UTRECHT, The Netherlands – As African Swine Fever (ASF) continues to sweep across Asia, the impact is expected to bring about dramatic changes in the supply and demand of all animal proteins globally, as a structural shift in the consumption of pork plays out to the benefit of other meats, including poultry and seafood. How the disease is spreading to other parts of Asia is the focus of an updated report from Rabobank, “African Swine Fever: A Global Update.”
Besides China, ASF has had the most affect to date on Vietnam, where the swine herd has declined by 20 percent in 2019. Efforts to counteract the impact of ASF across Southeast and Northern Asia have seen herd rebuilding hindered by recontamination resulting in the closure of some slaughtering operations; new biosecurity-focused operations being built; integration of production with slaughtering to mitigate infection risks; and investments in non-pork production, specifically poultry and even plant-based proteins.
New outbreaks outside of China also include South Korea, the Philippines and Timor-Leste. Meanwhile the threat of an outbreak in Thailand is a source of great concern, according to the Rabobank report.
As herd losses in China are expected to tank by 55 percent in 2019 compared to the previous year, those losses are expected to level off as the number of production operations dwindle and the Chinese government continues to implement control measures. The historic steep decrease in pork production in China is expected to be 25 percent (to just over 40 million mt) compared to 2018. Even lower production is likely in the first half of 2020 and the impact is expected to be evident for several years.
As China increases imports of pork to fill the ASF-induced void, shortages are still expected for the remainder of 2019 and well into 2020. Market instability in China is fueled in part by the spiking prices for pork, motivating producers to re-populate herds domestically knowing the risk of re-contamination is a significant threat. With live hog, piglet and pork meat prices rising steadily in 2019, pushing consumption down, Chinese government officials have initiated programs to stem pricing. Efforts such as releasing pork reserves and establishing a price ceiling haven’t tempered expectations of continued increases during what is considered peak season looming in the months ahead.
In response to the increased demand for pork in China, US pork export volumes have shifted higher to China (up by 64 percent) in 2019 through July compared to the same period in 2018. Overall US pork export volumes through July are up just 2 percent, though, attributable to unresolved trade issues, and lower year-to-date export volumes, with key trading partners in Mexico, Japan, Canada and South Korea.
According to Rabobank, the long-term affect of ASF is beginning to play out but the current instability in the market will likely linger until the cause of the disease spread is interrupted. Until factors such as significant improvements in biosecurity are established or an effective ASF vaccine is available for widespread use, market volatility is expected to continue.
“We anticipate relatively unstable market conditions over the coming three to five years,” Rabobank stated in its report.