Food security

Why Pork Pushed China to a Deal

On Friday, U.S. President Trump and China’s Vice Premier Liu He announced a trade agreement that saw Washington suspend tariff increases while China agreed to purchase some $40-$50 billion of agricultural products, including pork. Behind this seemingly positive development, the financial markets rallied; the Dow Jones rose some 320 points or 1.21 percent. Trump billed the agreement as “phase one” of a broader trade agreement, but behind the soaring rhetoric belies a key motivation for the deal: The Chinese need pig imports.

The truth is that even before the deal, Chinese imports of pigs from the United States was already increasing. According to the United States Department of Agriculture, Chinese imports of pork from the United States more than tripled from 23.4 to 93.4 million pounds from January 2019 to August 2019, with the imports generally increasing throughout this period.

The increased imports are because China’s pigs are suffering from an African swine fever epidemic. African swine fever is a highly virulent virus that, although harmless to humans, can cause death within a week in pigs. So infectious is this disease that Dutch bank Rabobank predicts China could lose 20-70 percent of its domestic pig herd this year, potentially around 350 million pigs or a quarter of the world’s pigs. To prevent further transmission of the virus, more than 1 million pigs were culled. Since China annually slaughters about 700 million pigs a year, this virus has affected nearly half of the country’s annual consumption worth of pigs. As a result, China’s pig prices have hit multi-year highs of 28 yuan ($3.96) per kilogram, up 47 percent from last August; Rabobank predicts that prices may further increase past 30 or 40 yuan per kilogram. Furthermore, pig price increases have squeezed the Chinese consumer, pushing food inflation to nearly 10 percent.