This October the United States Department of Agriculture (USDA) updated its projections (2019 and 2020) for the global meat market, and the clear highlight was the complicated situation in China, which impacts the dynamics of the sector around the world. Since August 2018 the Chinese have been suffering from ASF, a disease that has decimated a significant portion of the local swine herd, leading to a drop in production, a sharp rise in prices, and an increase in pork imports across the country.
USDA estimated that the Chinese swine herd must close 2019 with 310 million head. For the end of 2020 the estimate is 275 million head, down 35.76% from the beginning of 2018. The replacement of herds must occur slowly in China, since a large portion of breeders left the sector and others are still reluctant to boost production, since ASF is still present in the country. It is worth mentioning that the dynamics in the Chinese market tend to present a major change from now on, with large industries and integrators holding the largest share of the country’s production. It is noteworthy that about half of China’s pig farming was owned by family and small farms before the ASF outbreak. The Chinese government is already taking steps to stimulate livestock expansion, including insurance subsidies, higher compensation payments, subsidized interest rates and other forms of assistance.
Fewer animals will lead to a substantial decline in China’s pork production in 2020. According to the USDA’s report, production is expected to reach 34.75 million tons in 2020, compared with 46.5 million in 2019 (25% lower). The restricted supply in the country will lead the Chinese to act intensely on imports in the short and medium term. USDA estimated China’s pork imports at 2.6 million in 2019, a 67% increase compared to 2018. In 2020 China is expected to import 3.5 million tons of pork, according to the report, which will represent 35.13% of global imports next year. Brazil, the United States and the European Union must be the big beneficiaries, meeting Chinese demand.