FMD Outbreak Spoils Taiwan’s Pork Export Plans

Island nation was once a major pork supplier to Japan

By Alex Sun USMEF-Taiwan Marketing Manager and Joel Haggard USMEF Senior Vice President, Asia Pacific

Taiwan's Council of Agriculture (COA) has announced that it has confirmed several cases of foot-and-mouth disease (FMD) in hogs in central Taiwan.  About 675 hogs in Yunlin and Changhua counties have been culled, and FMD vaccinations have commenced on companion herds in the vicinity of the outbreak. These events will push back Taiwan’s goal of achieving FMD-free status by the spring of next year, dashing its hopes of aggressively reentering the pork export market. 

The COA had stated that it would stop vaccinating Taiwan’s swine herd for FMD next month, which would have allowed it to complete a full year without vaccinations in March 2010. Taiwan's   original plan was to obtain FMD-free status at the May 2010 OIE meeting, but any declaration of FMD-free status will now be pushed back to the latter part of 2011, at the earliest.

FMD-free recognition would have allowed Taiwan to resume fresh and frozen pork exports to Japan, which was formerly its largest export market. Before its FMD outbreak in March 1997 brought exports to a halt, Taiwan accounted for nearly 40 percent of Japan's total pork imports —    exporting 274,000 metric tons (604 million pounds) of pork to Japan in 1996.

Currently, five Taiwanese facilities are approved to export processed cooked pork to Japan, but the estimated export volume for 2008 of less than 250 tons ((551,150 pounds) is a fraction of the previous trade.  In fact, Taiwan’s total pork exports in 2008 are not likely to exceed 3,000 metric tons (6.6 million pounds).

Even prior to the latest outbreak, observers believed that Taiwan's hog population and pork production were trending toward a continued contraction. This was based in part on further herd reductions set in motion in 2008, when global grain prices surged and pork production costs spiked. Taiwan's total hog herd has contracted 9 percent since 2005, and some analysts believe that Taiwan's total hog population (approximately 6.5 million head) could fall by another 3 to 5 percent in 2009. The contraction — now exacerbated by the FMD outbreak — could drop Taiwan’s pork self sufficiency below 85 percent, and translate into increased import demand. Taiwan’s annual per capita pork consumption of 38 kilograms (83.6 pounds) represents half of its total red meat and poultry consumption.

Most of the shrinking of the herd has come from the closure of small operations.  Taiwan currently has an estimated 11,000 hog producers – a decline of more than 15 percent since 2003. At prevailing exchange rates, Taiwan breakevens increased from 60 cents/lb. in 2003 to 75 cents/lb. in 2007, and are currently estimated at 87 cents/lb.  Live hog prices have dropped slightly since the announcement of the FMD outbreak to 75 cents/lb., but analysts believe that the government's quick action to contain the outbreak will prevent a serious destabilization of the market.

More bad news was released this week when the government officially pronounced Taiwan in a recession, after a whopping 8.4 percent contraction of its fourth quarter GDP.  Taiwan distributed spending vouchers worth approximately $105 to its citizens on January 18. According to surveys, roughly two-thirds of respondents planned to spend the cash on food. In order to stimulate domestic pork consumption, the COA has been aggressively promoting local pork sales. Its most recent effort featured an island-wide campaign, promoting domestic pork attributes and the industry's pork traceability system.  Government statements are assuring consumers that the type O FMD strain - the same serotype found in the 1997 outbreak - is not harmful to humans. 

Taiwan was the eighth largest destination for U.S. pork last year, accounting for almost $53 million in sales - more than double its 2007 level.  Taiwan's total pork and pork variety imports in 2008 increased 46 percent to 55,730 metric tons (122.9 million pounds), fueled by lower production and higher hog prices in the spring and summer months.  The total import volume was the highest since 2003, and consisted of 52 percent muscle cuts.  The United States accounted for 47 percent of Taiwan’s total pork imports, with Canada second at 41 percent. This export performance came in spite of Taiwan’s ban on pork and pork products containing even small traces of the feed additive Ractopamine. In December of 2007, Taiwan's Department of Health established a 1 part per billion minimum required performance limit for Ractopamine, but later revoked it under pressure from the local industry and politicians.

Island nation was once a major pork supplier to Japan

By Alex Sun USMEF-Taiwan Marketing Manager and Joel Haggard USMEF Senior Vice President, Asia Pacific

Taiwan's Council of Agriculture (COA) has announced that it has confirmed several cases of foot-and-mouth disease (FMD) in hogs in central Taiwan.  About 675 hogs in Yunlin and Changhua counties have been culled, and FMD vaccinations have commenced on companion herds in the vicinity of the outbreak. These events will push back Taiwan’s goal of achieving FMD-free status by the spring of next year, dashing its hopes of aggressively reentering the pork export market. 

The COA had stated that it would stop vaccinating Taiwan’s swine herd for FMD next month, which would have allowed it to complete a full year without vaccinations in March 2010. Taiwan's   original plan was to obtain FMD-free status at the May 2010 OIE meeting, but any declaration of FMD-free status will now be pushed back to the latter part of 2011, at the earliest.

FMD-free recognition would have allowed Taiwan to resume fresh and frozen pork exports to Japan, which was formerly its largest export market. Before its FMD outbreak in March 1997 brought exports to a halt, Taiwan accounted for nearly 40 percent of Japan's total pork imports —    exporting 274,000 metric tons (604 million pounds) of pork to Japan in 1996.

Currently, five Taiwanese facilities are approved to export processed cooked pork to Japan, but the estimated export volume for 2008 of less than 250 tons ((551,150 pounds) is a fraction of the previous trade.  In fact, Taiwan’s total pork exports in 2008 are not likely to exceed 3,000 metric tons (6.6 million pounds).

Even prior to the latest outbreak, observers believed that Taiwan's hog population and pork production were trending toward a continued contraction. This was based in part on further herd reductions set in motion in 2008, when global grain prices surged and pork production costs spiked. Taiwan's total hog herd has contracted 9 percent since 2005, and some analysts believe that Taiwan's total hog population (approximately 6.5 million head) could fall by another 3 to 5 percent in 2009. The contraction — now exacerbated by the FMD outbreak — could drop Taiwan’s pork self sufficiency below 85 percent, and translate into increased import demand. Taiwan’s annual per capita pork consumption of 38 kilograms (83.6 pounds) represents half of its total red meat and poultry consumption.

Most of the shrinking of the herd has come from the closure of small operations.  Taiwan currently has an estimated 11,000 hog producers – a decline of more than 15 percent since 2003. At prevailing exchange rates, Taiwan breakevens increased from 60 cents/lb. in 2003 to 75 cents/lb. in 2007, and are currently estimated at 87 cents/lb.  Live hog prices have dropped slightly since the announcement of the FMD outbreak to 75 cents/lb., but analysts believe that the government's quick action to contain the outbreak will prevent a serious destabilization of the market.

More bad news was released this week when the government officially pronounced Taiwan in a recession, after a whopping 8.4 percent contraction of its fourth quarter GDP.  Taiwan distributed spending vouchers worth approximately $105 to its citizens on January 18. According to surveys, roughly two-thirds of respondents planned to spend the cash on food. In order to stimulate domestic pork consumption, the COA has been aggressively promoting local pork sales. Its most recent effort featured an island-wide campaign, promoting domestic pork attributes and the industry's pork traceability system.  Government statements are assuring consumers that the type O FMD strain - the same serotype found in the 1997 outbreak - is not harmful to humans. 

Taiwan was the eighth largest destination for U.S. pork last year, accounting for almost $53 million in sales - more than double its 2007 level.  Taiwan's total pork and pork variety imports in 2008 increased 46 percent to 55,730 metric tons (122.9 million pounds), fueled by lower production and higher hog prices in the spring and summer months.  The total import volume was the highest since 2003, and consisted of 52 percent muscle cuts.  The United States accounted for 47 percent of Taiwan’s total pork imports, with Canada second at 41 percent. This export performance came in spite of Taiwan’s ban on pork and pork products containing even small traces of the feed additive Ractopamine. In December of 2007, Taiwan's Department of Health established a 1 part per billion minimum required performance limit for Ractopamine, but later revoked it under pressure from the local industry and politicians.