Market Opportunities Growing in China11 December 2012
ANALYSIS - The development of pork production and the pig markets in Asia can be directly linked to the growth in size and wealth of the population, writes Chris Harris.
This growth in wealth in Asian countries with fast growing economies has led to a growth in disposable incomes and as pork is the meat of choice in Asia the growth in wealth has helped to expand the pig meat sector.
The growth in demand has generated an upsurge in production producing very attractive prices both in pig meat and feed.
This in turn offers major opportunities for companies from around the world to work and invest in the developing Asian region.
Last year, China's total output of meat was 79.57 million tonnes - an increase of 0.4 per cent year on year - and pork production was 50.53 million tonnes, accounting for 63.5 per cent of the total meat production.
The Chinese pig inventory was 467.67 million head - an increase of 0.7 per cent year on year.
At present China has a growth in its Gross Domestic Product of about 7.5 per cent - at a time when the developed western nations have been suffering recession.
Speaking at the recent EuroTier exhibition in Hanover, Germany, Dr Mike Varley from the Pig Technology Company said that the major setback to the growth in pig meat production in the Asian region in recent years had been the question of disease and pig health.
Foot and Mouth Disease has been seen in several countries including Taiwan and South Korea and a high strain of PRRS has also been a problem for many countries together with PCV-2 problems that are associated with high numbers of mortalities and loss of production.
The disease has largely spread from the small back yard operations that will vary in size from two to 50 sows.
Disease control is one of the most pressing problems in the Asia pig industries and some countries such as the Philippines have instituted a region by region slaughter policy for FMD and are starting to make inroad into eradicating the disease.
However, while the pig industry is growing in Asian countries, Dr Varley also warned that the decline in the UK pig herd and the pig sector which has its roots in the lack of an integrated production and supply chain can stand as a warning to the Asian industry.
"If you have an integrated supply chain, you get rid of unfair pricing," he said.
"Large producers will help to get rid of the distortion."
At present China consumes about 35kg of pig meat a year and the figure is rising and is expected to shoot up over the next two years. Pork consumption accounted for 64 per cent of total meat consumption in China in 2011.
The development of the Chinese pig industry which supplies half the world's pig can act as a model for other emerging Asian countries.
China is moving away from the back-yard production methods to large integrated businesses that are often linked to a feed company and in some cases also a processing company.
And for the Chinese producer in such large integrator operations the peak of profitability has seen them achieving $50 per pig. This has been a major attraction to outside investment.
Unlike the small operators, the integrators can control their businesses and the threat of disease much better because of the buildings systems and the ability to use antibiotics and control programmes.
The slack that is left as the back yard operators leave the industry, mainly during hard times when pig meat is not fetching high prices, is now being taken up by the integrators.
Dr Varley said that in 10 to 20 years' time, the Chinese farming community that is learning rapidly is likely to have established workable joint ventures with many European and North American companies that will be able to supply improved genetics nutrition programmes and technology for environmental management.
Dr Varley said that there will be a lot of changes to come but there will also be m any opportunities for European and US companies to invest.
The room for growth, investment and expansion in the Chinese pig meat industry has been echoed by the China Agriculture Animal Association.
Deputy Secretary General of the CAAA Gong Guifen said: "With the improvement of people's living standards and the increasing numbers of population, pork consumption in China is expected to keep a steady and sustained development.
"Thus, there is still room for pork production improvement in the next five years."