China looks set to offer pork exporters good opportunities in the coming months according to BPEX.
This assessment is based on a continued strong consumer demand for pork in China at a time when weak pig prices have prompted farmers to send “increasing numbers of sows for slaughter”. Some small scale producers, in fact, are reported to be looking to leave the industry altogether.
“The pork powerhouse of the world, China holds around half of the global pig herd,” said BPEX. “Yet, the growing population in China and pork being a staple food means domestic production is unable to satisfy demand. As such, China remains a key importer of pork and the significance of the country is increasing on the global market.
“Chinese demand for imported pork will be even more evident going forward as the latest inventory indicates a sharp reduction in the pig population. June figures, provided by Ministry of Agriculture, show an 8% year-on-year drop in the sow herd to 45.9m head, the lowest level in two years. The total pig herd stood at 428.2m head, down 4% from June 2013.
“Weak pig prices in China, combined with production challenges related to diseases and cold weather conditions, have placed domestic farmers in a difficult financial situation, however. Latest figures show reductions in profit margins, with feed prices in China not falling as much as elsewhere.”
With PEDv hitting production figures in the US, the main supplier to China, the exports door seems to be opening wider to EU producers.
“Spain Germany and Denmark are the key EU suppliers of pork to China,” said BPEX. “Figures from the first half of this year show imports from Spain and Denmark rose by 41% and 9%. The UK accounts for a smaller market share, around 5%, but the latest figures indicate progress, as China imported 43% more UK pork than in the first half of 2013.”
Even though China is looking to a five-year growth plan to compensate for the current declining pig population, farm management and veterinary training needs suggest such corrective action will take time to have an impact. This leaves BPEX to conclude that China is “likely to remain an important export market for the foreseeable future”.