Chinese Pork Industry Overview, September 2003

By USDA, FAS - This article provides the pork industry data from the USDA FAS Livestock and Products Annual 2003 report for China. A link to the full report is also provided. The full report include all the tabular data which we have omitted from this article.
calendar icon 25 September 2003
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Report Highlights

During 2003 the outbreak of SARS in China and detection of BSE in Canada negatively affected China’s meat consumption and trade picture. However, demand for imported pork and beef is forecast to rebound to pre-SARS levels for the reminder of 2003 and into 2004.

Rising incomes in China continue to favor growth in beef imports at the expense of domestic pork production and consumption. Import fraud problems prompted China to work with USDA to develop more effective certification and labeling procedures. During 2003 the Chinese Government announced a new strategic plan to bolster cattle production.

Executive Summary

During 2003 China’s imports of pork are forecast down at 56,000 MT due to the effect of the SARS panic on consumption, but recover to 70,000 MT during 2004. However, import demand remains strong for pork offal and feet, a significant component of China’s frozen pork imports. Pork production is increasing slowly but steadily as overall pork consumption is still growing. Pork consumption growth mainly comes from population growth, and pork consumption is more and more challenged by gaining popularity of other meats. China is generally self sufficient in pork production.

China’s health officials are strengthening the country’s regulatory environment, as consumer concerns about food health and safety rise, posing challenges for both domestic producers and key supplying countries such as Denmark, the United States and Australia. FAS/Beijing and the U.S. Meat Export Federation are working closely with China’s regulators to ensure China’s import requirements remain science-based and transparent.

Swine and Pork

Swine production forecast to be flat during 2003 and 2004 due to weak consumer demand for pork stemming from rising popularity of other meats.
China’s swine industry faces stagnant demand from consumers due to gaining popularity of other meats. Official statistics showed a smaller pace of growth in both swine inventory and pork production in 2002 over the previous year. The past nine months, hog prices were at low levels. However, low feed prices have helped the swine industry gain some marginal profits. Given these realities, the Chinese Government appears moving to discourage expansion of the swine industry. As evidence, when the Ministry of Agriculture recently announced the national strategic “Advantageous Production Area Development Program”, swine was not included like beef and dairy cattle.

Increasingly health conscious Chinese consumers, especially urban residents, prefer leaner pork. As a result, the swine industry has adjusted the swine production structure from expanding animal size to improving quality of the finished product. For example, the number of three-way crossbred, lean hogs has increased about five percent on the main production farms, but these efforts are not enough. Compared with western countries, the lean meat per hog in China is only 50 percent, on average.

Pork consumption has fallen from 80% in 1980s of all meat consumed to a new low of 62.23% in the first five months of 2003
In China pork consumption still commands the largest share of all meats consumed. According to NSB China’s per capita consumption was 1.78 kilograms in the first five months in 2003, accounting for 62.23 percent of all meat. However, any growth in total volume consumed reflects the steady pace of population growth and not per capita consumption gains. Chinese consumers, especially women and the older generation in urban cities, consider pork too fatty compared with others meats, a factor which is not good for health. According to the industry, most pork consumption increases stem from residents of newly urbanized towns and farmers who do manual labor in cities. Wealthier Chinese consumers are looking for greater diversity in their meat consumption such as beef, mutton and poultry. This trend will continue in the next couple of years as a strong economy and rising incomes makes purchases of other meats more affordable.

Prices for pork remain lackluster.
According to data from the Ministry of Agriculture, pork prices on average for June 2003 were decreasing against the same month of the previous year. With consumption growing slowly due mainly to population increases and supply outstripping demand, prices will not rise to the high levels seen in the early 1990s. Prices will fluctuate as normal during the high consumption season.

Fraud prevention efforts strengthening in China—USDA/FSIS certificates should improve sales opportunities for imported U.S. pork products.
The past year USDA and China’s AQSIQ officials made progress on several beef and pork trade issues. Both sides agreed to use a new FSIS export health certificate that utilizes a watermark to show authenticity. The other success was that China accepted the U.S. suggestion to use stick-on labeling marks on outer boxes instead of print-on labeling marks. This change will reduce export costs for U.S. traders. Both procedures were originally raised by China as a means to deal with fraud of products. There have been no reports of trade disruptions since the new labeling became effective. However, significant issues such as China’s zero tolerance levels for E. coli and Salmonella (please refer to FAS/Beijing’s report, CH2009) remain pending.

Chinese statistics of pork and offal imports inflate U.S. pork and offal exports to China. Some mislabeled pork products (normally lower quality products repackaged in Hong Kong) imported as U.S. origin are even accompanied by a fake U.S. health certificate. Recently, AQSIQ officials who claimed they found a drug residue forbidden in China rejected a shipment of pork offal. However, according to the industry, the supposed drug was never applied nor was that product even exported to China.

In response to these food safety and fraud concerns, during August 2003 the U.S. Meat Export Federation held technical seminars with the Ministry of Health, AQSIQ officials, and the meat trade on as wide range of meat trade issues. A better understanding of the U.S. Government and meat industry cooperation on export health certificates will hopefully help reduce these kinds of problems.

China continues practicing strict entry requirements for European products after the EU shut off most Chinese livestock and aquatic exports due to drug residue concerns. The EU’s export share to China for both meat and offal dropped considerably in 2002 and in the first quarter of 2003. Simultaneously, the U.S. exports are increasing and cutting into the EU share because of stricter entry requirements from the EU and better quality U.S. pork products, according to traders.

During the first two quarters of 2003, U.S. offal exports to China more than doubled over the same period of the previous year. This pork ma rket should remain stable, and imports in 2004 should be at or above this year’s level. Offal imports in 2002 were lower than expected mainly because the decreased EU share of exports to China was so fast that the increased US share could not compensate for it. Trade friction between the EU and China, coupled with competitive U.S. pork offal products, favors a shifting in the export share towards the United States.

Since Europe closed its market to most Chinese meat and aquatic products, China has shifted its strategy of focusing on pork exports to neighboring countries or areas. Pork access to Russia, though not smooth, has made good process. Russia is now China’s biggest export market. As the export volume to Russia in the first two quarters of 2003 (China data in the table below) already increased 7.6 percent of the total volume last year and the volume to Hong Kong is also growing, 25.4 percent, due to demand increases. China’s total exports in 2003 are estimated to rise above last year’s level and continue increasing in 2004.

Further Information

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Source: USDA, Foreign Agricultural Service - Annual Livestock and Products Report - September 2003
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