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Friday, 3 May 2019

In China, Swine Fever May Spike Prices Globally

China admitted in late April that it had to slaughter more than a million pigs in an attempt to stem the spread of an outbreak of swine fever. An unprecedented health crisis could have profound global economic consequences.

Millions of dead pigs, a decimated die and possible consequences for food prices around the world. An outbreak of swine fever has ravaged China in the last eight months, and the authorities acknowledged, on April 24, having slaughtered 1.2 million animals in an attempt to stem the spread of the disease, very contagious, fatal in almost 100% of cases and not transmitted to humans.

But experts, including those from the UN Food and Agriculture Organization (FAO), say the problem is not yet under control and may weigh heavily on food prices. "The number of outbreaks of the disease reported by the Chinese authorities is declining, but it is difficult to get a clear idea because we do not know if all cases are well reported," said Carola Sauter-Louis, epidemiologist and Director of the German Federal Institute for Animal Health Research, contacted by France 24.

World's largest producer and consumer of pigs

China had so far been spared by this disease discovered in 1921 in Kenya, which resulted in the death of millions of pigs in Africa and Europe. "I have never seen an epidemic of this magnitude before," the Indian daily Arlan Suderman, an American commodity economist who works with a team of ten in China, told Britain. "The importance of the epidemic is that it affects a country that is both the largest producer and the world's largest consumer of pork," says Carola Sauter-Louis. The 1.4 billion Chinese people consume more than 55 million tons of pork a year and, with a herd of 430,000 head, produce 52% of the world's pork.

The extent of the crisis has long escaped international attention as Beijing was quick to minimize its importance. After identifying the first case in the north of the country in August 2018, the authorities had dragged their feet before agreeing to recognize, early 2019, that swine fever had spread in a few months to the entire territory.

Bacon and hock more expensive

At the last census carried out by FAO on May 2, there were 129 outbreaks of illness in 31 Chinese provinces. In its April 2019 Global Livestock Market Note, the US Department of Agriculture has estimated that the Chinese herd will have 130 million fewer pigs because of the epidemic. 

The Chinese have already begun to feel the effects of the health crisis. Pork prices jumped 21 percent in one year, the Chinese Ministry of Agriculture said. Above all, the country which, despite its national production, has always had to import pork to satisfy the immense appetite of its population for this meat, will have to buy even more from Europeans, Brazilians or the United States.

A boon for some. On Wall Street, the share of Tyson Food, the largest US meat producer, has gained 40% since the beginning of the year, and those of two Brazilian pork exporters rose more than 60% over the same period, says the Wall Street Journal.

But this business opportunity "is expected to have a profound impact on food prices around the world for consumers," analysts at the Dutch bank Rabobank said in a note, quoted by the US economic chainBloomberg. If European and North American breeders export more pork to China, they provide less to other markets ... where prices will rise mechanically. A phenomenon that has already begun since the price of bacon in Spain has increased by 20% in March, while the price of pork knuckle has risen by 17% in Germany, where it is very popular.

African swine fever in China is also expected to affect the price of chicken. "Some of the Chinese, for whom pork has become too expensive, are already looking for alternatives and are turning to chicken," notes the Financial Times. The US Department of Agriculture anticipates, as well, an increase in Chinese chicken imports by 70% in 2019.

The swine fever epidemic could even have "geopolitical consequences," said Rabobank analysts. For them, Chinese President Xi Jinping may be more inclined to sign commercial peace with the United States in order to cancel Beijing's tariffs on North American pork imports

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