UTRECHT, THE NETHERLANDS — The African swine fever (ASF) outbreak in China is expected to impact the country’s pork market until 2025, the time needed for the herd inventory to bounce back, according to a new Rabobank report.
“Everybody recognizes that China’s pig population has been decimated but it isn’t fully appreciated that the market will take years — probably half a decade — to rebalance due to the huge restocking required and the fact that global imports simply cannot make up the shortfall,” said Chenjun Pan, animal protein senior analyst at Rabobank.
Analysts from Rabobank noted China’s pig herd already has contracted from over 430 million animals in August 2018, when the first case of ASF in the country was reported, to now stand at under 200 million pigs.
“The recovery will likely start taking shape next year but we’re then looking at years of production increases to get the market back on track given the herd has roughly halved in less than 18 months,” Pan said.
According to Rabobank, the focus next year and in 2021 will be on small-scale restocking and large-scale importing before hog production increases in the years to 2025, when the market should rebalance, and prices stabilize.
“However, even then the total herd is unlikely to return to the 2018 peak, analysts predict,” Rabobank said.
The report, “China’s recovery from African swine fever, rebuilding, relocating and restructuring,” notes that China will be unable to import enough pork to make up for the production shortfall in the coming years, causing high global prices and prompting consumers to change habits.
Rabobank foresees China’s population will consume more chilled, frozen and processed meat — rather than the preferred fresh warm pork — while poultry consumption will rise to make up some 30% of the market by 2025.
Rabobank’s analysts expect China’s pork market will be changed forever, with pork’s share of the market declining from the recent 63% to 53%.
“The key point is that even when the market does rebalance, it’s going to be a different meat environment in China,” Pan said. “Pork will remain the country’s protein of choice, but it will command a much smaller share of consumption as younger consumers lead the charge into poultry. For China, and the global market, this will be the new normal.”
Rabobank has predicted that ASF will kill a quarter of the word’s pig population. China, the world’s largest consumer of pork, accounts for about half the world’s production of the meat.