Report Analyzes Chinese Pork Production and Imports

China produces roughly half of the world’s annual output of pork and imports significant volumes that can distort the relative small global pork export market. China’s annual pork production is four to five times that of the U.S. A recent report by the Economic Research Service of USDA China’s Volatile Pork Industry provides critical information for market participants to understand the impact Chinese pork imports could have on global pork trade.

Two sentences from the report’s introduction provide a framework for the analysis. “China’s pork industry is constantly buffeted by a range of influences, including disease epidemics, feed prices, policy interventions, seasonal consumption patterns, demand for other meats, and macroeconomic factors…As increases in production costs, animal disease epidemics, animal waste disposal challenges, and food safety concerns limit the expan­sion of China’s domestic pork industry, the outlook for pork exports to China is favorable.”

The report’s authors combined import data for Hong Kong (a separate customs territory) and China because an unknown amount of pork imported to Hong Kong moves into China. 從 2000 至 2006, the two combined annually imported 500,000 å’Œ 600,000 公噸 (公噸) of pork and products, 10-20 percent of a growing world pork trade, but less than 1 percent of pork consumption in China-Hong Kong. A new era of pork imports began in 2007 when imports almost doubled to just over 1 萬噸 (MMT), 20 貿易百分比, after a decrease in Chinese pork production led to record domestic pork prices. Imports grew to over 1.9 MMT在 2008, 31 世界貿易百分比. Imports declined to 1.5 MMT在 2009, 27 貿易百分比, but recovered to 1.8 MMT在 2010, 30 per cent of trade. 美國. supplied about 20 percent of China-Hong Kong imports in recent years, 和在 2008, 中美. exports to China-Hong Kong accounted for 18 占美國總數的百分比. 出口商品, about double the share for 2000-06.

The volume of imports is price sensitive. 從 1991 通過 2006 hog prices in China ranged from $0.30-0.50 per pound and averaged $0.37 每磅. Chinese average hog prices doubled from $0.52 per pound in the first four months of 2007 to a peak in April of 2008 çš„ $1.08 每磅. Prices then declined to $0.61 per pound by May of 2009, but prices averaged $0.79 per pound for 2007-10. Prices rose in 2011 高到 $1.40 每磅. Chinese hog prices have gone from being cheaper than U.S. hogs to being more expensive. The authors estimate that pork in the Chinese market needs to be 30-45 percent higher than in the U.S. to cover freight, tariffs of 12-20 percent and value-added taxes of 13-17 百分.

The authors’ calculations of Chinese average cost of producing hogs increased from $0.30 per pound live weight in 2002 至 $0.71 per pound in 2010. Feed costs account for about 60 percent of the cost of production and increased from $0.18 per pound in 2002 至 $0.44 per pound in 2010. Feed costs likely rose further in 2011. Corn prices remain higher in China than the U.S. Labor costs are increasing and may be underestimated.

China has multi-year hog price cycles and seasonal fluctuations in pork demand associated with major holidays. The ratio of the price of hogs to the price of corn, both measured in Yuan per kilogram, is used to measure the short-term profitability in hog production and to trigger government interventions, including a hog “price alert” market stabilization program introduced in 2009 to increase meat inventories to support market prices or release inventories to drive down consumer prices. A hog/corn ratio of 6:1 is considered “normal.” The national government is using a wide array of programs to encourage the development of hog farms, expand the breeding herd and control diseases.

The pork price alert program includes language on pork imports “to reduce market supply” and increase pork exports when hogs prices are low. What that specifically means has not been determined because most of the concerns in recent years have been with high consumer prices.

中美. and Chinese consumers have tastes that are complementary and should increase trade. 美國. prefers muscle meat while Chinese consumers favor offal and variety meats. 中美. variety meats in 2011 sold at retail for less than half of Beijing variety meat prices, and tails, ears and kidneys have higher average prices in Beijing than spareribs. The authors note that variety meats account for most of U.S. pork exports to China, but U.S. muscle meat is becoming more competitive. 在 2011, lean carcasses were $70 per hundred pounds higher in Beijing than the $91 per hundred pounds U.S. price. A year earlier prices were about equal.

The environmental impact of hog manure and risks of food safety incidents have received increased attention in recent years. At the end of 2008, nationwide China had 94 hogs per 100 acres of cropland compared to 20 hogs per 100 acres of cropland in the U.S. Density in three Chinese provinces exceeded 200 hogs per acre compared to only one state, North Carolina, 在美國. Iowa had the second highest U.S. ratio at 82. The authors theorize that environmental impacts and tight feed supplies may limit domestic Chinese pork production.

The authors concluded, “China’s status as a major pork importer will likely continue to grow. China’s tradition of self-sufficiency in pork will be hard to maintain as feed costs rise and as land for expanding farms and processing facilities becomes scarce and expensive.” Chinese restaurants, hotels and other buyers who want high and consistent quality pork may be important buyers of imports. Imports can co-exist in the market with both grain-fed Chinese pork and meat from local pig breeds.

中美. exports to China have been helpful to the U.S. in removing supplies that had depressed domestic market prices. Now that the pork industry has achieved some supply demand balance, the industry has to consider how to plan for China’s long-term commitment to pork imports. The authors of the analysis have made a strong argument for China needing to import pork in response to long-term production uncertainties and costs and to account for seasonal variations in demand. 用 30 percent of the world import market for pork, the Chinese government has to more clearly communicate its long-term commitment to importing pork.

羅斯·科維斯（Ross Korves）是具有貿易和技術真相的經濟政策分析師