Despite setbacks, China is determined to grow its swine industry after taking a massive hit from African swine fever (ASF) in 2018. This has created opportunities for international collaboration, according to a new report from the Iowa Economic Development Association (IEDA).
Tony Wang, IEDA representative in Shanghai, China, said the road to recovery has been bumpy, especially as the country endures complications from COVID-19, the pig cycle, inflation, and other factors.
Following the devastation caused by ASF, China’s pork imports went up significantly in 2019 through 2021. At its peak in 2020, Wang said the U.S. accounted for roughly 14% of China’s pork imports. As China gradually rebuilds its swine herd, however, pork imports have dropped sharply. Still, Wang said lingering impact of ASF combined with the effect of the “pig cycle” and market speculation activities have kept the current pork prices fairly high (around $4.6/kg).
Challenging as it may be, China has set clear targets for building back its swine industry, Wang noted.
Structural transformation
China began tightening regulations on its swine industry in 2014, and ASF only accelerated the process, making it difficult for smaller market players to compete. Further, Wang relayed that national incentive packages are currently tailored to support only scale pig farms, those with a minimum annual slaughter rate of 500 heads. In fact, the larger the scale, the more generous the incentives, he added.
According to Dr. Zhu Zengyong from the Institute of Animal Sciences of CAAS, scale pig farms in China now account for about 60% of the market share, with a goal to reach 65% by 2025. Smaller farms and individual hog producers, on the other hand, have dropped from over 90% in 2001 to approximately 40% now.
Wang explained that the pig cycle is not only detrimental to the swine industry, “but it also puts China’s national food security at risk because pork is a staple meat in China, accounting for over 60% of total meat consumption on average.”
The structural transformation occurring makes it possible and easier for the government to monitor pork production in China and allows the government to intervene if specific parameters fluctuate beyond set levels, Wang explained.
Corresponding intervention measures will help offset the effect of price fluctuations on the industry. The same also holds true for implementing technical improvements for better biosecurity across the industry, Wang added.
“The goal is to mitigate the impact of the pig cycle while stabilizing pork supply for the 1.4 billion Chinese population.”
Technological advances
According to Wang, China is placing special emphasis on its breeding herd by setting a goal to become 95% self-sufficient in core swine breeding resources by 2035. The country has initiated working mechanisms among companies, government agencies, universities and research institutions to develop and promote market-oriented technological innovations that will drive advances in breeding technologies.
“Major hog producers in China, such as Muyuan Foods, the Wen’s and New Hope, are all doubling down on R&D activities and are working with various universities to develop better technologies in environment control, feeding, automated health inspection, etc.,” noted Wang.
The country’s efforts to expand its swine industry creates trade opportunities for the U.S., particularly for the feed and animal health sectors.
“Iowa exporters, such as genetic companies, animal health and nutrition providers, equipment suppliers and animal science consultants, will continue to be key suppliers to the swine industry as China strives to provide a safe and secure food source for its people.”
