ASF pork trade impact reaches beyond China
Much of the media coverage on African swine fever is on the virus’s rapid spread in China — and with good reason. China produces and consumes about half the world’s pork, so its looming pork deficit will have a significant impact on global trade for at least the next couple of years, and perhaps beyond. But ASF has also been confirmed in Vietnam, Cambodia, Laos and North Korea, and in pigs brought into Hong Kong for slaughter. Taiwan has also found infected pig carcasses from China washed onto the shore of Kinmen island. In addition, ASF’s growing presence in Asia has prompted many countries that are still ASF-free to ramp up preventive measures.
Since ASF was first confirmed in Vietnam in February of this year, it has spread to 62 of the country’s 63 provinces and, according to official reports, resulted in the depopulation of 3 million pigs — more than 10% of Vietnam’s swine herd. The USDA Foreign Agricultural Service in Hanoi reports that by early June the economic damage to Vietnam’s farm economy had reached $155 million and the Vietnamese government was encouraging famers to diversify livestock production to help mitigate a possible shortage of pork.
FAS also notes that while the government has made a concerted effort to reassure consumers that pork is safe for consumption and encouraged them not to boycott pork, many companies and schools have stopped using pork in prepared meals for employees and students. Hog prices in southern Vietnam dropped to $0.64 per pound in June, down 31% from a year ago, as consumer demand for pork has dropped and culling of pigs continues.
Although ASF was not confirmed in Vietnam until 2019, its demand for imported pork was already surging last year, when the European Union reported pork exports (including both muscle cuts and variety meat) to Vietnam of just under 80,000 metric tons, up 93% from 2017. Through April, EU exports to Vietnam were up another 79% to 29,000 mt. Vietnam is now the seventh-largest volume destination for EU pork exports and ranks 11th in value.
Russia was Vietnam’s second-largest pork supplier in 2018 at nearly 17,000 mt (all variety meat), more than tripling the 2017 total. Through May, Russia’s exports to Vietnam were 30% ahead of last year’s pace at 6,226 mt. Brazil’s exports to Vietnam through June reached 7,239 mt, up from just 818 mt in the first half of last year, making Brazil Vietnam’s No. 3 supplier based on monthly average. The United States is Vietnam’s fourth-largest supplier, and in 2018 the United States saw a fivefold increase in exports to 16,000 mt. Through May, this year’s exports to Vietnam increased 68% from a year ago to 3,077 mt.
Cambodia and Laos
ASF was first confirmed in Cambodia in early April and within a month the number of confirmed cases grew to seven. In late-June, Laos reported its first seven confirmed cases of ASF and an eighth case was reported in early July. While neither country is a large producer or importer of pork (Cambodia is estimated to harvest about 2 million pigs per year, Laos about 4 million), the spread of ASF in Cambodia and Laos has heightened concerns that it will soon enter Thailand, which produces about 1 million mt of pork annually.
While ASF has been suspected to be in North Korea for some time, the government first confirmed its presence in late-May. The outbreak reported was in North Korea’s Chagang province, on the China-North Korea border near the Chinese provinces of Jilin and Liaoning. It killed 77 pigs with another 22 culled and disposed of.
ASF’s confirmation in North Korea prompted South Korean officials to step up efforts to prevent further spread of the disease, including heightened surveillance at about 350 farms near the Korean Demilitarized Zone and additional measures to prevent wild pigs from carrying the disease across the border.
South Korea has also increased inspections and fines for illicitly hand-carried meat products. South Korea also announced that it will strengthen quarantine inspections of all pork imported from Germany in response to the temporary ban on German pork imports imposed by the Philippines (see more on this situation below, in the Philippines section). Effective July 1, all shipments of German pork are being held and 100% inspection is being conducted to ensure that no pork is included from third countries. If pork from a third country is found in a German pork shipment, the shipment in question will be destroyed and all imports from Germany could potentially be subject to suspension. Germany is currently the second-largest single-country supplier to South Korea (behind the United States) and South Korea is the second-largest destination for Germany’s pork exports, trailing only China.
While South Korea remains on high alert, its January-May hog slaughter was up 1.5% year-over-year and early July hog prices were down 24% to $1.78 per pound. Korean importers purchased heavily last year in anticipation of the looming China pork shortage and imports have remained strong in the first half of this year.
Hong Kong is a unique situation in which its two confirmed ASF cases — one in early May and one in early June — were in pigs imported from China for direct slaughter. The cases occurred at separate facilities and resulted in the culling of a combined total of more than 10,000 pigs at the harvest facilities where the hogs were tested. In both cases, slaughter operations were shut down for several days to accommodate disposal of carcasses and thorough cleaning of the sites. The incidents caused short-term spikes in prices for fresh pork and forced retailers to scramble for alternative supplies. Importers are also seeking fresh (chilled) pork options from supplying countries other than China, including the United States.
ASF has not entered the Philippines and its government has been one of the most aggressive in implementing trade-restrictive measures related to the disease. The Philippines not only bans imports from all countries with confirmed ASF cases, it also decreed that due to ASF’s presence in neighboring countries, imports from Germany, France, the Netherlands and Austria would only be allowed if the recipient is a meat processor (this is based on the assumption that the product will be cooked and processed before entering commercial channels in the Philippines). Shortly thereafter, the Philippines suspended all pork imports from Germany because 25 boxes of pork from Poland (where ASF is present) were found in a shipment of German pork. Prior to the suspension Germany was the largest supplier of pork to the Philippines, accounting for one quarter of its imports this year.
The Philippines’ restrictions on pork from suppliers that border countries with ASF is a significant concern, especially if other importing countries take similar actions. While this is likely to create some additional short-term opportunities for U.S. exporters serving the Philippines, it also underscores the importance of preventing ASF from entering the Western Hemisphere.
As noted above, Taiwan has had findings of ASF in dead hogs washed on shore from China and has ramped up its airport security and use of beagles in detecting meat products carried by airline passengers. Taiwan’s pork production is more than 800,000 mt per year; the country is 88% self-sufficient. Hog prices have been trending higher, averaging $1.14 per pound in June. This is roughly steady with last June, but the highest since July of last year. Taiwan’s imports of pork and pork variety meat have been running ahead of last year’s record pace, including a large increase in imports of U.S. pork.
Japan, which has no reported incidents of ASF, consistently ranks as the world’s largest value destination for imported pork and as the second-largest volume importer behind China. Poland was one of Japan’s largest pork suppliers as recently as 2013, but imports of Polish pork have been suspended since mid-2014 due to ASF. Japan also suspended imports from Belgium and Hungary last year, but has imposed no recent restrictions related to ASF.