GREENWOOD VILLAGE, Colo. – African Swine Fever will have far-reaching impacts on the global agriculture industry, but economists at CoBank believe some indirect impacts will somewhat offset the challenges.
In “African Swine Fever Implications for U.S. Ag,” CoBank economists expect a significant drop-off in feed demand which will weigh on US feed and grain exports. Additionally, growth in demand for feed in China and Southeast Asia will be slower than previously projected as swine producers work to rebuild their herds. Read more here.
CoBank projects the impact of a smaller swine herd in China to be “staggering.” If China’s hog herd declines by one-third in 2019-2020 from 2017-2018 levels, according to CoBank economists, the impact is likely to be:
- Soybean meal consumption down by roughly 9 MMT (approximately equivalent to 11 MMT of soybeans).
- Corn consumption down by about 28 MMT.
“Elevators, feed mills, and soybean crushers focused on feed exports to China will be hurt directly by ASF,” according to the report. “In contrast, those that are positioned to meet the domestic and non-China export demand could benefit from ASF in China.”
However, increased demand from other protein sectors may help soften the blow of a smaller hog herd in China.
CoBank reports that Chinese consumers already are switching to poultry and beef from pork as supplies of pork tighten in China. US meat and poultry producers stand to gain from this transition, according to CoBank, and higher demand for poultry, beef and fish from domestic and international sources could come in the form of increased feed demand.
“Demand for US animal protein will grow, resulting in an increase in domestic feed demand,” the report’s authors noted. “Elevators, crush facilities, and feed mills located close to, or in some way positioned to fill, domestic demand will likely benefit from this increase.
“ASF demand destruction will be especially painful for elevators, crushers, and feed mills that are focused on Chinese markets. Exports may not decline as severely for those that can pivot to the EU and other markets outside China.”
Headwinds for increased feed demand include improved feed efficiency and optimized feed rations; potential growth of Chinese distiller’s dried grains with solubles (DDGS); and a possible shift in Chinese consumers’ meat consumption mix.
“Of concern would be a shift out of pork to chicken or fish,” CoBank economists wrote. “Chicken and fish convert feed more efficiently than hogs and cattle. The risk is that feed demand declines as consumers shift consumption to meat coming from more feed-efficient animals.”