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USDA GAIN: Livestock and Products


25 February 2014

USDA GAIN: China Livestock and Products Semi-annual 2014USDA GAIN: China Livestock and Products Semi-annual 2014

China’s 2014 pork production will continue its growth trend by rising two percent to 55.8 million tons. China’s pork imports will expand by three percent to 790,000 tons based on competitive import prices, and live swine imports will rise by 5 percent due to strong demand for swine genetic improvement. In December 2013, China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) approved Chongqing, a municipality directly under the Central Government, to be China’s first inland meat entry port.

USDA GAIN: Livestock and Products

Commodities:

Meat, Swine

Production

Post forecasts China’s 2014 pork production at 55.8 million tons, two percent higher than USDA’s official 2014 estimate of 54.7 million tons. Fewer swine disease outbreaks and better animal nutrition continue to improve hog slaughter weights and pork production.

Policy

China’s 2014 productive sow inventory is expected to account for 11 percent of total swine inventory, an amount which is higher than the government’s required level of 9-10 percent. China’s swine surplus has pressed hog prices downward since October 2013. With no significant disease outbreak during the winter months and an abundant supply, sources note that hog prices should remain at relatively low levels during the first half of 2014. The government is monitoring the hog and grain price ratio to decide if domestic pork purchases for government-held reserves are required.

To prevent significant fluctuations in swine production, some provinces or cities have started to implement hog subsidy trials. As of January 2014, the Guangdong provincial government offered fattening farms that have swine (weighted at or above 10 kilograms) an insurance subsidy. The insurance fee per animal is RMB20 ($3.28) with the highest claim of RMB500 ($82.00). The Guangdong local government will pay 75 percent, and the farmer covers the remaining 25 percent. If a hog’s cause of death is based on a natural disaster or disease, the farmer can file a full claim if the hog weight is more than 80 kilograms. The first trial was implemented in Gaozhou City, Guangdong. In Chongqing’s Rongchang County, an insurance subsidy program is being developed for piglets with a highest claim of RMB300 ($49.20). This two month insurance period is for piglets less than 60 kilograms.

In December 2013, supervision of hog slaughter was transferred from the Ministry of Commerce (MOFCOM) to the Ministry of Agriculture (MOA). This responsibility includes drafting relevant laws and regulations; contributing to swine industry development plans and swine industry statistics; and supervising the quality and safety process of slaughtered products through audits and technical training. Sources note that the National Statistics Bureau will report swine inventory and pork production numbers on a half year and end of year basis, and MOA will report percentage changes of productive sow inventory monthly.

Consumption

Post forecasts that China’s 2014 pork consumption will increase by two percent to 56.2 million tons, partly due to continued demand in urban cities and cheaper prices compared to other meats. As noted in the beef section, China’s recent avian influenza outbreak influences consumers away from poultry towards red meats and fish. Despite higher-than-expected pork production and imports, Post forecasts that China’s 2014 per capita pork consumption will only increase by one percent to 41 kilograms mainly for the following reasons:

  • China’s slow economic growth will likely stabilize per capita income and consumption;
  • The reported 2013 incident on the dead pigs floating from Zhejiang Province to Shanghai Huangpu River continues to have a negative impact on consumer purchase decisions; and
  • China’s tightened ban on government banquets reduces consumption.

Imports

Despite record pork production, Post estimates that China’s 2014 imports will increase by two percent to 790,000 tons, largely due to competitive import prices. From January to November, the average 2013 domestic pork price was $3,977 per ton, while imported pork price was more than 50 percent cheaper at $1,899 during the same period in 2012.

The United States is China’s largest pork supplier; however, U.S. market share faces serious competition from Germany, China’s second largest supplier. The U.S. export market share dropped from 54 percent in 2011 to 36 percent in 2012 and continued downward to 21 percent in 2013. Meanwhile, Germany’s export market share increased from five percent to 20 percent over the last three years. This is partly due to Germany’s competitive pork prices and China’s ractopamine restrictions on U.S. pork exports.

Post estimates that China’s 2014 live breeding swine imports will increase by 10 percent to 23,000 head due to continued demand for improving local swine genetics. Breeding animal imports will continue upward as China continues to modernize its farming practices. The United States is China’s largest live swine supplier, accounting for over 50 percent of imports.

Exports

Post estimates China’s 2014 pork exports at 250,000 tons, slightly lower than USDA’s official estimate and largely due to few shipments to Japan, China’s second largest export market. Post forecasts China’s 2014 live hog exports at 1.71 million head due to reduced slaughter demand in Hong Kong and Macau.

February 2014

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