The Chinese government is looking to reduce the nation’s pig herd and countries across the globe are expected to absorb the impact of the shifting market.
When it comes to factors shaping the agriculture industry in 2024, the Chinese pork market is among the top influencers. Given its size and ability to impact global markets, economists have looked to the country’s pork industry for decades as an economic indicator.
This evolving situation is the next chapter in the book I wrote on the U.S.-China trade war, which featured soybeans, pigs, food security and politics as the main actors. To understand the history of how China became the biggest pork producer and consumer and how this impacts global markets, please considering reading my book.
Understanding China’s Pork Industry Reality
China holds the title of both the world’s largest pork producer and consumer. The country’s herd reached 434 million pigs in 2023, up from 310 million in 2019. They consume 55 million tons of pork per year. But, this number has steadily declined in recent years, with last year's numbers being closer to 53 million tons.
After the African Swine Fever (ASF) devastated the rural farm dominated industry, the Chinese government pushed hard to expand pork production and secure the country’s supply. Production policy changes and stricter importing regulations moved China away from the small farm model and into a feed mill design. As a result supply boomed and the government had to buy surplus pork for reserves to elevate pork prices.
Going into 2024, supply is still high and demand continues to weaken. Meat markets, once filled with people vying for their favorite cuts of pork in preparation for the Lunar New Year, were unusually quiet this year. One butcher from the market in Xinfadi reported that they were only selling 2,200 hogs a day versus the 4,000 they were selling a day just 5 years ago.
Why Isn’t China’s Pork Market Rebounding?
China fought for economic growth in 2023 as the country continued to rebound from pandemic shutdown measures. This year it seems they will have to fight harder. Economic conditions change how consumers assess value and spend their money. Said plainly, people tend to eat less meat when finances get tight. The less populated meat markets leading up to the Lunar New Year underscore this fact.
Consumer preferences drive demand and in the case of pork, many people in China have a lingering unease about the safety of the meat they consume. It seems the ASF left a stigma in its wake that is affecting the market at large. More and more people are opting for other meat options like beef and chicken.
Similarly, the government actions meant to protect the pork industry and ensure food security for its lower income populations have had an unforeseen influence on consumer preference. While lower income families are going without meat, and the middle class is diversifying their menus, the wealthier families are simply buying what tastes the best. And, it’s no longer pork. A consolidated hog market means commercial feeding methods, and that has changed the flavor of the pork enough that many consumers no longer prefer it.
Perhaps a third factor is China’s decreasing population. There simply might be fewer mouths to feed. Coupled with changing consumer preferences and regulation pressures, the imbalance of supply and demand might be a perfect storm of factors.
How Will China’s Falling Pork Demand Affect the Global Market?
Food security and sufficiency are a priority for China. After joining the WTO in 2001, it made structural shifts to increase domestic pork production. Even so, China still imports some pork, but given the weak market, pork imports fell by 2.53% in the last 4 years. In an effort to prevent the spread of ASF or any other contamination, China has been very selective when it comes to importing pork from other countries.
The United States and EU still export pork to China. Pork trade might not have the biggest impact on the global economy. Rather, reduced demand for soybeans could feel the effect of the market shift farther. American soybean exports have not recovered from the trade war and averaged only $2 billion in the last few years. This could fall even further as demand for soybeans to crush declines.
If production of pork demand slows, American producers who rely on Chinese buyers will likely be making their own shifts in the next year. China is expected to be able to produce enough soybean crops on their own to match the downsizing herd’s nutritional needs, which will no doubt shape the global economy.
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