Small farms in Asia are the worst hit by the outbreak, while global pork and feed markets fluctuate with fall and rise in China’s pig numbers
Pork accounts for 35-40 per cent of the global meat production. It is also a major source of protein with an annual consumption of more than 110,000 tonnes. Notwithstanding the rise of industrialised pig farming in developed and emerging economies, pig farms remain dominantly an affair of small-scale farmers. They are, therefore, the first victims of the African swine fever (ASF) outbreak.
In many countries, including India, where 70 per cent of the pig farms are owned by small-scale farmers (according to the Department of Animal Husbandry and Dairying), backyard farms are closing and people are moving out of the business. In China, almost 98 per cent of the total pork production is by small-scale farmers who have fewer than 100 pigs each, according to 2016 data from the National Bureau of Statistics of China.
Evaluating Losses Associated with AFS in the People’s Republic of China and Neighboring Countries, an Asian Development Bank (ADB) report released in October 2020, had warned: “The burden of the disease is falling disproportionately on smallholders — for whom pig raising is often a critical livelihood mechanism and safety net — in absolute terms and on a per pig basis, thereby threatening increases in poverty, vulnerability, and food insecurity.”
Take the case of Vietnam. The small nation has culled six million pigs (20 per cent of its total population) since February 2018, as per the US Department of Agriculture (USDA).
Given that its pig sector is valued at $4 billion, the loss is huge and has mostly impacted small farmers. Do Tien Duy, associate professor, Faculty of Animal Sciences and Veterinary Medicine, Nong Lam University, Vietnam, tells DTE, “The story of ASF in China and other Southeast Asian countries is not like the story in Africa and European countries, because ASF never hit the domestic pig production so badly there. The disease is dangerous for smallholders.”
Big, intensive farms have biosecurity applications and can survive an ASF epidemic. But most small- and medium-scale farms cannot afford such measures. The production in Vietnam has already transformed from small/medium-scale to large-scale in three years. After the outbreak, there has been a 50 to 70 per cent reduction in the number of small and medium farms, says Duy.
At the same time, large ones increased by 160 per cent. “The large farms knew the epidemiology scenario of ASF. Small farms were very vulnerable,” says Duy. In China, 40 million small-scale pig farmers were the hardest hit from ASF in 2019 as per a report by Grain, a Barcelona-based non-profit organisation.
“Even after ASF is dealt with, the pig population might not be the same as before, except in China because the government there is giving financial support to farm owners to produce good quality pigs and to put in place good biosecurity measures. Only a good biosecure farm can bring pig production back to normal,” Partiwat Poolperm, a swine expert based in Thailand, tells DTE, In other countries, it is possible that backyard farms will not make a comeback.
Josef Schmidhuber, deputy director at FAO’s Trade and Markets Division, says, “ASF has wiped out more meat production than any other animal disease in modern history.” This is in specific reference to the global impact of the viral disease outbreak in China. The country had to cull 100 million pigs since 2018, and has lost half of its pig population to ASF, as per official figures released by South China Morning Post.
Such was its impact that food inflation reached 17 per cent in China in December 2019. It is reported that to meet the meat demand, China released from its “secret reserve of pork” (a reserve it created in 2007, whose size is a state secret) to the public. This was also to stabilise the price of pork, which had doubled in 2018-2019.
According to the ADB report, China and neighbouring countries lost $55 billion to $130 billion due to ASF. To put this figure in context, the US pork industry contributed $40 billion to the country’s GDP in 2020, as per the country’s National Pork Producers Council.
China is the world’s largest producer, consumer and importer of pork. It is also the largest importer of soybean which is used as feed. The mass culling of pigs in China has, therefore, not just disrupted the domestic as well the global pork trade, it has also impacted the international market of animal feed.
Pork production has consistently risen in China. In 2010-2018, its annual pork production had risen by 50 million tonnes, as per OIE. In 2018, China was producing as much as 50 per cent of the world’s total pork. But ASF caused a 25 per cent dip in global pork production (see ‘Global fall’), as per Global Pork Production Report 2014-2020 by ResearchAndMarkets.com As the pig population dipped, China’s total consumption of animal feeds, such as soy, dropped by 17 per cent in 2019.
The country used to process over 80 per cent of imported soybeans into animal feed. As China’s animal feed import fell, the global prices also dipped.
In the global market, this combination of a decline in pork production and feed consumption in China proved to be a boon for many countries. Pig farmers outside Asia benefited from cheaper feed costs and higher export demand.
The UK’s food exports to China increased by 28 per cent in 2020, compared with the same period last year, as per the country’s Department of Environment, Food and Rural Affairs.
Since mid-2020 ASF infection has been declining in China, though it continues to spread in Europe and Asia. This led to a big announcement by China that it would start restocking the pig population to reach 90 per cent level of pre-ASF period by mid-2021.
But in February 2021, the Harbin Veterinary Research Institute under the Chinese Academy of Sciences declared that the ASF virus had mutated. The new strain causes mild disease but is very difficult to detect.
This fuelled fear that the infection would now be much more. In January, Reuters, quoting unnamed industry sources, reported about two new strains were bringing down production in pig farms.
A May 20, 2021, report by Meat and Livestock Australia (MLA), a service provider to Australia’s red meat industry, says the new strain has already killed 8 million pigs this year. This could be the reason why Chinese pork imports have risen in 2021, leading to fresh realignment among exporters.
“Chinese meat imports in the first three months of the year reached 2.56 million tonnes SWT [shipped weight], up 21 per cent from the same period last year,” says the MLA report.
In April, 2021, due to heavy exports to China, pig prices in the EU increased by an average of 19 per cent, according to the UK’s Agriculture and Horticulture Development Board.
China is the third-largest market for the US’ pork exports. According to estimates by HSBC, pork prices went up by 80 per cent, benefiting the American producers. The US also exports soybean to China whose price came down due to fall in demand.
Another development in China has added to this fast-changing animal protein and feed market. After the 2018 outbreak, the country undertook a massive reorganisation to change its pig farming from unorganised to consolidated industrial-scale. By 2025, under this plan, China would source 65 per cent of its pork from these large-scale farms.
According to the USDA, which has a keen interest in China’s pork industry for its export potential, China has operationalised 15,000 large-scale pig farms in 2020 alone. In addition, 13,000 large farms have been added to the production chain. USDA forecast says that with rapid consolidation of the pork industry in China, the large-scale pig farms will need more soybean feed.
China’s agriculture ministry, in June 2021, reported a rise in pig numbers as it started restocking the depleting population. As per the ministry, the country’s pig population is likely to exceed 440 million heads in 2021, in comparison to 310 million and 360 million heads in 2019 and 2020, respectively.
China spent $19.35 billion importing soybean in the first five months of 2021, an increase of 44 per cent compared to its import spending during the same period last year.
With it, the demand for soybeans has risen across the world. As per Chinese government data, soybean imports from the US and Brazil increased by 12.8 per cent in the first five months of 2021, in comparison with the same period last year.
On the impact of this hike in feed price, Poolperm says: “In future, pig feed might play a big role for the small size farm holder because you cannot buy cheap ingredients for your farm. Also, there was a shortage of feed ingredients because in South America they got La Niña so there was a hit in production. In the pig meat production cycle, feed accounts for 70 per cent of costs. So if you increase your feed price, your total cost also increases.” This will have a negative impact on the smallholder businesses as they would not be able to bear this high cost.
Impact in India
The outbreak of ASF, though reported last year in India, has already disturbed the domestic pork market and the supply chain. Piggeries have been a traditional source of livelihood and nutrition for the majority of people in northeastern, eas tern and southern states.
In Nagaland, for instance, pig rearing is an important part of the culture and farming system of the Naga community. With pork being the most favoured source of protein, residents rear one or two pigs in the backyard for meeting any exigencies. So much is the demand for pork that Nagaland sources more than half of its requirement from other states. In recent years, the commercial piggeries of Uttar Pradesh, Rajasthan, Punjab, Rajasthan and Haryana have emerged as major suppliers to Nagaland and other northeastern states.
Estimates show that ASF has caused a 50 per cent shortage in northeastern states’ pork production. The effect of ASF in the northeast is also being felt by the commercial pig farmers in the northern states.
Dharminder Singh of Sanghera village in Barnala district set up his farm after graduating from Ludhiana’s Guru Angad Dev Veterinary and Animal Sciences University and is among the 1,500-odd pig farmers in Punjab. He has seen his farm grow from 30 pigs in 2013 to 500 now.
“We have been stopped from trading since the recent outbreak. The market price of live animals has dropped drastically while feed cost has doubled,” he says. The price of soybean for feed is Rs 68 per kg this year against Rs 35 last year.
Europe shaken, not stirred
Europe has benefited from the crisis in China, but it has been shaken by the outbreak within its own territory. The Germany-Poland border areas have been reporting cases of ASF in wild boars. Authorities have detected nearly 5,000 infected animals since 2019, as per a combined country count on March 29, 2021, by multimedia website Pig Progress using OIE data.
In March this year, agriculture ministers of Germany, Poland and the Czech Republic had an emergency meeting to tackle the fast spread of ASF in wild boars and agreed to allow their aggressive hunting. Germany is also fencing its border with Poland to stop movements of wild boars.
Half of Germany’s frozen pork used to be exported to China till last August when the latter stopped importing due to the ASF outbreak. Currently, Germany has been reporting an increase in pork export, mostly to the EU and the UK. But there is a threat of Germany facing a curb on its export of frozen pork to EU countries, which will, in turn, lead to further shortage in the continent.
Many have started speculating on the ASF outbreak’s impacts on general animal protein consumption in the world. “When ASF first hit pig production, the impact was dramatic in two years because the pork prices were very high. To adapt with the change the farmers raised a lot of poultry, buffalo, and fish. About 30 per cent protein intake was replaced by these items in Vietnam,” says Do Tien Duy.
This may be a temporary development, but there is a perception that COVID-19 has brought the focus back on non-vegetarian food and the way we source it. Still, it is safe to say that ASF has caused long-term changes in the demand-supply chain in the pork industry that has a bearing on agricultural products as well.
Besides, it has hit the affordability of the primary source of animal protein. There would be a decline in calorie availability in all regions of the world due to higher prices of meat price and of cereals used as feed, as per Modelling the global economic con-sequences of a major African swine fever outbreak in China, published in Nature Food in April 2020.
It says: “Aside from China, we see many countries in East and Southeast Asia as well as Europe with declines in calorie availability of more than 1 per cent. In high-income countries where baseline calorie availability is already high, such declines will tend not to have negative health impacts... The largest absolute change in hunger is found in India (more than 2 million additional people at risk of hunger) and is driven primarily by the secondary price impacts, particularly the increase in the price of wheat, which is an important food staple.”
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