The USDA's Economic Research Service (ERS) indicated on Wednesday that, "Net farm income, a broad measure of profits, is forecast to increase by $22.0 billion (23.2 percent) from 2020 to $116.8 billion in 2021. This expected increase follows a forecast…
Bloomberg News reported last week that, “China’s hog population has stopped shrinking and is starting to rise, after months of decline because of African swine fever, and the recovery should keep pork prices in check, a senior agriculture ministry official said.
“Pig herds probably began to pick up in November after 12 provinces, including Henan, Shandong and Jilin, reported an increase in inventories, said Yang Zhenhai, head of the ministry’s animal husbandry bureau. The declines in some provinces in the south and southwest have also eased. ‘Overall, breeding sow inventories are expanding and we see a bottoming in hog inventories.'”
The Bloomberg article added that, “China’s wholesale pork prices have dropped for a fourth straight week from a record level, taking the decline from the start of November to almost 20%. Inflation hit a seven-year high in October on the back on rising pork prices.”
Nonetheless, Reuters writers Sophie Yu and Dominique Patton reported last week that, “Cao Xianli, the owner of a ‘ribs and rice’ restaurant in eastern China’s Qingdao city, is facing his biggest test in a decade of running the eatery.
“Not only have costs doubled in the last year because of soaring pork prices, but he’s not even sure he’ll be able to secure enough of the meat needed for his signature dish.”
The Reuters article pointed out that, “China’s rocketing pork prices come after a deadly disease ravaged its huge hog herd, leaving the world’s top consumer of the meat short of about a quarter of its usual supplies. That’s about 13.5 million tonnes, more than the entire pork production of the United States.”
“Sky rocketing pork prices are impacting the entire supply chain. Wholesale chicken prices are up 33% on a year ago, driven by widescale substitution of pricy pork with cheaper poultry, meaning China’s popular fried chicken chains are also feeling the heat,” the Reuters article said.
Yu and Patton added that, “The agriculture ministry says pig production should return to about 80% of normal levels by late 2020, but many others believe that forecast is overly optimistic, particularly as swine fever is still spreading.”
Meanwhile, Emiko Terazono reported last week at The Financial Times Online that,
The impact of African swine fever, which has led to the loss of hundreds of millions of pigs in China, has started to affect world food prices, which reached their highest point in more than two years in November.
“Chinese domestic pork prices have rocketed as the country’s pig herd, normally about 450m strong, has more than halved. The country’s meat imports have leapt too, as Beijing has sought to fill the gap.”
The FT article noted that, “China’s pig herd is likely to decline further in the first half of next year, before rebounding in the second, according to Justin Sherrard, a strategist at Rabobank. ‘Overall, we think China will have a flat year [in pig numbers],’ he said.”
Also with respect to Chinese herd expansion, Reuters writers Min Zhang and Dominique Patton reported on Thursday that, “China’s Ministry of Agriculture and Rural Affairs issued a three-year plan to speed recovery of pig production after the world’s largest hog herd was ravaged by disease, targeting 70% self-sufficiency in pork for the nation’s southeast.”
And Liyan Qi reported on Thursday at The Wall Street Journal Online that, “China has asked local officials to rectify previous measures to shut down smaller pig farms in a bid to restore pork supply.
“A surge in pork prices amid an outbreak of African swine fever has been exacerbated by Beijing’s efforts in recent years to crack down on polluting industries, including pig farming, analysts said.”
The Journal article stated that, “By the end of December, local governments must get rid of all ‘no-pig cities’ or ‘no-pig counties,’ China’s Agriculture and Rural Affairs Ministry said Friday.
“They must work with the local environment watchdog to resurvey areas where pig farming is banned and lift the bans in areas that should allow pig farming, the ministry said.”
More broadly on the African Swine Fever issue, The Associated Press reported last week that, “An outbreak of African swine fever in Poland near the German border has killed 21 wild boar, the agriculture minister said Wednesday.
Reuters writer Michael Hogan reported last week that, “Germany said on Friday it was stepping up measures to prevent an outbreak of African swine fever (ASF) after a case was discovered in a wild boar in Poland, 40 km (25 miles) from the border between the two countries.”
The Reuters article pointed out that, “There are fears in Germany that its exports of pork to China and other Asian countries could be threatened, with import bans regularly imposed on pig meat from regions where ASF has been discovered.
Germany’s pork exports to China rose 43% year-on-year in the first seven months of 2019, according to figures from market research consultancy AMI, fuelled by increased demand after ASF slashed China’s pig herd by as much as half since August 2018.
And from a U.S. perspective, Bloomberg writers Lydia Mulvany and Michael Hirtzer reported last week that, “The biggest U.S. hog herd since World War II is keeping live-animal prices muted even as a record number of pigs are being slaughtered to meet booming global demand.
“After a deadly disease decimated pigs in top consumer China and other parts of Asia, American hog farmers were expected to benefit from rising exports to fill a protein shortfall. However, while slaughter estimates in the U.S. are reaching unprecedented highs, prices for live animals are at the lowest ever for the season in government data going back to 2003.”