Nick Peksa examines the extent to which the growing African Swine Fever epidemic could influence pork supply chains in the coming months. This article first appeared in ESM Issue 5 2019.
Over the years, Europe has experienced a number of agricultural epidemics, from the Irish Potato Famine (1845-49) to the more recent foot-and-mouth outbreak in the UK (2001), wherein six million cows and sheep were killed. Avian flu struck next (2003-5), wiping out the Dutch egg industry, globally killing hundreds of people, and resulting in millions of chickens being slaughtered worldwide.
Now, there are signs that we are potentially about to experience the next disease that will leave a lasting mark on the agricultural industry: African swine fever.
Symptoms
African swine fever (ASF) is a highly contagious viral disease that affects pigs and wild boar. The most common symptoms of the virus are a high temperature and loss of appetite. Other symptoms include vomiting, diarrhoea, and difficulty with breathing and standing.
To date, there are no known vaccines or cures, so, in its acute form, the mortality rate for pigs is extremely high. Fortunately, unlike bird flu, humans are not susceptible to this disease.
ASF is primarily transmitted through direct contact with infected animals. It can also be transmitted through ingestion of infected meat products, through tick bites, and also indirectly through contact with contaminated clothing, vehicles and equipment.
Chinese Pork
China is at the centre of the global pork market – by itself, it is responsible for consumption of around 50% of global pork production. When news initially broke last year that China had been struck by ASF, it was very concerning. The Chinese government has frequently reported that the epidemic is under control. However, there are a number of factors that point toward this news being governmental misinformation.
The government is claiming that the pig herd is down by 32.2% – this is contradicted by industry sources suggesting that 45% is a more realistic number. To put this percentage into context, by the end of 2019, this could mean that 350 million pigs have died from the disease in China alone.
Global Pig Prices
ASF has forced the price of Chinese pork to increase. Recently, the markets have started to spike, as China had managed to supplement its production shortfall by relying on its frozen stockpile, and by importing pork from both Europe and the US.
China’s imports from Europe are already up by 43% year on year, with volumes up by over 250,000 tonnes. This increased demand has supported sharp price increases across all European grades of pig meat. Prices are expected to continue rising into the fourth quarter of the year, in line with expectations that Chinese demand is expected to increase further.
European pig prices started their ascendancy back in March, when the Chinese saw sow numbers drop by 25%. Prior to the outbreak of ASF, consumer demand for red meat had been decreasing across Europe. This year, Germany has experienced a reduction of 4.3% in the demand for pork products (-3.6% for sausages).
Therefore, the industry had geared up for this trend, and the EU was on track to decrease slaughtering by 3% in the first half of the year, with a further decrease of 1% expected in the second half of 2019. There is a good chance that the industry will reconsider its slaughtering plan to match the increased import demand from China.
European Infections
The European pork industry had, until recently, managed to protect commercial herds from infection through careful precautions, preventing any potentially contaminated food or clothing from entering their facilities. However, cases have started to be reported in the wild-pig herds of Europe.
The first few cases of ASF in Europe were reported in June, in the wild-pig population of Hungary, close to the Slovakian boarder. Slovakia then experienced a handful of isolated cases in late July. Poland, a much larger producer, proceeded to announce up to 28 new outbreaks in July.
On 7 August, Serbia reported at least four separate outbreaks. If infections spread to the major commercial producers in Europe, the effect could be devastating.
Closing Thoughts
If ASF takes hold in Europe, the global pig industry would be in trouble, as would a number of other industries.
Soybeans represent a significant proportion of the agricultural make-up of the US and Brazil, and a dip in demand for soymeal would cause the farmers significant amounts of pain. The supply chain goes deeper than soymeal – consider the by-product of crushing soybeans: soybean oil. If fewer soybeans are crushed, less oil will be produced, and, again, the price will increase.
Thus, as well as preparing for price increases in pork, should we also be preparing for more expensive vegetable oils?
For more information, contact nick.peksa@cost-insights.co.uk.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
