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Global Challenges of the Swine Industry

With many geopolitical and environmental events occurring around the world at any given time, it’s important to step back and analyze how these issues affect the average farmer or producer. In this case, I want to describe some examples of how the swine industry is currently being impacted in the areas where I serve our customers, Eastern Europe and Asia. I will also offer potential solutions for those impacted in these areas.

RUSSIA –

1. Rising grain prices- This factor occurs periodically and always affects the cost of animal feed. It, in turn, forms the overall prices for livestock products.
2. Strengthening the consolidation of food chain retail- This leads to the withdrawal of small private enterprises from the market and an increase in the presence of the largest agricultural holdings in the country.
3. Market capacity- One of the directions of further development of pig breeding in Russia is the export of products, the capacity of the domestic market does not allow increasing production volumes, although the production capacities of existing pig breeding enterprises allow increasing pork production of at least 1 million tons annually.
4. Growth of pork production is supported by the state- Due to the abolition of quotas and the introduction of duties on the import of this type of meat, imports have significantly decreased, and domestic producers have been able to increase sales in the domestic market. In 2022, 4.45 million tons of pork were produced in slaughter weight. And consumption has grown to 28 kg per person per year.

In 2023, pork production is expected to increase to 6 million tons. The annual increase in production is 5-7% due to large agricultural holdings. In private farms, pork production is falling.

The ASF virus is periodically observed in the country and the huge investments that are needed for biosecurity can only be afforded by large companies.

Challenges:

• The risk of breaking the supply chains of genetic material, feed additives, veterinary drugs, equipment, spare parts, etc.
• A possible drop in domestic consumption of pork against the background of a decrease in household incomes
• Reduction in the supply of pork to the countries of Southeast Asia (the main factor is logistical restrictions)
• The availability of state support in the form of additional preferential working loans, investment loans for the creation of breeding and genetic centers and the construction of enterprises for slaughtering and processing pork
• Tightening of state regulation in the field of environmental legislation.

Moving Forward:

• Bringing key indicators of animal productivity to the level of indicators obtained at profitable enterprises (feed conversion – less than 2.8, pork yield per sow – 3.5 tons in live weight, etc.)
• Increasing the level of vertical integration (provision with grain of own production by at least 50%, slaughter and deep cutting of 100% of grown animals)
• Development of an export sales channel (study of target markets, training of qualified personnel, construction of enterprises for freezing and storing products, etc.)
• Investing in marketing, advertising, product branding as a key condition for the stability and profitability of salesM&A transactions (mergers and acquisitions)) – the main factor in the inevitability of business scaling and the softest way for weak players to exit. The two largest acquisitions of companies from the top 20 took place in 2021, one took place in 2022.

PHILIPPINES –

1. Philippines is considered one of the major pork producing country prior to the outbreak of African Swine Fever in 2019.
2. The liveweight price as of May 5 is $1.74/lb lower compared to the same month last year.Liveweight price in the Philippines is a lot better compared to the liveweight price in Canada, USA, and other EU countries (USA 54c/lb, Canada 48c/lb).
3. According to Philippine Statistical Authority (PSA), the Hog population decreased by 70-75% due to the African Swine Fever Virus (ASF). The Hog Industry is very important to the Feed Millers because the average feed intake of Hogs is 1.6kgs compared to Average feed intake of Broilers & Layers 0.150 to 0.250 kgs.
4. Filipinos are pork eaters, to mitigate the shortage in pork supply, the President signed into law allowing importation of pork up to December 31, 2023, with tariff reduction from 35% down to 15%. The market is flooded with imported frozen pork sold everywhere at much cheaper price compared to locally produced pork. Frozen imported pork is 50% cheaper than locally produced pork.
5. The repopulation project of the Department of Agriculture is now implemented to farms located in the provinces declared ASF free or Green Zone.

Challenges:

• Feed raw materials increased by a minimum of 35% (there are raw materials that increased by 114%) while the price of liveweight local pork increased by merely 5%.
• Bio security issues, there were several farms that repopulated with Breeder Sows and/or sentinel pigs but were hit again by African Swine Fever (ASF).
• Unfair trade competition brought about by cheap imported pork with reduced tariff rate outside Minimum Access Volume (MAV) a WTO commitment. Spain is the major supplier of frozen pork.

Moving Forward:

• Buy raw materials from non ASF countries.
• No available ASF vaccine yet.
• Focus on the Reproductive & Productive Performances of the Piggery Farms to improve financial performances.

ASIA & AUSTRALIA:

SOUTH KOREA – One of the largest consumers and pork importers. Pork industry in South Korea is developing little by little. Local pork demand is very high compared to the supply. The price liveweight of hogs is at $2.10/lb the highest in the world due to very little supply. Main suppliers of pork are USA, Germany, Spain, and Canada. Purchasing power is high in South Korea.

MALAYSIA – Hog production still recovering. Sabah is the major state where hog production is located. Sabah was also hit by African Swine Fever. Malaysia is not a major hog producing country.

TAIWAN – The country’s hog industry has recuperated from the nipa virus and is slowly increasing its hog population. The government of Taiwan invests big in pork production and upgrading of its pork production system. Taiwan strengthens its boarder to prevent the entry of African Swine Fever.

THAILAND – One of the world’s pork producing countries. While other Asian countries were hit by African Swine Fever in 2019, Thailand also had its share of ASF in 2022. The hog population decreased by 43%.

Challenges:

• Tremendous increase in the price of feed raw materials, especially protein and energy sources.
• Declining pork prices
• Massive smuggled frozen pork originating from Brazil, Europe, and Russia

Moving Forward:

• Waiting for the efficacy of the new African Swine Fever vaccine developed by Thailand authorities
• Looking for alternative and cheaper source of protein and energy raw materials
• Studying the possibility to export pork products to nearby Myanmar & Cambodia countries.

VIETNAM – Also one of the world’s pork producing countries along with Thailand. Vietnam was hit by African Swine Fever in 2019 and the hog population decreased by 50%. A low supply of finisher pigs for slaughter versus increased local demand. Liveweight price is very good/high at $1.10/lb. Vietnam export pork and pork products to Cambodia. Cambodia’s economy is growing fats and improving.

Challenges:

• High Feed raw material prices.
• Increasing volume of imported frozen pork coming from Russia at 0% tariff.

Moving Forward:

• Waiting for the efficacy of ASF vaccine developed in Vietnam.
• Currently, exporting piglets and pork products in Cambodia.

AUSTRALIA – Pig farms are mostly situated in Queensland and Victoria. A lot of Australian pork is exported to New Zealand, Singapore, Hongkong. Australian consume pork in the form of bacon, ham, and sausages. Australia is the world’s 4th largest beef producer country in the World. African Swine Fever virus has never occurred in Australia.