not sensitive to price increases.
Chinese pig price
The Chinese pig price is obviously based on supply and demand.
However, although extensive sow culling began in August 2018, the Chinese pig price did not start to increase until July 2019, due to a liquidation of government stock.
The Chinese pig price only began to rise rapidly in July 2019, by 60% (81%YOY) due to the supply shortage. This has now had a significant effect on the volume of pigmeat imports.
Pigmeat imports
Traditionally, the Chinese pigmeat market was largely self-sufficient at 97-98% of total requirement.
However, due to the pigmeat scarcity the level of imports has risen dramatically.
The Chinese Vice Premier, Hu Chunhua recently acknowledged that China’s pork supply situation will be “extremely severe” during the fourth quarter of this year and first half of 2020. He added that the government estimates that “the country will have a 10m tonne deficit in pork supply in the coming year”. This is more than the total amount of pigmeat traded in international markets.
Market outlook
There are two reasons why the recovery of the Chinese sow herd will be slow. Firstly, the sheer volume of sow culling, combined with deaths from ASF mean that there simply isn’t enough genetic damline stock available worldwide to replenish the destocked units. It will take time build these stock levels to respond to this shortage.
The other issue is that ASF is still circulating in the country and new pig units are reportedly still becoming infected.
If the Chinese sow herd size can be stabilised over the next 12 months through high biosecurity, then restocks can begin on a large scale.
On this estimation, it will be a minimum of four years before a significant volume of the pigmeat deficit will be replaced by Chinese domestic production.
What’s beyond the recovery?
When the country’s pig herds recover, it will cause downward pressure on pigmeat prices.
High value products will also suffer a price decrease, but the intrinsic higher margin in these products will give a buffer to these pig producers eg Parma ham, high welfare, etc.
We are only a small, wet rock on the edge of Europe, with only 1% of the European sow herd. Is there any point in the Irish pig industry even trying to compete with the big players?
I believe there is, because our compact size is our big advantage. This could allow the industry to use close linkages to develop a ‘bespoke’ high value-added pigmeat product, ensuring our pigmeat moves up the value-added chain to avoid competition.
Such a programme would focus on utilising linkages and reducing industry silo know-how through a partnership between Irish pig farms, genetic suppliers, feed mills and slaughter plants under the combined multi-agency guidance of Teagasc, DAFM, Bord Bia and Enterprise Ireland.
The ultimate aim is to produce a pigmeat product from the ‘DNA to the dinner’, of high taste and high health credentials that can be independently verified and therefore difficult to copy.
A proposed outline of the programme is as follows:
Genetic: identify AI boars which have the genotypic and phenotypic potential required to generate high marbling intramuscular fat and therefore to potentially deliver high succulent, flavoursome pigmeat.Pig Farms: identify suitable pigs though in-herd farm BLUP genetic systems which will select the sow & AI to deliver the progeny characteristics required.Feed Mills: identify and deliver diets that will allow the chosen genetics to deliver their potential for meat quality and enhanced health Slaughter plants: enhanced lairage resting time to ensure exceptional meat PH levels. Increased chill time (96 hours) to maximise the tenderness of the final pigmeat product.If 10% of Irish pigmeat was produced by this programme, within five years and this high-value product generated three times the profit margin of commodity pigmeat, then this small output is the equivalent of 30% of the national herd profitability.
When the cold wind of low pig price blows, this extra insulation will be very welcome by Irish producers to keep their feed valves whistling.
Read more
Pig farmers call for greater scrutiny of imports
Pigmeat drives EU agri-food exports hike
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