Shuttle: China enters a new cycle in pig farming

China will enter a new cycle in pig farming. Prices in the sector will be less volatile, but there will be a greater presence of the government with policies for the sector.

This comes after China plunged into a severe supply crisis, caused by African swine fever, which has plagued the country since 2018.

China is recovering, and the scenario is changing. Brazil, however, will still have chances of exporting to the Chinese market, albeit in smaller quantities.

The assessment is by Rabobank, which forecasts Chinese imports at the level prior to the swine fever crisis, something close to 3 million to 3.5 million tons.

Brazil, however, will have to compete with traditional exporters to the Asian market, such as Spain, Canada, Holland and Germany. The latter, for now, is out of the market due to African swine fever in its territory.

In 2018, Brazil supplied 13% of the pork imported by China. In the first half of this year, the volume was 21%. Spain, which supplied 18% in 2018, took 29% of the market this year.

The new cycle of Chinese pig farming will reflect more the government’s guidelines, which restructure the sector. There will be a consolidation of industries, with a greater presence of large producers in the market.

Sustainability and food safety will be in the guidelines, and the consumer, more segmented, becomes more sophisticated, demanding a product with greater added value.

In Rabobank’s assessment, there will be opportunities for both local and global chains, including for other proteins, due to the shortage of pork in recent years.

The Chinese hope to restore production with increased productivity, which will come from genetics and new technologies to be adopted by the sector. Product quality and cost reduction are also in focus.

With so many innovations and government policies, Rabobank expects a reduction of small producers and greater competition between large ones.

The new cycle should lead to higher but less volatile prices. The challenges, however, are adaptations to a market that has changed with the swine fever and Covid crises.

The restart of swine farming must also adapt to a possible slower pace of the economy, with the possibility of lower investments in production and difficulties in demand.

The bank’s analysts expect a reduction in costs, mainly with the adoption of new technologies, management and scale. The climatic crises, which affect grain production, however, are still reasons for concern.

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