Swine Epidemics Affect the Chinese Pork Market

Outbreaks of ‘blue ear’ disease (PRRS), foot-and-mouth disease (FMD), classical swine fever, pneumonia, Streptococcus suis, circovirus, parasites and erysipelas are common in China’s pig industry, according to Fred Gale, Daniel Marti and Dinghuan Hu in a report entitled ‘China’s Volatile Pork Industry’ from the USDA Economic Research Service.

22 March 2012

6 minute read

News reports indicate that large losses attributed to disease periodically restrict the supply of pork, contributing to price surges. Chinese news media periodically report illegal sale of pork from diseased hogs, pork that is discolored or bearing lesions, and discovery of large numbers of hog carcasses in rivers and canals.

The impact of disease on the pork market is impossible to assess with any precision. When disease affects sows and young pigs, impacts on the market may occur several months after an outbreak. The frequency and incidence of disease is hard to measure accurately, and outbreaks are often regional. While the Ministry of Agriculture reports on disease outbreaks, these figures likely understate the actual incidence of disease because farmers and merchants have little incentive to report diseased animals to authorities (Woolsey et al., 2010).

Rising pork prices in 2007 and 2011 were attributed in part to disease outbreaks. During 2006-07, the supply of feeder pigs was reduced in part because blue ear disease (also known as porcine reproductive & respiratory syndrome, PRRS) caused sows to abort. This restricted the supply of finished hogs and led to high prices during 2007-08. During 2010, another round of disease outbreaks induced many farmers to slaughter hogs early, and many diseased carcasses were illegally sold to slaughterhouses. The increased supply of slaughtered hogs and the prevalence of tainted pork led to a period of depressed prices during 2010 (Woolsey et al., 2010). The disease–related decline in hog inventories during 2010 led to tight supplies of feeder pigs and another surge in pork prices during 2011 (Woolsey and Zhang, 2011; Sun et al., 2011).

Chinese agricultural officials have taken steps to reduce the effects of animal disease epidemics. Immunisations for PRRS, classical swine fever and foot and mouth disease (FMD) are compulsory and subsidised. Farmers are compensated for culling animals to prevent epidemics, and local officials must bear the cost of sanitary disposal of dead animals. Agricultural officials have made it a priority to improve veterinary services, biosafety and monitoring and control of farms, slaughterhouses, transportation and markets. Chinese pigs are required to have ear tags recording seven to eight mandatory immunisations. Slaughterhouses are required to ensure that hogs have ear tags and vaccination certificates. Inspectors are required to conduct ante– and post–mortem inspections of slaughtered hogs, and tissue samples are to be examined for parasites at slaughterhouses.

However, government programmes and regulations are not uniformly implemented, and problems with animal health persist. Vaccines may not be effective against multiple strains of PRRS that exist in China’s hog herds. Wang (2009) reported that ear tags (that record immunisations) and animal quarantine certificates can be easily falsified or purchased; farmers often miss vaccinations; syringes are often used on multiple animals; and veterinary personnel needed to carry out vaccinations are in short supply. In a small survey of farmers, Liu et al. (2007) found most farmers whose sick pigs did not respond to treatment sold the animals before they died or improperly discarded the carcasses of dead animals; only one farmer said he buried dead pigs as required by regulations. Liu et al. found that most farmers did not use ear tags or only attached them at the time the pigs were sold; pigs without ear tags were sold to unlicensed butchers or neighbouring farmers.

The high density of animal populations, rudimentary facilities, lack of technical knowledge among farm personnel and lack of resistance among ‘foreign’ breeds of pigs may contribute to vulnerability to disease. One article in a Chinese veterinary publication warned farmers that changes in feed, poor nutrition, neglect of immunisations and other animal stress–inducing factors that are more common on small–scale farms may heighten risk of classical swine fever outbreaks (Ren, 2010). According to Feng (2010), periods of extreme weather or flooding can trigger an epidemic among farms characterised by stressed animals and neglect of immunisations. ¹⁹ As evidence of farmers’ cost-cutting, Feng noted that many feed and veterinary drug companies reported sales declines of as much as 30 per cent during the period of losses in 2010. Feng also suggested that periods of losses by farmers may leave local governments short of cash to pay veterinary technicians and dispose of carcasses.

Feng (2010) hypothesised that disease outbreaks may actually be linked to the hog cycle itself. Writing in an industry newsletter, he observed that extended periods of losses for small– and medium–scale hog farmers may leave them short of cash. Farmers may then cut costs by switching to lower quality, less nutritious feeds and neglect vaccinations. Less nutritious diets leave animals in a weakened state and vulnerable to disease. Jiao and Kou (2010) reported that farmers in Sichuan cut costs during a period of depressed prices by increasing the proportion of rapeseed stalks in hog rations. Sun et al. (2011) observed that the substitution of cheaper feed substitutes contributed to chronic disease problems in the industry.

Chinese officials introduced subsidised insurance for producers of sows to reduce the risk of financial losses attributed to animal deaths, but some market reports indicate that this programme encountered moral hazard problems. Liu (2010) reported heavy losses incurred by companies offering sow insurance in Henan Province, citing large numbers of claims, high costs and fraud.²⁰ In July 2010, a Yangzhou newspaper reported that the insurance company’s pay–outs for sow death losses had doubled from the previous year and reached 25 per cent in one county (Yang, 2010). According to an insurance worker quoted in the article, some farmers neglected to treat sows for diseases during periods of low hog prices because the insurance indemnity exceeded the animal’s salvage value if it were culled and sold.

Footnotes

¹⁹Woolsey et al. (2010) also report that low efficacy of free vaccines may contribute to epidemics. Some local distributors lack facilities to keep vaccines at the proper temperature.

²⁰A company official told Liu that in some cases, multiple farmers filed claims on the same dead animal.