THE GLOBAL WINDOW OF TURKISH FOOD AND AGRICULTURE The Global Window of Turkish Food and Agriculture Sector
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April, 2020
ASF has devastated China’s swine industry since August 2018. Despite low official reported cases of ASF and robust recovery efforts in the second half of 2019, overall swine production and slaughter will remain depressed in 2020. Further complicating matters is the coronavirus outbreak in China, but it is likely that there will be sufficient market incentive and political stimulus to push forward with recovery efforts.
As a result, the 2020 ending hog inventory is expected to increase slightly from 2019 as the decline bottoms out. With low pork production in 2020 resulting in high pork prices, many Chinese consumers will seek out beef as an alternative protein. While elevated beef prices will spur some larger facilities to increase cattle production, most smaller facilities will be cautious in the face of uncertain pork prices and rising input costs. Overall, cattle ending inventories are expected to remain basically flat through 2020. The majority of increased beef demand will be satisfied by imports.
Executive Summary:
Swine Inventory: Hog and sow inventory are both starting at low levels, having fallen 27 and 30 percent respectively from 2019’s starting inventory. Due to robust restocking efforts in 2020 and fewer losses to ASF, the decline in herd inventory will reverse and year end 2020 inventories are forecast to grow by 9 percent.
Pork Production: Total hogs slaughtered and pork production in 2020 are both estimated to fall further by 24 percent and 20 percent, respectively, from the previous year.
Pork Consumption:
High prices will force many Chinese consumers to seek out substitute proteins or decrease net meat consumption. The Chinese government will continue to use multiple market and policy interventions in an attempt to stabilize prices.
Pork Trade:
As the pork supply remains tight through 2020, pork imports will increase to a record 3.9 MMT. However, China’s pork supply gap vastly outstrips available global supply, resulting in persistent high prices.
Cattle Inventory:
Due to the longer life cycle of beef production, overall cattle inventories will not see a significant increase in 2020, as most smaller cattle farmers forego investing to expand operations. However, government stimulus, relaxation of environmental standards, and higher profits will likely incentivize some larger operations to invest in long-term expansion.
Beef Production:
With increasing slaughter weights and high demand, domestic beef production will increase to 7 MMT.
Beef Consumption:
Persistent high pork prices have decreased the price gap between pork and beef, leading many consumers to increase their beef consumption. Although many traditional Chinese dishes cannot substitute beef for pork, thinly sliced beef for hotpot will likely realize high growth in 2020.
Beef Trade:
With very limited capacity to grow domestic production, China’s growing appetite for beef will continue to be met by imports estimated at 2.5 MMT in 2020.
Trade Policy:
The signing and implementation of the U.S.-China Economic and Trade Agreement (ETA) will open the doors for increased imports of U.S. pork and beef, including processed meat products. Also, tariff exclusions for U.S. meat imports will spur additional purchases in 2020.
Source: United States Department of Agriculture (USDA), Foreign Agricultural Service
