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The Uncertain Impact of COVID-19 on Global Pork
Source: | Author:刘晓锋 | Published time: 2020-11-25 | 795 Views | Share:

Global economic expectations have fallen sharply as COVID-19 has spread to those who work in agriculture and meat production. The risks to food production and meat supply have also increased, especially the world's largest pork producer and supplier--Wanzhou international's SmithfieldFood company shut down some plants after hundreds of workers at the U.S. meat processing plants were diagnosed with COVID-19. The American pork production industry is facing a severe capital chain crisis, and the Sino-us pork trade has attracted much attention. Although China's pork imports from the United States have reached a record high since 2020, there are still many risks and tests to see if this trend can be sustained in the future.

China's pork imports nearly tripled in March from the same month in 2019, hitting a record monthly volume, according to China's General Administration of Customs, Reuters reported. Buyers are trying to fill a huge supply gap after ASF decimated China's pig population. As the world's largest pork consumer, China imported 391,000 tons of pork in March 2020, up about 207% from 127,000 tons in March 2019. Customs data showed that pork shipments reached 951,000 tons in the first quarter, almost double the amount in the same period last year

According to statistics from the General Administration of Customs, data released by USMEF shows that pork imports from the Chinese mainland more than doubled to nearly 700,000 tons in The first two months of 2020, with an average unit price increase of about 1,260 dollars per ton. In the same period, mainland China's pork imports from the US rose by more than 100,000 tons, 462% over the same period in 2019, a historic miracle in the world pork trade. What's different is that according to USDA statistics and USMEF data, in January and February 2020, the US exported 184,600 tons of pork to mainland China, an increase of 340% compared with the same period last year.

So far, the United States has surpassed Germany to become the second largest importer of pork from mainland China, while Mainland China has surpassed Mexico to become the largest exporter of pork from the United States. In terms of mainland China's pork imports in 2019, the US ranks the third, accounting for 13.9%, lower than Germany (16.3%) and Spain (17.5%). In terms of total US pork exports in 2019, China accounted for 21.5% of total US pork exports, with mainland China the second largest US pork exporter, behind Mexico (26.5%).

The Chinese mainland imported more than 3 million tons of global pork in 2019, up 40.8% from a year earlier. In the mainland's top 10 pork imports, imports from nine other countries rose by double digits year on year, in addition to falling imports from Canada. Spain and the US increased by 60.3% and 59.1% year on year, respectively.

COVID-19 is currently impacting the seemingly crazy increase of pork imports from China. In April 2020, Smithfield foods, the world's largest pork producer and supplier, announced the closure of its SD facilities in Sioux falls, SouthDakota, and its MartinCity, Missouri, and Cudahy, Wisconsin, plants until further notice. The Cudahy plant, which produces dried sausages and bacon, will be closed for two weeks. The 400-person MartinCity plant makes spiral ham and smoked ham from materials supplied by the company's SiouxFalls plant. The SiouxFalls plant is one of the largest pork processing plants in the United States, accounting for 4 to 5% of U.S. pork production. The plant supplies nearly 130m meals a week, or about 18m a day, and employs 3,700 people. More than 550 independent family farmers supply the plant. Smithfield will resume operations in SiouxFalls as soon as further instructions from local, state and federal officials are received.

Combined with data from U.S. Centers for Disease Control and Prevention and USDA pork production maps, Lowa and Minnesota, the two largest hog breeding states in the United States, are not currently the most affected (about 2,000 confirmed cases of COVID-19 each), but Illinois in the Midwest, where the outbreak is most severe, also has a dense pig industry. Smithfield is one of several U.S. meat giants to close plants, raising questions about whether U.S. pork will continue to grow as much as it did in the first quarter of 2020.

"The closure of this plant, along with the closure of other protein plants in our industry, is pushing our nation to the brink of a meat supply. It would be impossible to keep the grocery store in stock if our factories were not running. "The closure of these facilities will also have a serious, if not catastrophic, impact on many people in the supply chain, starting with us livestock and poultry farmers." "Closing the Martin plant is part of an ongoing domino effect in our industry," said KennethM.Sullivan, President and CHIEF executive officer of Smithfield. The events highlight the interdependence and interconnectedness of all parts of our food supply chain.

DanHalstrom, president and CEO of USMEF, described the situation as "turbulent" and "unique." According to industry analysts such as Holstrom and the NPPC, despite consumers' worldwide food choices and the fact that pork is the protein of choice in many countries, the current trade between China and the U.S. has the following positive and negative effects:

For one, thousands of temporary foreign workers are brought to work in meat processing plants and farms in the United States every year. Since March 2020, the accelerated spread of COVID-19 in the United States has directly hindered the supply of foreign labor to the U.S. pig industry. Without much-needed reforms to support a viable labor force in U.S. agriculture, animal welfare could be threatened and production costs could rise, leading to higher food prices.

Second, the decline in foreign labour will not be offset by American residents. The population of rural America is declining year by year. Most Americans do not live near local farms or packing plants. As a result, U.S. pork producers are increasingly dependent on foreign labor from Mexico and elsewhere. In recent years, unemployment in some pork-producing communities has been as low as 2.6%. The result is that pig farmers and factory operators are highly dependent on foreign workers. However, the visa program providing access to these workers is not valid for non-seasonal livestock operations.

In this light, China has a large pork shortage and strong demand, while the U.S. pig industry and pork production are facing challenges and more uncertainty due to changes in COVID-19. According to the Us National Pork Producers Council, US pork producers are facing a capital chain crisis and will lose more than $5bn due to COVID-19.

But the U.S. pork industry is doing all it can to ensure U.S. pork supplies and trade. At present, in addition to exporting pork to many countries around the world, the United States also imports pork from some countries. And the United States also has considerable pork reserves, as does China's national reserve. At the same time, groups across the American pig industry are urging the state to provide financial support for farmers and meat producers. On April 17, 2020, USDA announced the $19 billion COVID-19 agriculture, meat, and food production assistance program to help farmers and meat and other producers respond to emergencies in order to maintain the functioning, safety, and integrity of the food supply chain for produce and meat.