African swine fever is a severe viral disease spread by pigs and other pork products, clothing and other non-living things. Outbreaks of the fever are usually confined to areas of Europe and Africa and there is no known vaccine or cure. However, China, which is home to almost half of the world’s pig population has recently been hit with a massive epidemic of swine fever, with projected losses to the total herd of around a third.
We’ve already seen increasing pork prices over the past weeks as the disease has developed, and this will only continue to rise as the number of reported cases increases. Procurement of pigs will be more difficult due to the fewer number of pigs available and the fact that some countries have placed import bans on affected countries. Thankfully the disease only affects pigs and wild variants, so should not cause too much concern for other livestock producers.
This may also be a boon in disguise for the US in their ongoing trade dispute with the Chinese government. The higher prices caused by this sudden drop in supply could lead to China being in a weaker negotiating position and thus may have to make concessions in the trade discussions.
This will probably be good for the US as there’s a 62% tariff on US pork entering China. This epidemic could lead to China lowering this tariff and import more American pork to cover the shortfall in supply caused by the fever. This will benefit US pork exporters by driving up demand for their pigs from China, thus increasing their profits.
Only time will tell how this flu epidemic will affect the pork market in the long run, but in the meantime expect to see wholesale prices rise steadily as pig stocks continue to deplete until the outbreak is over and enough time passes for more pigs to be raised.
This article was written by Prestige Purchasing, a Foodservice and Hospitality procurement consultancy. We run bespoke, client-funded supply chain reviews and procurement projects for leading out-of-home eating businesses. No aggregation or supplier income. No share of savings. Food purchasing without the funny business.