Source: Rita Jane Gabbett, MEATINGPLACE, 1/23/17


The math is fairly simple. Chinese consumers are becoming wealthier, and their demand for pork as a culturally preferred protein is growing. At the same time, the cost of pork production in China is nearly double the cost of production in the United States. The simple answer is more U.S. pork exports to China.

These are the conclusions, along with others, reached by analyst Fred Gale at USDA’s Economic Research Service in a new report titled, “China’s Pork Imports Rise Along with Production Costs.” 

“With rising production costs, constraints on land use, and stricter environmental regulations in China, the country is likely to remain a large importer of pork,” the report concluded.

China became a significant pork importer when its pork price rose to about double the U.S. price in 2008, but imports declined during 2009-10 as China’s price fell.  During 2012-15, China’s pork price was often as much as double the U.S. price, and China was a significant importer of pork. Monthly imports soared to a new record during 2016 as the China price rose and the U.S. price fell.

Driving production costs in China are higher feed and, to a lesser extent, rising labor costs.

The daily wage paid to hired laborers by hog farms in China rose eight-fold from 2000 to 2015. Still, the average Chinese wage reached only $1.76 per hour in 2015, compared to $12.54 per hour in the United States. While the rapid wage growth is spurring China’s transition toward larger-scale farms, labor productivity remains low in hog production.

A much bigger driver is the cost of feed in China. The difference between China and U.S. prices for corn and soybean meal has always been great and for corn, that gap has widened significantly since 2013.

China’s price of soybean meal has been consistently 20- to 40-percent higher than in the United States, reflecting the cost of importing soybeans that includes the cost of freight, a 3-percent import duty, and a 13-percent value-added tax.

China has a quota that limits imports of corn, and the price of corn in China varies independently of international prices. In many years, the China corn price was 30-40 percent higher than in the United States. The difference widened to 120 percent in 2013 and 180 percent in 2014 when U.S. prices fell but China supported prices at a relatively high level. The difference was about 140 percent in 2015 as China reduced its support price for corn that year.

Higher production costs have driven higher prices for domestic pork in China.

“If China’s high price persists, exporters in the United States and other countries will find sustained market opportunities there,” Gale concluded.

For more stories, go to www.meatingplace.com.