China announced it will raise its pork import tariff beginning Jan. 1, a move that will reduce global demand for pork exports, especially from the US and Brazil. China’s tariff decision also signals the country’s increased need for feed grains for its expanding hog herd.
China will boost its pork import tariff to 12% from 8%. The decision restores the tariff rate to the level before the 2018 onset of African swine fever (ASF) that decimated nearly half of China’s hog herd and drove a sharp increase in pork imports.
With its hog herd recovery now complete, China has less need to import pork, but will need large quantities of feed grains as the herd matures and the hog industry becomes more industrialized.
Gro’s models have been pointing to a drop in China’s pork imports since July. In November, Gro sharpened its prediction and forecasted that China’s 2022 pork imports would fall to a pre-ASF level of 1-2 million tonnes.
That is likely to put pressure on US pork processor profitability, as cold storage inventories should build, but could lower prices for consumers.
For pork processors, export markets have grown in importance. Even as US pork production has increased since 2000, exports’ share of the total has more than quadrupled to 27%, as can be seen in this Gro display. A similar story has unfolded in Brazil: While pork production has more than doubled, the share held by exports is up four-fold to 31%.
China became the No. 1 importer of US pork in 2018. Now, pork exports to China from both the US and Brazil have already started to fall. Overall China’s October pork arrivals fell by 42% on the prior year to under 200,000 tonnes, while imports year-to-date declined 8% to 3.34 million tonnes, according to Gro’s China Customs data.
Greater industrialization of China’s hog industry requires increased feed demand. This Gro display shows higher forecasts for China’s rate of soybean crushing, which produces soybean meal for feed, as well as for quantities of corn used in feed, for the 2021/22 marketing year. Relative prices among various grains, also shown on the display, helps determine which grains are most economical to use in feed. Contact firstname.lastname@example.org for more information on Gro’s China analytics.