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China's WH Group sees higher hog prices after use of unapproved vaccines

Use of illegal African swine fever vaccines by some Chinese hog producers last year reduced output of hogs and will support prices in 2021.

31 March 2021, at 7:19am

Reuters reports that an executive from leading pork processor WH Group made the assessment on 30 March. The impacts of using illegal vaccines against ASF has spurred growth in imports of cheaper meats.

China has been trying to rebuild its massive hog herd since the deadly African swine fever virus ravaged the country's farms during 2018 and 2019.

But use of unapproved vaccines in a bid to protect against the disease had the opposite effect and ended up killing pigs, said Ma Xiangjie, president of Henan Shuanghui Investment and Development, WH Group's domestic unit.

Pig prices rose significantly at the end of 2020, as supplies tightened, Ma told reporters after the company released annual earnings, defying expectations of growing hog output.

"Since the second half of last year some pig producers in China, especially south of the Yangtze river, used some immature pig vaccines and caught African swine fever again," said Ma.

WH processed 46% fewer hogs in China in 2020 compared with the prior year because of tight supply, reducing capacity utilization at its plants to 30%.

But imports of 700,000 tonnes of pork, poultry and beef, including 70% from the United States, helped it make up the shortfall and generate record revenues and profits in its home market.

Revenue at the group that also owns US-based Smithfield grew 6.2% to $25.6 billion but profit before biological fair value adjustments fell 29.4% to $973 million, largely due to the impact of COVID-19 on sales and production inefficiencies in its US plants.

The company has raised its forecast on Chinese pig prices this year due to the impact of "toxic vaccines", added Ma, though prices will still be on average lower than in 2020.

It will continue to grow its meat imports in 2021 and is working to expand the range of products and volume brought into China from the US.

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