Source:  Rita Jane Gabbett, MEATINGPLACE, 11/4/11

When most people try to forecast how much pork China might import in the future they look at Chinese pork consumption trends, but U.S. Meat Export Federation Vice President for Asia-Pacific Joel Haggard says think again.

“Don’t worry about overall consumption. Be more concerned about what is happening with self sufficiency,” he told participants at this week’s Strategic Planning Conference here.

Haggard explained that even if Chinese pork consumption remained unchanged, a 5 percent change in the country’s ability to produce the pork it needs domestically could have a huge impact on global pork trade.   
Chinese government subsidies are attracting big investors in new large-scale pork production facilities, but Haggard said he’s not sure those investments are offsetting the dramatic exodus of small-scale pork producers throughout China.

He said while there is no solid data on how many Chinese pork producers there are, some estimates have been as high as 80 million and there is speculation that as many as 30 million have exited the business.
“It’s hard to say (what the numbers are), but small producers are exiting and large producers are not offsetting,” said Haggard, noting that USDA recently reduced its pork production estimate for China.
Pork is such a large part of China’s gross domestic product that when pork prices rise, so does inflation. Pork prices hit record highs of $138 per hundredweight in September, but have since declined by about 10 percent, Haggard estimated.

He also noted that the United States isn’t the only country facing high corn prices, with corn prices in China running as high as $9.84 per bushel.

Haggard said most of the pork China imports does not go to retail or to foodservice. Rather, Chinese processors are using it to create their own products. During his presentation he showed a picture of boxes of Smithfield pork being used to make Jinhua Ham.

He predicted future increases in overall Chinese pork consumption would come from rural areas, as urban consumers are already diversifying their diets.

Haggard outlined three phases of Chinese pork import behavior. Phase one is offal and byproduct purchases, phase two is opportunistic frozen pork purchases for price control and phase three will be consistent program purchases of chilled pork.

“Right now they are purchasing for price control,” said Haggard. “There is some government buying and some private buying, but it is opportunistic. They are not loyal to any supplying country.”

He said there is work to be done on critical control points for China to become a chilled pork importer, including reducing quarantine and inspection clearance times and evolving logistics and inventory control.

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