Translated Key Points from Mr. Xirongs interview:

First:
The obstruction of logistics seriously affects the production supply and the trade of live livestock and poultry.

Since the outbreak of coronavirus, major public health emergencies have been launched at the first level, resulting in the control of roads and motor vehicles. As the consequence, the transportation of pigs, young breeding stocks, eggs, poultry meat, feed, veterinary drugs, vaccines, equipment and other production and living related materials are greatly affected.

Cross province live livestock and poultry sales and transportation links are broken. Live livestock and poultry cannot be transferred between enterprises to meet normal production, and business process is interrupted.

At present, all or some cities and counties in 27 provinces have closed the live poultry market, and the live poultry in the market cannot be sold. The poultry industry has suffered heavy losses.

According to the incomplete statistics of the association, it is preliminarily estimated that as of February 12, the loss of poultry industry has reached 15.865 billion yuan (2.25 U.S. billion)

Livestock and poultry industry is a special industry with poor ability to resist market risks. Once the industry is destroyed, the recovery period will be a very slow process.

Second:

The slaughterhouse cannot be started or the operation is insufficient and affects the production and marketing of livestock and poultry.

The procedures to reopen the operations of slaughtering enterprises is complicated: the road restrictions on the flow of people, resulta in a shortage of manpower, an so the slaughterhouses cannot start operation, or the operation is insufficient which directly leads to the failure of sales for poultry, commercial pigs, cattle, sheep, rabbits and others.

Third:
The production staff is in short supply and the cost is rising.

Affected by the delay of returning employees and the extreme shortage of labor force, the enterprises cannot complete the established work plan, the production index decreases and so the cost increases.

Fourth:
Some enterprises are short of working capital and have difficulty in capital turnover.

Due to the dual threats of ASF and coronavirus, the enterprises have invested heavily in biological safety control and prevention, including the increase of inventory of various materials, thus raising the warehouse cost and plus the new outbreak of coronavirus, which seriously affects pig sales, and the lack of liquidity and difficulties in capital turnover.

Fifth:
It will affect the purchase of materials, delay the commencement time of new projects and introduction of breeding stocks.

It is difficult for enterprises to purchase materials for life and epidemic prevention, especially face masks and disinfectants.

New projects under construction in some enterprises are affected to varying degrees.

Due to the restriction of personnel flow and road traffic, many enterprises cannot introduce new genetics, which affects the follow-up commercial production.

Given above challenges, the Ministry of Agriculture and Rural Affairs, National Development and Reform Commission, and the Ministry of Transport jointly developed a policy to build the Green Corridor for the priority products including feed products, corn, soybean meal and other feed raw materials, breeding livestock and poultry, piglet and young birds, aquarium fry, livestock and poultry marketing animals, fresh milk, dairy products, fresh aquatic products, chilled and fresh pork, transferal bees, etc.

We believe Brett Stuart of Global AgriTrends has as good a handle on China’s Swine Industry as anyone anywhere. Here are some comments published in the Western producer by columnist Karen Briere from Brett’s recent talk in Saskatoon Canada:

“Disease is a global market game-changer.”

“The hog market seems to be having a hard time believing what is happening in China”, Stuart said. He called it “irrational.”

The country officially says 40 percent of its sow herd is gone but he estimates it at closer to 65 percent.

“In context, North America has about 6.5 million sows and China just lost 24 million.”

“I look at U.S. hog futures and no one will believe it. We’re not even making money on hogs. They’re pretty suspicious of this, especially the investors.”

“It’s just not there,” Stuart said. “By my math, I say China is going to have about a 24.5 million tonne gap in protein in 2020.”

“Current global pork trade is about eight million tonnes.”

Stuart said “there is nothing that can be produced in the volume China requires to fill the gap. Chinese pork prices are going to stay very high for a long time as a result.”

He added that “China’s claims that it can restore normal pork supply by 2021 is simply propaganda; there aren’t 20 million sows on the global market.”