China’s Recovery From African Swine Fever: Rebuilding, Relocating, and Restructuring

African swine fever (ASF) has already caused huge herd losses and led to soaring pork prices in China in 2019. We believe the disease will continue to spread in the country in the coming years. However, we expect the pace of herd loss to slow down, due to industry participants’ reactions and policy changes. Restocking will likely take around five years, but hog herd levels may find it difficult to recover to pre-ASF levels.

Report summary

“In addition to the direct impact on the hog herd, ASF will reshape the development of China’s hog supply chain in the coming years,” according to Chenjun Pan, Senior Analyst – Animal Protein at Rabobank. “During the rebuilding process, the industry structure will move towards larger scale production, which features biosecurity improvement and more coordinated supply chain arrangements. While integrated models will likely expand market share quickly, the major business model will continue to be dominated by the contracted farming model, in which larger scale family farms and cooperatives play a key role.”

The geographical distribution of hog-farming will also change. We expect to see a faster growth in hog production in the south and east, where a certain level of self-sufficiency will be an important agenda item for local authorities.

Consumption patterns will change. Consumers will adapt to the supply restrictions, which lead to insufficient fresh warm meat, by increasing the purchase of pork products in other forms (e.g. chilled, frozen, and processed). The meat consumption mix will see a structural change, with poultry share growing to over 30% by 2025, at the expense of pork.

Rebuilding China’s pork industry will offer great opportunities for supply chain participants. The market value of pork and other meats will expand substantially, providing opportunities for farm input providers, meat sector investors, cold chain service providers, distributors, and retailers. China’s pork imports are expected to rise to a new level, even in a post-ASF era.