China - Pork Powerhouse of the WorldMonday, November 27, 2006
By Ruojun Wang and presented at the 2006 Banff Pork Seminar - In recent years, live pig and pork production and pork consumption have been undergoing dramatic changes in China.
As the biggest pig and pork producing country in the world, all these changes will not only influence the pig and pork industry in China, but will also affect international feed and pork trading countries. An overview of the current status and challenges faced by China, the powerhouse of pork production, will help the world understand the past, present and future trends in the Chinese pig industry. This information may also enable countries and companies to adjust pork production policies to suit the future international market economy in pork.
The Reality of Agriculture in China
Affluent Labor Resources but Short of Land and Water Resources There are more than 900 million people in rural China. Of those 900 million people, only 100 million of the 600 million capable workers are required to work the current Chinese land area used for agricultural production. The remaining 500 million workers must work in other non-agricultural industries or must migrate to cities for jobs.
Land and water resources are in short supply and the scale of many agricultural operations is not economical. Arable land acreage per household in China is less than 1 ha, while the USA, with twice the arable land as China, has 2 million farms and average acreage of 100 ha. In comparison, the EU, with similar arable land as China, has 7.4 million farms and average acreage of 20 ha.
Lower Pork Price but High Cost for Major Agriculture Products
Taking the 1998 international future price of agricultural products as a basis of 100, prices for key Chinese agricultural products in 2001 were much higher: wheat 143, rice 101, corn 180, soybean 179, cotton 107, soybean oil 156, peanut oil 153, sugar 183 and live pigs 68. Of the 9 key Chinese agricultural products, only live pigs were competitively priced with the international market (Zhai, 2001). Live pig price increased dramatically from July 2003 and is still at a relatively high level in 2005 (Figure 1 and Figure2).
Increases in live pig and pork prices were the result of increases in feed price, caused by less grain production in 2003 and 2004 and international price increases, and SARS outbreaks in China during 2003, 2004, and 2005. This also triggered increases in pork and offal importation from Canada, USA and Demark due to local pork price increases and WTO entry related quota and tariff reduction for pork products (tariff reduction to a set level was completed in 2004).
Live Pig and Pork Production in China
China has been the largest live pig and pork producing country in the world for many years; 48-50% of the worlds live pigs are grown in China. With a long history of 7000 years of pig farming, the pig is a very important animal for both the economy and the domestic food supply.
In 2004, China had 485.5 million pigs on farms and slaughtered more than 621 million pigs; this accounted for 48.6% of the world slaughter and yielded 47.6% of the world pork production. In 1990, about 310 million pigs were slaughtered from a national population of 336 million pigs accounting for 33.6% of the slaughtered pigs in the world and 32.6% of the world pork (Table 1 and Table 2). These data indicate that pig productivity increased rapidly in the last decade. As a pork powerhouse, China will influence all aspects of the world pig industry such as labor, feed ingredient trading, food processing, pork trading, live pig trading, equipment and technology transfer.
China is divided into 4 key pig-producing regions. These regions are: Yangzi River region (Sichuan, Chongqing city, Guizhou, Hunan, Jiangxi, Jiangsu, Zhejiang and Anhui provinces) with 43.8% of national pork production; Northern China region (Hebei, Shandong and Henan provinces) with 21.6% of national pork production; Northeastern region (Liaoning, Jinlin and Heilongjiang provinces) with 6.3% of national pork production; and Southeastern coast region (Fujian, Guangdong, Yunnan and Hainan) with 13.2% of national pork production (Wang, 2001).
The Yangzi River and Northern China regions are the key pork producing and internal exporting zones in China. Northeastern China used to be short of pork due to the colder climate but is becoming self-sufficient and starting to export to other regions as a result of cheaper feed ingredient supply and high cost of grain transportation in the last several years. In the first quarter of 2005, nine provinces slaughtered more than 9 million head of pigs, 62.1% of the national total. These provinces were Hunan, Sichuan, Henan, Shandong, Hebei, Guangdong, Hubei, Guangxi and Anhui. Hunan, Scihuan and Henan are the key provinces, accounting for one third of national total slaughter. Sichuan, Hunan, Henan, Shandong and Hebei produced more than 1 million tons of pork in the first quarter in 2005, accounting for 43% of total national pork production.
The national breeding herd, as a percentage of market pigs, reached 9.8% in first quarter of 2005; this is higher than the normal 8%. In Hunan, Henan, Shandong and Hubei, breeding herd percentages of market pigs reached 10.0%, 11.8%, 11.6% and 11.4%, respectively. This increased percentage of breeding pigs suggests that more pigs will be produced over the next two to three years and over stocking will reduce live pig price and pork price. This is already evident in late 2005.
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Source: Paper presented during the 2006 Banff Pork Seminar Procedings