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China’s hog sector recovery well underway

USDA China sow hog breeding facilities.png
Country’s hog production and pork production forecast to rise by 2% and 5%.

A newly published USDA Global Agriculture Information Network (GAIN) report suggests China’s recovery from African swine fever (ASF) continues as a rise in both hog and pork production is forecast for 2022. USDA’s China hog production estimate for 2022 is 2% higher at 665 million head, driven by high beginning stocks and more efficient sows. Pork production is estimated to reach 50 million metric tons (MMT), a 5% increase over 2021, due to higher hog production and higher slaughter levels.

Still, producers’ losses as well as government policies designed to stabilize the swine herd are expected to temper production and swine sector volatility in 2022, report author Alexandra Baych noted.

Large producers have continued to expand their market share of pork production, but high pork volumes will keep prices low and put pressure on producers’ profit margins, the report suggested.

USDA data showed sow beginning stocks for 2022 at 40 million sows, up from 31 million in 2020. According to the report, China’s Ministry of Agriculture and Rural Affairs (MARA) has noted that the 2021 sow inventory, at 39.5 million, is oversupplied and exceeded prescribed levels. China’s official National Bureau of Statistics (NBS) actually had the sow population at the end of 2021 at 43.29 million sows, and the country is now requiring that producers/provinces maintain a national sow inventory of 41 million.

On September 23, 2021, MARA published the Interim Implementation Plan to Manage Swine Production Capacity. The plan, which aims to stabilize the swine sector from dramatic fluctuations, requires 41 million sows and specifies a “normal” inventory target for each province/area that should not fluctuate more than 5%. It also provides support for large-scale farms, which industry contacts say could further accelerate concentration in the swine sector.

Baych said the central government will use control measures if production is outside the targeted range.

Regarding ASF, the report said it will likely remain endemic, but added that hog losses are expected to fall in 2022. Further, the Harbin Veterinary Research Institute of the Chinese Academy of Agricultural Sciences (CAAS) identified in October 2021 a less virulent new strain of ASF. The strain appears to be less fatal to hog, sow, and piglet populations, Baych relayed, adding that producers and provincial authorities have also adapted production and slaughter practices to mitigate against large losses and disease spread.

Overall, Baych said competition from low-priced domestic pork, a pork import tariff increase (from 8-12%), a less optimistic economic outlook, and continued COVID-19 related restrictions and market disruptions will contribute to lower pork imports of 3.3 MMT for China. Spain, Brazil, the United States, Denmark, and the Netherlands are expected to remain the five major pork suppliers.

Baych said sources report that U.S. pork is expected to remain popular due to stable supplies and consumers preference for the meats’ sweeter taste. However, other major supplying countries have advantages such as lower trimming/waste rate and higher lean meat rate.

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