Swine Industry Symposium Brings U.S. and China Pork Interests Together

Chris Hodges, CEO of the National Pork Board, addresses the U.S.-China Swine Industry Symposium

Stakeholders from the world’s two largest pork-producing nations came together in September for the fourth U.S.-China Swine Industry Symposium, a collaborative event co-sponsored by USMEF and agricultural organizations from both countries. Held in Beijing, this year’s symposium — “Is Bigger Better?” — focused on changes and challenges faced by pork producers, processors and other members of the supply chain.

For the U.S. delegation, the symposium was part of an extensive trade mission organized by USMEF to build relationships between producers, importers and processing companies. Meetings also provided them with feedback on how to improve trade.

“Kudos to USMEF and its staff in Asia for a well-organized mission – we were able to meet with many top decision-makers, including company presidents and CEOs, and we picked up a lot of good information,” said Chris Hodges, CEO of the National Pork Board. “We discussed trade barriers and the things that need to be done to overcome these obstacles. I’ve been talking with producers and packers about these meetings, along with the topics discussed at the Swine Industry Symposium, since I returned to the United States.”

The symposium featured addresses by Hodges, Dr. Craig Morris, USDA deputy administrator for the Agricultural Marketing Service, and John Hagenbuch, a soybean and hog producer from Utica, Illinois, who serves on the USMEF Executive Committee. The U.S. Grains Council (USGC) and the U.S. Soybean Export Council (USSEC) teamed with USMEF to produce the event. Sponsors from China were the China Animal Agriculture Association (CAAA), China Chamber of Commerce of Foodstuffs and Native Produce (CFNA) and the China Meat Association (CMA). Industry stakeholders participated from a mix of Chinese organizations, including the Ministry of Agriculture, the General Administration of Quality Supervision, Inspection and Quarantine, the Chinese Academy of Agricultural Sciences, producer groups and private hog producing companies.

John Hagenbuch, an Illinois soybean and hog producer, discusses his family farm operation at the symposium

The symposium included exchanges of information on issues such as food safety, food security and sustainability. U.S. producers and agricultural officials at the symposium came to a common conclusion: Chinese pork producers today find themselves in a place that is familiar to U.S. producers from the 20th century.

“Members of the Chinese pork industry were interested to learn that U.S. producers had gone through many of the same challenges decades ago in striving for industry sustainability,” said Joel Haggard, USMEF senior vice president for the Asia Pacific region.

As noted many times during the symposium, the Chinese pork industry is in a period of significant transformation. The number of small producers has declined, while larger, specialized production operations have risen rapidly. According to the National Bureau of Statistics of China, the share of hogs slaughtered on farms with less than 40 pigs declined from 73 percent in 2002 to 34 percent in 2010. In 2012, only 33 percent of hog farms had fewer than 50 hogs, 29 percent had 50 to 499 hogs and 38 percent had more than 500 hogs.

Haggard said the Chinese are trying to figure out what size of hog operation is the most efficient.

“Competitiveness is critical, and several Chinese researchers are studying the costs of various sizes of operations,” said Haggard. “What they are finding is that in China, medium-scale production units – those that produce 100 to 1,000 market pigs per year – are now the most competitive.”

Meanwhile, the cost of production is putting many small Chinese farmers out of business, while larger producers aren’t expanding rapidly enough to meet growing demand. This equation adds up to opportunity for suppliers hoping to export pork to China.

Import regulations remain challenging and the nature of trade in China has changed. Hodges hopes to use what he learned to help U.S. companies compete in the fast-growing market.

“The Chinese hold U.S. pork in high regard, and there is interest by Chinese companies in finding a partner in the United States,” he said.

Hodges said issues raised in his conversations with Chinese customers included labeling methods and delays in getting products through customs. China’s requirement that producers prove they do not feed ractopamine to their hogs is also a major hurdle.

The symposium revealed a not-so-secret challenge for the Chinese hog industry: what to do with manure?

China produces hogs in a diverse range of locations and habitats, making manure management a huge and complex issue. At the symposium, Gong Gui Fen, deputy secretary general of CAAA, told the audience that environmental regulations for livestock production in China have been in place for years, but implementation has been challenging. The country enacted new livestock pollution ordinances at the beginning of 2015, said Fen.

“China passed livestock industry-specific environmental regulations that addressed the growing issue in China of waste management, and that’s definitely increased the cost of production for China’s hog industry,” explained Haggard.

On the other hand, speakers at this year’s symposium described a new normal in Chinese hog production, where greater stability will characterize the market. This is based on the belief that when larger hog-producing units dominate the industry, spikes in supply will soften as there will be fewer small producers to jump in and out of the business according to profitability dynamics.

Evolution of the Chinese hog farmer was of special interest to some members of the USMEF delegation.

Hagenbuch presented the symposium audience a pictorial of his family farm and a detailed explanation of his hog-finishing operation. The Chinese were especially interested to learn how manure is stored and eventually used to enhance crop production.

“The chance to share information and hear about some of the things hog farmers in China deal with was very interesting,” said Hagenbuch, who expanded his hog production facilities four years ago. “It’s also great to get information about how trade works and what Chinese customers are looking for.”

Providing a regulatory perspective, Morris gave an overview of U.S swine industry market transparency. Morris highlighted the abundance of information available to the U.S. industry and to the public.

Chinese speakers had touched upon the growing trend toward specialization in the pork industry and the lack of market information. Specialization requires more and better market information, as producers need to plan accordingly.

“Currently there is little market information in China,” agreed Morris. “There is a daily hog price issued by the Ministry of Agriculture, but information on such things as weekly slaughter does not exist.”