China's hog farmers gain piglet feed essentials in new US tariff exemptions

Among the products included in China's first batch of exemptions last month was whey permeate, a staple for piglet feed.
calendar icon 5 October 2019
clock icon 4 minute read

US exports, prices decline

Tom Vilsack, chief executive of the US Dairy Export Council, also touted permeate and whey to Chinese officials as tools to recover from the outbreak when he visited China shortly before the exemptions were announced.

"I repeatedly pointed to win-win dairy solutions for the US and China," said Vilsack, a former US agriculture secretary who spoke with officials at China's ministries of commerce and finance.

Permeate is made by concentrating whey, a byproduct of cheese, into an ingredient that is high in lactose. It is fed to piglets before weaning when they begin to consume corn and soy, which are harder to digest.

As much as 85 percent of US permeate is used to feed the world's piglets, contributing to $5.6 billion in total US dairy exports, according to suppliers. But exports of US permeate to China have declined to less than 10 percent of production from about 30 percent before the trade war, suppliers said.

The decline has hurt profits for high-protein whey production, according to US food company Land O'Lakes , which sells cheese but does not directly export permeate.

"We do expect an increase in demand for permeate with suspension of the tariff, although we expect it to be tempered by the ongoing impacts of ASF," Land O'Lakes said..

Prices for US permeate have halved to about 10 cents a pound because of the disease and trade war, said Richard Bradfield, a vice president for Missouri-based animal-feed company International Ingredient Corporation.

Demand should increase by the second half of 2020 as Chinese farmers rebuild their herds, said Qingping Liu, the company's Asia director. For now, though, buyers are expecting lower prices due to the exemptions, Liu said.

"While North China demand picked up some, South China demand is very weak with only 20 percent of pigs left," Liu said.

The deaths of millions of hogs is also limiting sales of US fish meal, according to Virginia-based producer Omega Protein, a unit of Canada's Cooke Inc.

"While there may be increased interest now that China has exempted fish meal and oil, other factors still remain such as African swine fever and high port stocks that we considered challenges to increasing sales to the Chinese," spokesman Ben Landry said.

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