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Drop in pork production in China

There has been a significant reduction in the hog herd in China. A new report from Rabobank says over the last 18 months the herd has been reduced by 100 million hogs including 10 million fewer breeding sows. Rabobank Animal Protein Analyst Will Sawyer says that reduction is comparable to the total production of North America.

He says the sell-off was prompted by profit-and-loss. Hog farmers have struggled for years in China and now the price of corn is around $9 per bushel. “That’s a heavy hurdle to get the Chinese consumer to pay for that high of a feed cost.” So the only alternative for some producers was to reduce supply until the price rebounded. “That’s what we’ve seen in the past few months as prices have reached a level where producers are finally back in the black.”

Contributing to the scenario is an effort by the Chinese government to modernize and improve the safety and efficiency of hog production in the country. As the industry has contracted in the last 18 months, Sawyer says a lot of those small producers, those with two-or-three pigs on their farm, exit the industry. He says many of those small producers do not the same food safety practices we have here in the U.S.

While the reduction in Chinese supply does open the door for more imports, Sawyer says they are still going to get 96-97 percent of their supply from domestic sources.

Sawyer talks about the situation: