Cargill prepares for pork market shock in China for the next decade
The Chinese ASF situation is here to stay, believes John Fering, managing director for Cargill’s premix and nutrition business in China.
In an interview for Bloomberg, Fering explained that the estimate of 24% of losses in the Chinese pig inventory is considered to be "conservatory" due to the fact that the virus has spread so fast across the country and the industry is still tributary to small-scale enterprises.
Rabobank has issued a warning regarding the risk of losing 70% of the Chinese pig inventory due to the ASF virus, which equals 35% of the world's herd and that may be closer to China's reality. Such an impact would take years to achieve balance in the Chinese pork market, according to Mr. Fering. "This is not a short-term event. This is going to take several years, if not a decade, to fully achieve structural recovery," he said.
The first ASF outbreak in China was reported in August 2018 and since then there have been more than 140 outbreaks confirmed. The number of pigs culled due the outbreaks has reached 1.2 million but that is according to official data, while the real situation may be far worst, as independent sources are saying.
China has increased pork imports in the last four months due to the shortage in the domestic market but there is also a trend in switching to other animal proteins as pig meat prices are spiking up.
John Fering's opinion on this crisis is that substitutes for pork are going to gain a larger market share in China's protein market in the following years. Poultry, eggs and beef are going to be the main beneficiaries of this situation and Cargill intends to capitalize it by opening a second poultry plant in the country with an annual capacity of 32,000 tons of chicken.