China’s huge hog herd – equivalent to more than half the world total – will return to growth in 2018 for the first time in six years, driving a further decline in pork imports from record highs.
China’s hog herd, which has shrunk by some 55m head to 420.0m head over the past five years, will rise by more than 27m head in 2018, the US Department of Agriculture said in its first forecasts for next year.
China’s hog herd has entered a “new cycle”, the department said.
The recovery reflects a tipping point in a drive to rationalise China’s hog output in large-scale producers at the expense of the backyard operators that had traditionally been the focus of the country’s output.
The campaign, designed to promote factors such as food safety and environmental protection, has reached a point where new capacity additions are exceeding closures of small-time producers.
“While the largest producers still control a minority of hog supplies, growth in this part of the sector now appears to exceed the exit of small producers,” the USDA said.
‘Steep run-up in prices’
In fact, “historically high prices”, which last year meant profits the USDA pegged at $100 per head, have long provided a strong incentive for herd expansion.
“A steep run-up in prices that began in 2014,” and saw values hit record highs last year encouraged large-scale producers, at least, “to invest in new facilities and equipment”.
However, the industry has since 2013 witnessed the “the exit of mainly small, less-efficient producers who could not comply with new standards” on issues such as waste treatment.
This issue is approaching something of a head, with a deadline for hog farm closures in so-called “forbidden zones”, on environmental grounds.
‘Imports to decline’
Indeed, this could see a temporary spike in pork output early in 2018, as herds are liquidated, US officials in Beijing said in a separate report, further depressing prospects for pork exporters to China.
The USDA pegged China’s pork imports next year at 1.60m tonnes, extending to 27% the decline from a record high of 2.18m tonnes recorded in 2016.
“Imports are forecast to decline for the second consecutive year in 2018 as production gains reduce demand for imported pork,” the USDA said.
“The European Union, US, and Canada will remain the principal suppliers, competing primarily on price,” the USDA added.
(Source – http://www.agrimoney.com/news/chinas-hog-herd-to-renew-expansion-boding-ill-for-pork-imports–11097.html)