China is expected to import more pork in the future if the domestic price of the country's favorite meat continues to rise, according to ChinaDaily.com.cn. And the price is definitely rising. According to official figures, pork was nearly 57 percent higher in July than it had been a year ago.
"The central government may consider importing more pork in the future, especially when the country has been harmed by long-term increases in pork prices," said Wang Jimin, deputy director of the Chinese Academy of Agricultural Sciences Institute. "The country will continue to see high pork prices in the next few months of the year."
"Farmers now are not willing to spend their time and money raising pigs, which is a rather dirty and hard job compared with working in cities," Wang said. The challenges have resulted in many Chinese producers giving up raising pigs.
There’s no doubt about it: China holds the biggest single potential for increasing U.S. pork export sales. The nation’s 1.3 billion people consume over 100,000 tons of pork per day but the country has big problems producing their own supply.
Wang said domestic pork may eventually cost more than imported pork. "That's possible, but it's hard to predict when that will exactly happen," he said. It is also hard to predict the actual potential for the U.S. pork industry.
According to the USDA, the amount of U.S. pork exported to China is expected to increase throughout the summer and possibly into next year. That’s the kind of prediction that grabs the attention of the U.S. pork industry, the world’s highest quality, lowest cost pork producer.
China’s recent efforts to increase domestic pork production seem to be facing a strong headwind. “China has severe swine disease problems caused by having too many hogs too close together,” according to Dermot Hayes, Iowa State University economist. “As a result, their output per sow is falling. They are attempting to fix this problem by adding more sows." Hayes says it will take time to see if the approach works, but is not optimistic. “I think this will make the disease problem worse.”
In July, the Chinese government introduced a series of financial supports for pork producers they hope will cap pork prices and ease inflation. “China is not run by market forces, so it is difficult to make accurate projections,” says Hayes.
Much of China’s pork imports consist of variety meats. “Of the 316,000 tons we exported so far this year, 126,000 tons were muscle meat,” says Hayes. “However, it seems likely that a lot of this muscle meat consists of low value meat such as feet, ears, tails and hocks.”
China’s import regulations present a unique challenge for U.S. pork processing plants. In addition to the unusual make-up of Chinese pork imports, the nation tests incoming meat for a product commonly used in U.S. finishing hogs. “China tests imported high value primals for ractopamine,” says Hayes. “While we can produce hogs without it, this only makes sense if we export the full set of primals from that carcass. Smithfield did this in 2008 and it is possible they are doing so now.”
Still, hopes are riding high on the potential for increased pork demand from China and the U.S. pork industry is standing at the ready to supply what the nation wants.
Chart courtesy of Dermot Hayes, Iowa State University