China: First U.S.-China Hog Summit Yields New Cooperation Initiative

The path to modernization for China’s hog industry and the extent to which the U.S. industry’s own development in recent decades may offer lessons to Chinese producers were themes explored during the inaugural U.S.-China Hog Summit held in Beijing Saturday, Sept. 22.

The summit brought together the world’s largest pork producer and importer (China) with the largest single-country pork exporter (U.S.). It was truly an international collaborative effort with multiple organizers and sponsors from both countries: the U.S. Meat Export Federation, the U.S. Grains Council (USGC) and the U.S. Department of Agriculture (USDA) along with the China Animal Agriculture Association (CAAA), China’s Center for Agricultural Policy and the Chinese Academy of Sciences. Funding for USMEF’s participation was provided through USDA’s Emerging Markets Program.

Presentations during the one-day conference were divided into four major topics: the changing structure of U.S. and China’s hog industries, waste management and sustainability, food safety and disease control, and trade and food security. Chinese attendees included government officials, think tank researchers, producers and industry association representatives, while U.S. participation included USMEF and USGC members from the feed industry and packer/processor/exporter sectors, representatives of hog breeding companies, economists, American Soybean Association representatives, and USDA representatives and academics.

One of the presentations was offered by Henry Moore, owner-operator of North Carolina’s Bobcat Farms, LLC. Moore addressed U.S. farm safety programs such as Pork Quality Assurance (PQA) and the extent of biosecurity and environmental stewardship measures employed by U.S. producers. A member of the 15-person National Pork Board, Moore also emphasized the principle of ethical production and how U.S. producers came to recognize its importance to consumers.

Moore’s presentation fit one of the key themes of the summit: environmental sustainability. Moore’s Bobcat Farms has been recognized with a national Environmental Stewards award by National Hog Farmer magazine and the Pork Checkoff for initiatives including manure management, soil and water conservation, wildlife habitat and air quality.

The widening differential between U.S. and Chinese hog production costs was cited by USMEF Asia-Pacific Senior Vice President Joel Haggard as the source of potential commercial incentives for Chinese end users to increase pork imports, noting that China is already the world’s largest pork importer despite being the largest pork producer. Haggard reiterated the United States’ commitment to being a reliable pork supplier to China, reminding attendees that even small-percentage changes in Chinese domestic pork supplies can create huge ripples among pork exporting countries.

Haggard illustrated his point with a chart that showed China’s total 2012 domestic pork production estimated at 51.6 million metric tons (113.8 billion pounds) while total global pork exports are estimated at 6.9 million metric tons (15.2 billion pounds). If China’s pork self-sufficiency rate fell to just below 87 percent, its unmet demand would account for all of the pork currently exported in the world.

The increasing rate of Chinese pork producers leaving the industry due to rising costs and price uncertainty, fueled in part by the increasing incidence of disease epidemics in recent years, was highlighted by Dr. Wang Jimin of China’s Academy of Agricultural Sciences (CAAS). He presented recent research showing that owners of increasingly “scaled” operations were optimistic about the future and plan to expand production.

The latter point was reinforced by Luo Xu Fang, vice president of Guangdong Wens Foodstuff Group Co., Ltd., China’s largest hog producer with an estimated 2012 market hog output of 8.7 million head. He explained that the success behind his company’s rapid ascendancy rested with Wens “Company + Farmer” model which is essentially the same as the U.S.’s contract production.

The conference highlighted new challenges to China’s hog industry transformation. The topic of waste management and environmental sustainability generated considerable discussion and debate, especially as China develops new environmental legislation affecting rural enterprises, including livestock operations. One conference participant commented that the small scale of the average Chinese hog operations, plus the lack of individual land ownership rights, constitute significant sustainability obstacles.

Addressing the topic of food security, Huang Jikun of the Chinese Academy of Sciences noted that while China’s imports of pork have risen, the country’s food security objectives would likely result in increased imports of feed grains rather than meat, noting that after China’s emergence as a huge soybean importer, increased corn imports were likely.

“This first Hog Summit was a huge success in creating a dialogue between our industries, building trust and a strong foundation for future cooperation,” said USMEF President and CEO Philip Seng. “While there are still obstacles in U.S.-China pork trade, dialogue and cooperation are essential to fostering a problem-solving environment.”

At the outset of the conference, FAS-China’s Agricultural Minister Counselor Scott Sindelar highlighted the growing ties between the Chinese and U.S. hog industries. USMEF China Director Jianwen Liu reinforced this point by citing USMEF’s deeper engagement with China’s hog industry, which fits well with the formal commitment made by U.S. and Chinese leaders in February to strengthen the agricultural relationship between the two countries.

“The conference has already yielded benefits in terms of establishing more conversation between our two industries,” said Liu. “We have already received inquiries about a follow-up engagement, and suggestions for new topics such as new production technologies. We also would like to include field visits in future exchanges.”

U.S. pork exports (muscle cuts plus variety meat) to the China/Hong Kong region set new records in 2011 at 483,323 metric tons (1.07 billion pounds) valued at almost $910 million, making it the No. 3 market for U.S. pork exports. Through the first seven months of 2012, those totals are up 20 percent in volume (to 252,187 metric tons or 556 million pounds) and 55 percent in value to nearly $509 million.