China’s climate agenda sparks pork modernisation

China is likely to see increased levels of industrialised pig farming in 2017

Environmental regulation on the meat industry in China will drive a surge in modernisation for the country’s pork sector, according to Rabobank.

New environmental pig farming policies, such as the tax on proper handling of effluent, will reshape the country’s distribution of pork production, promoting both industrialisation and modernisation. While expansion in south China will be restricted, more industrialised farms will emerge in the north and west of China.

This is outlook painted by Dutch firm Rabobank in its Q1 quarterly report on the global pork industry.

Pig meat production declined by 5% last year, which kept pork prices high, but as China overhauls its output in 2017, productivity could lead to an increase in Rabobank’s five-nation hog price index.

Price influence
 
A lower-than-expected decline in imports will support prices in key exporting countries, while exchange rates remain the other important variable influencing prices,” said Albert Vernooij, Rabobank’s animal protein analyst.

Prices will also be affected by the slow increase in global supply, supported by growing productivity and rising sow numbers.

Pig farmers in China are also experiencing record levels of profitability and the second half of this year will see pork production increase by 2%, according to Rabobank.

High imports still expected

Slow recovery of domestic production for the world’s largest pork importer, means meat prices will remain above the average levels of 2013-15.

While production is expected, local demand for pork will see China continue to import large volumes of pig meat. European countries will be the main beneficiaries of this, but the US, Canada and Brazil will continue to gain ground.
 
Exports of pork, particularly to China, will be crucial to Brazilian pig farmers and analysts tip production in Brazil to rise by 3%.

We expect the export growth of Brazil to continue, based on rising production, competitively priced pork (also due to the value of the real) and good demand in Asia, especially China,” Vernooij added.

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