16 December 2021
Anna Heslop By Anna Heslop

The Effect of African Swine Fever on the Global Swine Market.

The spread of African Swine Fever (ASF) has devastated pork production across the world in recent years, causing a surge in demand for Australian beef. ASF resembles classical swine fever (CSF), with symptoms so similar that lab tests are required to differentiate the strain. Caused by a unique virus and beginning as an endemic in African warthogs and bush pigs, the infection initially caused no real reaction but began causing adverse reactions when passed on to more domestic and wild pigs through a variety of soft-bodied ticks.

Fatal and highly infectious, since its introduction in August 2018, ASF has spread to all provinces in China, the world’s largest pork producer and consumer. In 2019, impacts were experienced across nearly all economic sectors, with total economic loss related to ASF accounting for 0.78% of China’s 2019 GDP.

Classified by the World Organisation for Animal Health (OIE) as a ‘List A’ disease, with a mortality of up to 100%, the largest outbreak of ASF reported in China killed millions of pigs in one fell swoop. At present, eradication of the disease presents a major challenge due to the absence of effective vaccines, treatment, and sanitary practices. Particularly in China, eradication is particularly difficult as a large proportion of pigs are kept on small-sized farms, making the spread of disease nearly impossible to manage. Efforts have been made to prevent and control the rapid spread of the disease, including allocating quarantine zones and culling infected herds. However, despite these prevention measures, large economic losses have ensued affecting the future prospects of the industry.

China is certainly one of the worst countries affected by ASF, but is swiftly followed by continued outbreaks in Europe, South America, Vietnam, and other parts of Asia with similarly overwhelming negative impacts.

Spread Across Europe

ASF continues to be reported in wild boar across Europe, with Germany facing a long-term battle to eradicate the disease, carried by wild animals crossing from Poland where the disease is widespread. As a result, in September 2020 China banned German pork imports, causing a major loss of global business for Germany.

According to the OIE, frequent outbreaks in domestic pigs continue to be reported across Romania, Ukraine, and Russia, highlighting the need for stronger prevention tactics and immunisation to ensure the security of the hog market across Europe. Many countries, most recently the UK, are imposing bans on pork from certain EU regions as the disease continues to see new cases in domestic farms, distorting global hog trade.

Economic Impacts

Across China, the average direct financial loss due to mortality and culling of pigs has been as high as $8.7 million per province. Liaoning province was most severely damaged, with a direct financial loss amounting to around $55 million. Unsurprisingly, therefore, over the past year, the price of pork meat has risen more than 40% in China alone.

As a result of this huge impact on the pork industry, consumer purchases in other sectors noticeably increased. China’s leading poultry company saw half-year profits climb by more than 50% in 2019, driving the company to raise output by 30% to meet demand. A total of 18 Chinese provinces suffered losses ranging from $100-900 million, with total economic losses of up to $196.2 billion (1.4% of China’s GDP in 2019).

As China has the largest facilities for pork production in the world, accounting for roughly 45% of the global pork market, it’s clear that the ASF epidemic has a severe long-term effect on the swine industry. As a result, almost all economic sectors will experience the global knock-on effect.

Key Products

Currently, as there is no commercial vaccine available for ASF, outbreaks are controlled by animal quarantine and the elimination of the infected. However, in September 2021 a breakthrough by the U.S. Department of Agriculture's (USDA) Agricultural Research Service (ARS) saw one of its African Swine Fever Virus (ASFV) vaccine candidates’ ability to prevent and protect both European and Asian bred swine against the latest Asian strain of the virus.

ARS researcher, Manuel Borca, said:

This is a major step for science and agriculture. We are working carefully to see our vaccine candidate commercialized through the joint efforts of the U.S. government, and our commercial partner, the Navetco National Veterinary Joint Stock Company.

ARS has successfully executed seven licenses with pharmaceutical companies to develop the vaccines and continues to evaluate additional commercial partners to develop the approved vaccines, speeding up its global rollout.

How does ASF impact the animal feed industry?

Hog prices bottomed out in October 2021, increasing feed costs as a result. Prices of feed raw materials like corn, wheat, soybean mail, coco oil and palm oil have all experienced an increase, driving industry costs up dramatically.

As a result of years of reduced pig farming, the requirement for feed saw an equally significant drop-off. Despite less demand for grains and other feed crops, as well as whey powder for piglet feed, soybean meal remained relatively stable due to its use in the growing poultry feed market. Therefore, to remain relevant, feed manufacturers must diversify their product mix to invest in poultry and aqua feed too.

Companies are reassessing the markets they operate in to determine which countries offer opportunities, opposed to those who are still suffering as a result of ASF. Where larger, global companies are likely to have quickly adapted their offering to fit various markets, smaller players are having to adapt to survive. All this with serious effects on the skilled workforces specialising in this aspect of the market. Alongside this, due to ongoing culls, farmers are looking for the cheapest feed available to satisfy their herd’s requirements, making business difficult for those operating at the top end of the market.

There is also potential for ASF to be transmitted through infected animal feed. As a result, producers are spending much longer sourcing ingredients and testing feed production in an attempt to minimise risk wherever possible. As the American pork production market is one of the only continents yet to suffer an ASF outbreak, this is a serious issue when sourcing feed from China. This has led to tightened restrictions on traceability of ingredients by government organisations for producers and manufacturers, an additional expense many companies struggle to afford in the current climate.

What’s next?

Although the industry has taken a huge hit in the past few years, it looks like 2022 might see the market finally begin to recover. Herds are being rebuilt on larger farms across China, allowing pork production to increase once again. Whilst this trend is expected to continue in 2022, ASF is still active, so herd rebuilding remains risky due to potential virus mutations.

Despite the gradual climb back to success, financing larger farms proves more difficult due to wider economic issues, and the price of pigs still sits below breakeven. This change in the industry landscape has resulted in many small producers exiting the industry for good.

Despite the increased availability of pork, China has diversified its offering to meet the new demand for beef in recent years. It’s now believed that this demand will continue, resulting in potentially long-term damage to the global pork market.

Are you interested in discussing the effects of African Swine Fever on the animal health market in some more detail? Drop me a message at anna.heslop@lifesci-cm.com.

To read more of my content about trends and discoveries in the wider animal health market, click here.

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Anna Heslop

Anna is a specialist recruiter working globally in the Animal Health & Nutrition industry. She carries out business with a calm and considered approach, striking up excellent long-lasting relationships with both her clients and candidates. Anna is particularly passionate about identifying industry trends and likes to share these insights with her engaged global network. 

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