Monday, December 30, 2019

80% Decline in Pigs in County Survey by Journalist

A journalist found swine inventories were only 5-to-20 percent of normal in 7 of 10 Chinese counties visited this month. This and several other surveys dug out of the Chinese internet reveal the degree to which hog numbers were decimated by African swine fever and the real challenges facing recovery. Facts on the ground are in sharp contrast to propaganda about rebounding production being trumpeted by Chinese news media.

The article, "Inventories have fallen again in 10 major nationally-known swine-raising counties! At the end of the year inventories have fallen 75% since June in Xiangtan, Longyan, and Qionglai" was originally published by Nong Cai Bao Dian's (农财宝典) livestock news based in Guangdong Province (the site now appears to be inaccessible). The journalist followed up an earlier report on swine numbers in these counties by checking official statistics and interviewing local industry people. The journalist described her data as "rough" estimates and emphasized that they were only for reference.

A summary of the journalists' findings are shown in the table below. Bobai county in Guangxi and Gao'an City in Jiangxi Province were hit hardest, with the stock of finishing hogs just 5-10% of normal in Bobai and 10% of normal in Gao'an. Sow numbers were just 5% of normal in those two regions. Fujian's Nanping City was least-impacted with its inventory at 70-80% of normal. Shandong's Ju'nan County has 20-50% of its normal hog inventory. Seven of the ten counties had hog inventories at 20% or less of normal. These translate to declines in swine numbers of 80-95% in most of the counties, more than double the 40-percent national decline reported by the Ministry of Agriculture and Rural Affairs.

Estimated swine inventories in 10 Chinese counties/cities, December 2019
Previous annual production (head) Current inventory as percent of normal
Province County/city Finishing hogs Sows
Guangxi Bobai County 2.2 mil 5-10% 5%
Guangdong Sihui City 1.2 mil 10% 10%
Guangdong Huazhou City na 10-20% 10-20%
Guangxi Luchuan County  1 mil 5-20% 20-25%
Shandong Ju'nan County 2 mil 20-50% 20%
Jiangxi Gao'an City 2.66 mil 10% 5%
Sichuan Qionglai City 1.38 mil 10-20% 20%
Hunan Xiangtan County 1.75 mil 20% 20%
Fujian Longyan City 4.5 mil 20-40% 20-30%
Fujian Nanping City 1.45 mil 70-80% 70-80%
Estimates by Nong Cai Bao Dian journalist Zeng Huiling.

The counties are not nationally representative. Most are in southern provinces which appear to have been hit hardest by the epidemic. Only one county in Shandong was north of the Yangtze River.
Swine-producing counties surveyed by Nong Cai Bao Dian journalist:
Numbers are current swine inventory as percent of "normal"

The reporter found that hog production has failed to revive or has even deteriorated over the last six months in a number of counties. In Guangxi's Bobai county the reporter heard that farmers were hesitant to resume pig production due to fears of a second outbreak, lack of financing, and inability to buy breeding pigs due to strict approval requirements. In Guangdong's Sihui County, the reporter heard that some farmers were receiving help from big companies in restoring production, but recovery was judged to be "not optimistic" with less than 10% of sows remaining. Huazhou in western Guangdong used to have 1,000 sow farms, but only 100 are "testing the water" with a "gambling mentality." Pigs have survived so far in Huazhou, but farms are not expanding as they maintain a cautious attitude.

In Guangxi Province's Luchuan County recovery of production is active among scaled-up farms. In Ju'nan County of Shandong Province, recovery is also limited to large-scale farms, as small and medium farms have largely quit the market due to lack of financing and inability to resist disease. In Gao'an County of Jiangxi farmers are deterred by the high price of sows and may resume production after the spring festival. In Qionglai City, Sichuan Province a pair of 2000-head farms encountered problems when they restocked their farms. The high price of piglets and fear of disease outbreaks are also cited as deterrents to farmers in Qionglai. In Longyan City, Fujian Province, there has been a lot of activity, but no real success in restoring production. In Nanping City, Fujian, the decline in production was less severe than in the other counties surveyed, but most farms have kept their herds stable between June and December.

An Internet search verified several inventory numbers reported by the journalist and one apparent error was discovered, but no official statistics could be found online for most of the counties. China conducted an agricultural census in 2017 that would provide a baseline for evaluating the impact of African swine fever, but no detailed data have been published nationally or by provinces. One exception is Longyan City's statistical bureau which published a detailed report with several tables about local pig farms.

Xiangtan County's statistics bureau surveyed the local swine industry and reported a 20-percent year-on-year decline in hog numbers and a 23-percent decline in sow numbers in the third quarter of 2019--much slower than the 80-percent declines reported by the journalist. The bureau noted that its decline was slower than an 87-percent decline in sow numbers contained in a report by a Tsinghua University professor (from 40 million at the beginning of 2018 to under 5 million in July 2019). The bureau said Xiangtan's supply and demand for pork were "balanced," but it also described local production capacity as "seriously deficient." The report said hog prices were up 230 percent from a year earlier, piglet prices were up 300 percent, and pork prices were up 270 percent. The bureau said medium and small farmers were deterred by disease risk, environmental pressures, and risk of price fluctuations. Backyard farmers had basically quit the market under disease pressure, the Xiangtan report said. Farms with 200-500 head mostly could not afford required manure treatment equipment, and larger farms needed to upgrade old facilities. Land is an obstacle to expansion. Some abandoned industrial sites are available to build pig farms, but the cost of cleaning up the sites is often prohibitive, the Xiangtan report said.

An October report by the government production cost survey team in Lin'yi Prefecture, Shandong Province found that the swine inventory in Ju'nan County had declined greatly, falling from 1 million to 526,000 hogs--broadly consistent with the journalist's report. The Lin'yi report said just 10,000 sows remained in Ju'nan County--the fewest ever.

A futures company's early-December tour of farms and slaughterhouses in Henan Province--the largest pig-producing province and a region not covered by the journalist's survey--found that small farmers had been largely forced out of business by the peak disease period between October 2018 and January 2019. The manager of a large slaughterhouse estimated that Henan's swine inventory had shrunk by 60 percent--much faster than the 40-percent reported by the province's official statistics. In some parts of Henan, inventories are estimated to have fallen by 60-to-90 percent. One 18,000-head farm lost half its herd. One nucleus breeding farm was hit hard by the epidemic and was recently bought by a farming company from south China. A manager of a large farming and slaughter company in Henan said the disease situation remained pessimistic.

Henan province experienced scattered ASF outbreaks in November 2019 that spread from north to south, wiping out about 60 percent of swine on farms with 100-to-500 head. According to the futures company report, the virus is reportedly less deadly than last year and is often mixed with other infections such as blue ear disease. Farmers in Henan are not clearing out entire farms in a panic as they did last year; instead they are culling selectively--a strategy known as "extraction." Farms have switched from grinding and mixing feed on-farm to buying complete formulated feed because they fear contaminated grain could infect their farm. noted the recent outbreak in Henan in a commentary, anticipated that disease could spread more during the winter months, and argued that extraction is only feasible for large farms while smaller scattered farms still need to be completely depopulated when there is an ASF infection.

The futures analysts' tour heard that large farms and about 20 percent of small farms have been active in reviving hog production. Small farms held about 70 percent of swine in Henan before ASF but now their share was estimated to be 30 percent. Farms began retaining gilts for breeding earlier this year and are now farrowing, but their litters are small and breeding success is about 60 percent. The success rate in restocking farms varies from 40-50 percent to 70 percent. Disease risk, cash flow, and high prices for piglets and sows are deterrents. A farm in Anyang City that lost all but 400 of its 3600 sows during the epidemic says it hopes to restore its inventory of sows and finishing hogs to 30 percent of normal in 2020. One Henan farmer said not many hog farmers have switched to raising poultry because pig farmers cannot easily adapt to the feed, techniques, and housing requirements for poultry. In another part of Henan, the futures analysts were told that 60-70 percent of farmers had switched to poultry-raising.

Slaughterhouse managers and pig traders in Henan told the futures analysts that pork demand dropped sharply as prices soared in October. One said the decline in pork price during November reflected a decline in demand, not an increase in supply. There was a bump in pork consumption as weather turned colder during December, but the slaughterhouse official is pessimistic about sales of traditional cured pork products this winter due to the high prices.

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