The spread of African Swine Fever (ASF) across China and other parts of Asia is starting to have an impact on our markets.
ASF is not harmful to humans, but it does have close to 100 per cent mortality in pigs. ASF is spread by feeding waste to pigs, and can be carried in pork or even transmitted on dirty boots. As such, the disease is very hard to control.
Given that 30 per cent of China's pigs are in backyard operations, it's also very difficult to strengthen biosecurity measures.
Since August last year, China has reported 124 outbreaks of ASF and according to official reports, have culled 1.01 million head of pigs. This represents just 0.23 per cent of the Chinese total (Figure 1).
Based on official numbers, ASF is not having much impact. However, some of the forecasts that have been released recently are much scarier.
Analysis from Rabobank forecasts that 150-200 million pigs will die from ASF in China. This represents 35-46 per cent of China's pigs and 19-26 per cent of world numbers.
If Rabobanks forecast is correct, this will mean a 30 per cent decline in Chinese pork production, which equates to 16.8 million tonnes (Figure 2).
The US produces just 12.4 million tonnes in total, so there is no way the pork will be replaced by imports.
While many Chinese will miss out on pork meat protein, those that can afford to are turning to imported meat, but it's a drop in the ocean.
If Australia's record start to the year of beef, lamb and mutton exports to China continue, China might take 324,000 tonnes of our red meat.
Our total exports would fill just 2 per cent of the protein hole left by lower Chinese pork production.
What does it mean?
In normal markets, a massive fall in supplies of pork would see a strong hike in prices and subsequent shifting of demand to other meats.
Prices of those substitutes would then rise. However, we know the Chinese markets are not normal, with intervention from government likely to keep meat affordable.
As such, there will be a limit to what China will pay for our export beef and lamb, but given the stronger demand, it's safe to say export values are unlikely to fall any time soon.
The story Aussie exports just a drop in the Swine Fever ocean first appeared on Farm Online.