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Central Government in China Pushes Pork Production

08/01/2019

In the face of ascending mortality from African swine fever (ASF) that to date may have depleted the national herd by one third, government authorities in China are adopting a traditional centrally-planned approach to increasing production. At issue is the reality that pork prices are climbing, reflecting an imbalance between supply and demand. It is understood that frozen pork in storage has been depleted and with tariffs imposed on U.S. imports, prices are over 30 percent higher than in July 2018. To prevent consumer disaffection, provincial and municipal authorities are now subject to obligatory production quotas consistent with traditional Communist practice. Measures to support production include grants to consolidate processing and subsidizing hog producers. Issuing orders may be easier than ensuring compliance given that the infection is not controlled and that a low standard of biosecurity prevails in small family-operated farms.

The disease will not be controlled for at least two years even if an effective vaccine is introduced since the hog industry requires radical restructuring. Eradication in the foreseeable future does not appear to be a reality. Previous postings on EGG-NEWS and CHICK-NEWS commented on the epidemiology of African swine fever in both Eastern Europe and Southeast Asia and the problems associated with control and the impact on supply. (Enter African swine fever in the SEARCH block to review previous postings)

Evidence that ASF has severely impacted supply is the response to the order to increase production with a reported five percent increase in the share price of the WH Group on the Hang Seng Exchange on Friday, July 26th.

The action by the central government and provincial authorities are at least recognition of the problem represented by ASF despite an egregious lack of transparency over prevalence and failure to acknowledge the wide geographic extent of the infection.