Aussie exporters must move swiftly on swine fever-hit protein markets

Swine fever food insecurity fears spreading, but so are market rivals

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China is in overdrive rebuilding its pig herd and rival exporters have surplus product galore to offer protein-hungry markets

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The massive meat sales opportunities emerging in Asia as the killer disease swine fever bores a big hole in the protein market have local exporters salivating with anticipation, but they may need to move swiftly to cash in.

The United Nations says African swine fever is raising real food insecurity concerns across Asia, particularly in the next 18 months.

The UN's Food and Agriculture Organisation meat price index is up 12.5 per cent to its highest point in almost five years.

However, at the same time China is pulling out all stops to rapidly rebuild its pig herd and crank up poultry production, having lost almost half its massive 450 million head herd to the virulent disease in 12 months.

The Chinese are using this disease outbreak as a chance to scale up pig production into really big, well-managed piggeries - Dr Mark Schipp, World Organisation for Animal Health.

Livestock experts tip within a few years China will bounce back breeding bigger pigs and have a much bigger-scale and more robust pork industry.

Meanwhile, North America has record pork and beef stocks to unload into any market where swine fever has hit, or to fill market gaps left around the world where other products are diverted to service extra demand from China or other Asian countries.

European and South American meat suppliers are also eagerly eyeing opportunities to sell more pork, red meat and poultry.

The Australian pig industry wants to build sales, too, particularly its existing (modest) export trade to parts of Asia.

Just as important, however, it sees the swine fever crisis as a perfect chance to push back the tide of pig meat imports swamping our domestic market.

About 80pc of Australian pig meat consumption is imported product, but peak industry body, Australian Pork Limited, wants to see those numbers shrink to just 50pc as big overseas suppliers in Canada, the US, Denmark and Germany target new opportunities, like China.

Chinese pigmeat prices have doubled in a year, this month hitting an Australian equivalent of about $4.40 a kilogram, according to APL.

That's well above our own bullish domestic values at $3.86/kg, which have climbed more than $1/kg in a year as drought and high feed costs restrained pig numbers.

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China normally produces about half the world's pigs and buys about 25pc of global imports, or 2.5m tonnes annually.

However, Australia's chief veterinary officer, Dr Mark Schipp, said latest Chinese data indicated 41pc of its herd had died or been destroyed because of swine fever, which is highly infectious in pigs, although not harmful to humans.

"Add the recent losses from outbreaks in Eastern Europe, Africa, Mongolia, Vietnam, Cambodia, South Korea, Laos, Myanmar and the Philippines and I'd say at least 25pc of the world's pig herd has gone," said Dr Schipp, also president to the World Organisation for Animal Health.

"There's a real potential for food insecurity in parts of Asia or the Pacific."

He estimated a 12- to 18-month turnaround time before a return to reasonable levels of pig production again, but most of that swift recovery would be in China where replacement piglets were now being produced at a rate about 150pc higher than a year ago.

"The Chinese are using this disease outbreak as a chance to scale up pig production into really big, well-managed piggeries, as they've done with their dairy farms, with a lot of attention on biosecurity," he said.

African swine fever may be a food security problem in some countries for many years - Dr Mark Schipp

"While it's not my area of expertise, I'd think the export market opportunity for protein in China and the price spikes we've seen lately may be settling down in 12 months or so.

"Far more challenging will be other parts of Asia and potentially the Pacific where they have poor biosecurity.

"African swine fever may be a food security problem in some countries for many years."

Dr Schipp described the swine fever epidemic as the biggest global threat "to any commercial livestock of our generation".

He has also highlighted potential global shortages for medical products made from pigs, including the human blood-thinner, heparin, used to prevent blood clots.

Swine fever-related protein demand had lately helped fuel more surging Aussie beef and sheepmeat sales to Asia, particularly China where Australia now ranks as the third biggest beef supplier.

However, other exporters are seizing the day, too.

The US Department of Agriculture tipped China's total beef imports would nudge 3m tonnes next year, including from Canada which has just been allowed to re-enter the market.

Although US-China trade frictions were expected to limit US activity in China, American cattle producers remain confident of sales into alternative markets as other major beef suppliers in South America, Europe and Australia try to meet Chinese demand.

The US also has more than 1m tonnes of red meat and poultry sitting in cold storage ready to take advantage of any market gaps.

The USDA reported significant October rises in pork shipments to Japan, Korea, Mexico and China, supported by a 48-year-high stockpile of pork bellies to service extra orders.

APL chief executive officer, Margo Andrae, said swine fever had triggered not just the risk of a protein crisis, but a global shakeup in protein markets.

Australian pork and red meat producers had plenty of options and strategies to think about.

The extra demand has to be serviced, which means more product has to be accumulated in this country - David Bryant, Rural Funds Management

Rural Funds Management's managing director, David Bryant, noted how some big agribusinesses were already making longer term plans.

Mr Bryant, whose company owns a $1b mix of rural property including cattle country and feedlots, said players such as processing giant, JBS, were already "putting steps in place" to address supply chain needs expected in the next five years.

"It will take time to build more background requirements, but the extra demand has to be serviced, which means more product has to be accumulated in this country," he said.

"This is the most significant food demand event I've seen in the 22 years since we started RFM.

"I'm confident the underlying conditions will see very strong demand for Australia for quite a while."

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