U.S. food producers are adjusting how they import pigs in an attempt to meet Chinese demand after an African swine fever epidemic decimated the hog population of the Asian nation and triggered an acute shortage of pork.
A subsidiary of Tyson Foods Inc. headquartered in Arkansas has become the first distributor to announce it will prohibit ractopamine from hogs that it purchases from producers as it seeks to eliminate the feed ingredient that China has removed from its supply chain. The step puts businesses in a role to raise imports to cover the deficit, while China is trying to resolve the 18-month trade war with the US.
"It paves the way for quick and growing exports to China," said Archer Financial Services senior livestock analyst and broker Dennis Smith. With ASF disease consuming hog herds across Asia, Vietnam and South Korea are also likely to need more pork, although North Korea is also known to have hog problems, he added.
Swine fever spread throughout Asia, infecting millions of pigs, causing unprecedented losses. Hardest hit is China, home to half of the hogs in the world, where pork prices soared. Industries in the nation have so far this year purchased U.S. agricultural products including 20 million tons of soybeans and 700,000 tons of pork and will increase their purchases, reporters told Foreign Ministry spokesman Geng Shuang on Tuesday.
Earlier this year, China halted beef exports from Canada after ractopamine was found in a shipment from a producer located in Quebec.
While in the United States, the Food and Drug Administration permitted the use of the feed additive, since 2002 it has been prohibited by the Asian country, claiming that the drug could affect people who eat meat with it.
If all U.S. manufacturers were to prohibit ractopamine, that would cut American pork supply by 110 million pounds a year as pigs would be leaner, according to Dan Basse, chairman of AgResource Co. Tyson said farmers had been informed of the shift on Wednesday and had to meet the new demand by February 4.
The firm has provided export consumers with restricted ractopamine-free pork by partnering with farmers who grow hogs without it and by segregating animals and goods at processing plants. Such services no longer meet the increasing global demand sufficiently, Tyson said. The suspension will begin on February 2020.
"This is a response to JBS doing the same thing to open up their sales prospects to China," said Michael McDougall, a broker at New York's Paragon Global Markets. It will take China "a long time to recover, enabling countries such as the United States, Brazil, and the EU to export."
