If China’s pork sector continues to grow at the pace it is today, the industry’s demand for corn within the next five years could have a significant impact on the world’s supply. According to a new report, “The Industrialization of China’s Pork Supply Chain,” issued by Rabobank’s Food & Agribusiness Research and Advisory Group, China’s corn imports could approach 22 million tons, annually.
The Rabobank report takes a hard look at China’s growing role in the global pork market and focuses on how the country’s fluctuating pork imports affect supply and demand balances and prices.
Whether China will move back towards self-sufficiency or become an even bigger importer of pork is open to debate. If China is able to improve domestic corn yields and improve feed conversion ratios to levels common in the U.S. pork industry, their goals of self-sufficiency are achievable, the report says. If China does not have to import pork and current pork production trends continue, their need for corn will rise significantly.
In recent years, China has imported about a half million tons of pork, annually. “In Rabobank’s view, China is likely to continue to be an importer of both pork and corn for the foreseeable future, but how much of each will depend on improvements in the supply chain,” the report states. “China’s pork supply chain is in a transition period, shifting from traditional household farming to modern commercial systems. While both farms and processing plants are growing rapidly in size, coordination between the two remains undeveloped. The pork supply chain is still based on the spot market in most cases.”
There is great potential to improve productivity of the pork sector, but the country’s lack of land intensive agriculture for growing feedstuffs, such as corn, may hold it back. “China’s chances for self sufficiency in pork is boosted by its great potential for improvement in hog productivity and a strong consumer preference for fresh meat,” the report continues. “(But) it should import this type of commodity (corn) rather than producing it, and focus on areas such as pork production. However, challenges in achieving success in pork production include the continuation of disease problems, food safety issues, logistics and the lack of a cold chain.”
Rabobank Group is a global financial services leader providing wholesale and retail banking, asset management, leasing, real estate services, and renewable energy project financing. Rabobank, one of the largest banks in the world, has nearly $1 trillion in assets and has operations in more than 40 countries.