Will African swine fever impact the poultry industry? (Poultry Specialist)
(Editor’s note: Jennifer Timmons is an assistant professor at the University of Maryland Eastern Shore.)
African swine fever is a highly contagious viral disease that affects domestic and wild pigs of all ages. This is a devastating disease for which there is no treatment or vaccine available.
The only way to eradicate the disease is to depopulate all affected or exposed swine herds. African swine fever is found in countries around the world. An outbreak of African swine fever in China started in August 2018, and since then, cases have also been reported in Cambodia, Vietnam, North Korea and in some parts of the European Union.
China is the world’s largest pork producer and consumer. China consumes more than half of the world’s pork. In 2018, China produced 17.5 billion pounds of pork, which was 0.9 % lower than 2017.
It is difficult to determine the extent of the outbreak since there seems to be evidence of underreporting of outbreaks to the World Organization for Animal Health. Half of China’s swine are produced on small farms and half of China’s pork is produced by private slaughterhouses. China does not have a system in place to report accurate pork production numbers. In a report by the USDA Foreign Agriculture Service on July 22, it is estimated that China’s total herd inventory will decrease 21 percent in 2019, from 428 million head to 340 million head.
As the supply of pork has decreased, the price of pork is on the rise. As a result of these higher prices, some farmers in China have started to restock their herd and hope to benefit from the rising pork prices which is risky since the disease has not been contained.
Although China’s per capita pork consumption is one of the highest in the world, pork consumption has seen a gradual reduction as the Chinese consumer’s income has increased and have looked to a variety of other proteins. In addition, younger Chinese consumers have viewed chicken as a healthier option compared to pork.
Since it will take several years for the swine industry to recover from the effects of African swine fever, a global shift in animal protein supplies is expected. A report by Food and Agribank Rabobank states that the global protein supply will be redirected to China to meet their protein needs. It is estimated that there will be reduction of 10 million metric tons or 5-7% of animal protein in 2019. This shortage is predicted to have a significant effect on the global economy.
A June 2019 article in Broiler Economics, by Paul Aho, reported that the prices of protein worldwide are rising. Dr Aho, also stated that the higher prices of pork and beef will result in a greater demand for chicken. This article reported that USDA expects chicken production to increase by 1% this year with another 1% projected increase for 2020. If this projection is correct, the rest of 2019 is looking to be a profitable year for chicken despite rising grain prices.
Corn prices are expected to be high because of the flooding in the Midwest and delayed planting. The USDA has projected corn production to be reduced by 1.4 billion bushels from last year. USDA does not expect soybean and soybean meal prices to increase as high as corn.
The Chinese market has been closed to U.S. poultry meat imports since January 2015. This was due to the outbreak of avian influenza. No one knows if the outbreak of African swine fever, and the reduction of pork will lead to opening up exports of chicken to China.
However, if China has a shortage of protein, it will provide opportunities for other countries to meet the demand. A report by Austin Alonzo in Watt Poultry USA, predicted that China will import more chicken. An article from the South China Morning Post stated that the imports of frozen chicken meat increased 107% in June compared to a year ago. This increased demand for chicken will drive up the price of chicken and could benefit the U.S. poultry market.
It is expected that China will allow more imports of meat from other countries due to the decline in pork. However, it will be interesting to see if China’s ban on U.S. poultry imports will be lifted, and the how the U.S. poultry market will respond to lessened export restrictions if this does happen.
1-800-634-5021 410-822-3965 Fax- 410-822-5068
P.O. Box 2026 Easton, MD 21601-8925