Hog market recovery still months away says economist

Thursday, November 19, 2009

By SARAH VAN ENGELEN

China’s lifting of an import ban on U.S. pork and disease outbreaks in the country’s swine herd could be a positive for Canadian hog prices and exports.

But it will take eight to 10 months for Canadian pork prices to return to pre-H1N1 outbreak levels, predicts Ken McEwan, professor of production economics, University of Guelph.

McEwan says China’s decision to lift a ban on pork from the United States and some Canadian provinces last month is good news, because the Canadian share of U.S. exports is roughly eight to nine per cent. United States pork industry statistics from 2008 show the United States exported four million metric tonnes worth $690 million to China.

At the same time, trade data, in particular that from the United States and China, shows that H1N1 is taking its toll on the industry, he says. Media reports have associated the flu with swine despite the World Health Organization stating people could not contract the virus by eating pork products. Despite the health organization’s assurances that pork was safe, China banned live swine, pork and pork product imports from the United States and from Alberta, Manitoba and Quebec following the outbreak of H1N1 flu earlier this year.

McEwan says U.S. pork exports to mainland China and Hong Kong from January to September of this year had dropped by 66.3 per cent, based on carcass weight, compared to the same period last year. In 2008, China was the U.S. pork industry’s number three export market and its fastest growing market. He says U.S. industry estimates put H1N1 related losses at more than US$63.5 million. He estimates the Ontario industry’s loss to be between C$6.3 and C$7.4 million.

It is not clear if recent disease outbreaks in China and the country’s decision to lift its import ban are related, he adds. He explains the Chinese government has been providing subsidies for increased production and the resulting boost in numbers may compensate for the loss in production related to the diseases.

Media reports in October indicated that China was coping with an outbreak of hog cholera, a highly contagious disease. The World Organization for Animal Health states that no treatment is possible and affected pigs must be slaughtered and the carcases buried or incinerated.

Chinese media has also reported Porcine Reproductive and Respiratory Syndrome (PRRS) outbreaks. By Oct. 20, 7,600 pigs in that country were diagnosed with PRRS and more than 7,700 culled.

However, the country’s agriculture ministry has stated that the country’s overall swine disease situation “remains stable.” BF