What is the most recent issue in the pork industry?

African Swine Fever (ASF) has been one of the most pressing issues in the pork industry with China suffered greatly from the disease back in 2018. Cases of ASF in Germany recently have been the most pressing as China banned the import of pork from Germany on September 12, following a case of African swine fever in a wild boar in the Eastern state of Brandenburg last week. The ban takes effect immediately, meaning that any exports that are already shipped will be sent back or destroyed. Currently, South Korea, China, the Philippines, and Japan have all banned imports of German pork following a case of ASF in the Eastern state of Brandenburg along the border with Poland. Japanese imports of German pork amounted to 40.24K MT in 2019, accounting for 3.3% of the country s total imports.

The ban came two days before talks between Chinese President Xi Jinping, German Chancellor Angela Merkel, and EU officials were scheduled surrounding trade issues between the EU and China. Some analysts have speculated that the ban stems from political concerns more than it has to do with the disease as a display of the country s coercive diplomacy tactics. Prior to the ban, there had been evident disapproval from Chinese Foreign Minister Wang Yi on remarks from European officials including German Foreign Minister Heiko Maas's criticism of the national security law imposed in Hong Kong. Currently, the German Ministry of Agriculture has said it is in talks with the Chinese government to try to have the ban impact imports only from regions affected by the disease.

The ban also comes after the largest pork producer China has had its own difficulties with ASF and experienced a subsequent 20% drop in production during the first four months of 2020. It is estimated that China’s pig population has decreased by approximately one-third compared to the period before ASF was introduced into the country in 2018. Subsequently, German pork exports to China were at 158K MT worth USD 501.6 million during the first four months of 2020, a 50% increase compared to the same period in 2019 (volume). Approximately 14% of pork imports in China are from Germany. This provides an opportunity for other major producing countries such as the US, Canada, Spain, and Brazil to expand on exports to China. The US pork industry in particular is in an advantageous position with the Phase One trade deal guaranteeing increases of USD 200 billion in export value for the next two years, including agricultural products. Lean hog futures in the US rose late last week in anticipation of the ban.

However, according to US thinktank PIIE, China’s imports of US agricultural products until July amounted to USD 9.9 billion out of the yearly target of USD 36.6 billion, prompting uncertainties in the fulfillment of the agreement despite China’s “promise” to follow on the Phase One deal in mid-August. In addition, as it takes approximately 10 months for the pigs to be fully marketable, increasing the supply promptly in time might prove to be difficult. Nevertheless, several exporters have expressed their willingness to increase exports to China. International director of porcine trade body Daniel de Miguel has started last Friday that its white pig sector is “fully prepared to continue its growth trend in sales of safe and quality pork products to the Chinese market” while the US has announced it is “well-positioned” to export more pork to China.