Implementation of strict environmental regulations will further constrain China’s sow herd recovery in 2017. Post is decreasing its 2017 starting sow estimate by 12 percent to 38 million head. This reduction will impact the 2017 pig crop, decreasing domestic pork production to 51 million metric tons (MMT). Even at their current record levels, increased imports will only partially offset this production decrease, causing domestic pork prices to continue to rise and leading to a 2.6 MMT drop in overall pork consumption to 52 MMT, accordig to United States Department of Agriculture GAIN-FAS report.
Implementation of new environmental restrictions leave some producers squealing
In 2016, China’s Ministry of Agriculture announced the 13th Five-Year Plan for Agriculture. One of the major themes of the 13th Plan was the goal to improve environmental protections by moving swine production away from waterways and crowded urban populations, effectively shifting production west and northeast. In order to implement this goal, more than 20 Provincial Governments set up Development Control Areas (DCAs) within their provinces. These DCAs are established based on specific criteria set by the provincial governments, but generally establish areas near waterways and urban populations where swine operations are prohibited.
The chart below shows where most DCAs are located, effectively creating different Environmental Control Zones for the swine industry. For example, within the Development Control Zone (shown in red), it will be difficult (but not impossible) to conduct swine operations due to the high number of DCAs in that area. In contrast, the Development Focus Zone (in green) has fewer DCAs. Out towards the west, (i.e., Sichuan and Chongqing), there are fewer waterways and the central government also benefits from the new job growth. Up towards the northeast lies China’s Corn Belt, where close proximity to major grain producing regions will lower the feed shipping costs and provide more opportunities for on-farm manure management.
In 2017, all swine farms located within DCAs must be moved or destroyed. Chinese industry reports that the implementation of these DCAs has led to an overall 3.6 million pig inventory reduction, thus far. In some of the well-developed economic areas like Zhejiang and Jiangsu, swine inventory reductions have already reached 50 percent. Some large swine farming provinces like Shandong, Guangdong, and Jiangsu have committed to clear out swine farms located inside DCAs in 2017, which will lead to further swine inventory reductions.
Monday February 27, 2017/ FAS-USDA/ United States.