China’s Swine Industry: The Road to Recovery

January 5, 2023

By Tony Wang, IEDA Representative, Shanghai, China

As the world’s largest pork producer and consumer, China took a massive hit from the African Swine Fever (ASF) outbreak in 2018 and has since been on a bumpy road trying to restore its swine herd amid further complications from COVID-19, the pig cycle1 and inflation, among other factors.

As a result of the devastation caused by ASF, China’s pork imports went up significantly in 2019 through 2021. At its peak in 2020, the U.S. accounted for roughly 14% of China’s pork imports. As China gradually rebuilds its swine herd, its pork imports dropped sharply in 2022, though the lingering impact of ASF combined with the effect of the “pig cycle” and market speculation activities keeps the current pork prices fairly high (around $4.6/kg).

Challenging as it may be, China has set clear targets for its swine industry2 and has set out to build back its swine population primarily through the following methods.

Structural transformation
China started tightening regulations on the swine industry in 2014 for limiting its environmental impact while increasing efficiency and quality. The ASF only served to accelerate this process by accidentally erecting higher barriers for smaller market players to return once they are forced out of the market. Currently, national incentive packages are tailored to support only scale pig farms, those with a minimum annual slaughter rate of 500 heads. The larger the scale, the more generous the incentives. Meanwhile, the Chinese government is guiding and encouraging smaller farms to join large hog producers for technical training and assistance while providing additional space for those large hog producers in return. According to Dr. Zhu Zengyong from the Institute of Animal Sciences of CAAS, scale pig farms in China now account for about 60% of the market share, with a goal to reach 65% by 2025, while smaller farms and individual hog producers have dropped from over 90% in 2001 to around 40% this year.

A national coordination mechanism
The pig cycle is not only detrimental to the swine industry, but it also puts China’s national food security at risk because pork is a staple meat in China, accounting for over 60% of total meat consumption on average. The structural transformation mentioned earlier makes it possible and easier for the government to monitor pork production in China and allows the government to intervene once specific parameters fluctuate beyond set levels. Corresponding intervention measures will help offset the effect of the “flock” entry or exit of smaller or individual pig farm owners when pork prices fluctuate throughout the year. The same also holds true for implementing technical improvements for better biosecurity across the industry, even along the supply chain, particularly against ASF. The goal is to mitigate the impact of the pig cycle while stabilizing pork supply for the 1.4 billion Chinese population.

Technological advances
China imported a great amount of breeding pigs to help rebuild its swine herd during the 2020-2021 period. The U.S. played an important role in the process, particularly in 2021, when it accounted for 38.78% of breeding animals imported. Meanwhile, China has also set a goal to become 95% self-sufficient in core breeding resources for its swine herd by 2035. China is initiating working mechanisms among companies, government agencies, universities and research institutions to develop and promote market-oriented technological innovations that will drive advances in breeding technologies.

Major hog producers in China, such as Muyuan Foods, the Wen’s and New Hope, are all doubling down on R&D activities and are working with various universities to develop better technologies in environment control, feeding, automated health inspection, etc.

China is determined to grow its swine industry, and these methods can create further opportunities for international collaboration, such as trade in feed stock for its transformed scale pig farms and technological advances to help better fight ASF.

Iowa exporters, such as genetic companies, animal health and nutrition providers, equipment suppliers and animal science consultants, will continue to be key suppliers to the swine industry as China strives to provide a safe and secure food source for its people. IEDA’s International Trade Office offers support to Iowa companies that want to explore or grow opportunities in China. Contact Joseph Rude at joseph.rude@iowaeda.com for more information about exporting animal health and nutrition products to China.

1 The “pig cycle” refers to a three- to four-year cycle in the swine industry where when pork prices go up during a supply shortage, people flock into the swine industry, further driving up prices along the supply chain. Over time, this will create an oversupply of pork and prices would plunge and hurt most people in the business, causing them to exit. This would in return result in another shortage in supply and start another cycle.
2Specific targets laid out in the 14th Five Year Development Plan for the National Animal Husbandry and Veterinary Industry include achieving a pork self-sufficiency rate of 95%, maintaining a regular pork production capacity of 55M tons/year, and building the swine industry into a 1.5 trillion yuan (about $214.3B) industry.

;