Jim Long, CEO of swine genetics firm Genesus Genetics, believes China will not allow other countries to usurp its dominance in the pork industry, not even in the face of a massive outbreak of African swine fever (ASF).
Long, whose company has become one of the largest exporters of breeding stock to China in recent years, does not believe the country will be rid of ASF any time soon. But a recent visit to the country has him convinced that China’s farmers will find a way to rebound, perhaps coming back stronger than ever before.
The local industry, he said, just doesn’t see the crisis in the same way outsiders do.
“I couldn’t figure out why they weren’t more depressed,” he said of his May tour of the region. “Why are they not upset? But the reality is, they are going to make so much more money per head on what they’ve got left, that it actually works. It isn’t like they’re losing money — they’re making money. And they think the price is going to get a lot stronger.”
In some provinces, Long said, producers are getting as much as $375 per hog, with a break-even point over $100 beneath that. ASF has slowed the Chinese hog industry — but only somewhat. One farmer he spoke to told Long they’re putting in more than 4,000 new sow units.
“They’re still building,” he said. “They haven’t stopped.”
Long believes China will have to slow the pace. With ASF still spreading in the country, he said, he’s heard rumors of pigs culled and farms emptied, only to become infected again within a few months.
Predictions for the future
In time, he believes China’s pork industry will undergo a transformation similar to what took place in Russia, where ASF is still present, but contained to the occasional small outbreak. There, farmers are required to exterminate all infected pigs and leave the quarantined barn empty for at least a year to ensure the virus is eradicated. The potential risk has left small farmers unable to obtain credit, which has concentrated the industry in roughly 20 companies with barns in multiple locations to mitigate the risk.
China will have to slow down to gain control of a situation where its rules “haven’t worked really smoothly so far,” Long said. He predicts that meat prices — not just pork but “every surplus thing in the world” — will hit historic highs over the next two years. But after that, he anticipates that China’s grit and penchant for centralized planning will trigger an unprecedented comeback.
“It’s much more than food” to them, he said. “It’s cultural, and it’s somewhat political. I’m not sure I understand what it all means, but it’s more than just food. I would expect they will make a big effort to rebuild the industry, and a lot of that will be new facilities. It will be a massive undertaking, but you see what has happened there over the past decade, and I wouldn’t bet against it.”
And when that day comes, he said, they’re going to have to get new stock from somewhere.
“It will be the biggest airlift of breeding stock ever in the history of the world, when this thing hits,” Long said.
View our continuing coverage of the African swine fever outbreak.