Disease Erodes Demand

DISEASE ERODES DEMAND

HOG DISEASE SLOWS SOYBEAN SHIPMENTS

BY BETHANY BARATTA

African swine fever (ASF) is decimating China’s hog herd, further eroding U.S. soybean prices and raising questions about the safety of amino acids and other ingredients used in pork production being imported from China.

Official reported cases of African swine fever in China alone have forced farmers to cull more than 200 million pigs in an effort to control the spread of the disease. Industry experts say, however, that the number of cases is vastly underreported.

As many as half of China’s breeding herd have either died as a result of ASF or have been culled in attempts to control the spread of the disease.

“China has the biggest hog herd in the world, and they have been severely impacted by this dreaded disease,” says Richard Fritz, a founding partner of Global AgriTrends, a global ag research and analysis firm. At 428 million head, China raises 65 percent of the world’s hog herd, as estimated by the U.S. Department of Agriculture.

By the end of 2019, China’s total swine inventory will be down 13 percent to 374 million head, according to the latest USDA Foreign Agricultural Service’s Global Agricultural Information Network (GAIN) report published on April 9. An August outlook from Global AgriTrends predicted that ASF has wiped out 53 percent of China’s hog population.

ASF has spread to all 31 of China’s mainland provinces, municipalities and autonomous regions since August 2018, according to Farm Journal’s Pork. It’s also been spreading throughout certain regions in Asia, Africa and Europe.

“Seventy-five percent of the world’s hogs are threatened by ASF,” Fritz says.

There is currently no vaccine or treatment available for the disease.

“We are probably three to seven years away from a viable vaccine,” Fritz says.

Soybeans losing

While ASF has driven up global pork prices, it’s bad news for soybean exporters and soybean demand, according to Minghao Li, assistant professor of economics at New Mexico State University and a recent post-doctorate research associate at the Center for Agricultural and Rural Development (CARD) at Iowa State University (ISU).

“According to our estimation, a 14 percent decrease in pork production would lead to a 10 percent decrease in soybean import demand,” Li says. He was part of a team of researchers at CARD who prepared an ASF impact study.

China’s hog inventory dropped 32 percent between December 2018 and July 2019, Li says.

Soybean prices have dipped an additional 3 percent in the past couple of months, and there could be a further decline in prices in the near future, says Chad Hart, crops market specialist at ISU.

Although it’s difficult to separate the decreased demand for soybeans as it relates to the trade war versus ASF, it is affecting soybean shipments, Hart says.

“The Chinese market is about 500 million to 600 million bushels behind in soybean demand over the past four to five months compared to the previous year,” Hart says. Nearly 80 percent of the soybeans China is sourcing are coming from Brazil, USDA data shows. Just 10 percent is coming from the U.S.

“CHINA HAS THE BIGGEST HOG HERD IN THE WORLD, AND THEY HAVE BEEN SEVERELY IMPACTED BY THIS DREADED DISEASE.

— RICHARD FRITZ, GLOBAL AGRITRENDS

Decreased demand due to ASF further erodes prices for Iowa soybean farmers like Lindsay Greiner, immediate past president of the Iowa Soybean Association.

“You take all the trade disputes going on and add in African swine fever, it definitely impacts our prices,” he says. “We’ve lost a lot of our market because there aren’t as many hogs to feed.”

It’s added insult to injury, says ISA CEO Kirk Leeds.

“The last thing U.S. soybean farmers needed was another reason to put doubt in the marketplace about demand,” he says.

Dave Hommel, a pig and grain farmer from Eldora, continues to provide routine care for his pigs as African swine fever spreads throughout China and certain regions around the world. African swine fever has not been detected in the U.S.

It’s unknown how long ASF — and the lingering trade dispute — could suppress U.S. soybean prices. Fritz says ASF is also impacting the hog population in Vietnam. While that’s terrible news for hog producers there, Fritz says farmers in the region will likely produce more poultry and aquaculture as a result. U.S. soybean farmers may see an increase in demand from those industries, he says.

Pig farmers on the defense

There's hope that efforts to stave off the disease will keep ASF out of the U.S.

“Although AFS will continue to spread, I think we can cut the rate at which it does,” Frits says.

The disease would have a huge impact on the U.S.

Studies led by ISU Economist Dermot Hayes estimate a loss of $8 billion for the pork industry in the first year alone. An additional $1.5 billion in soybeans and $4 billion in corn would be lost as well, Hayes says. Greiner, a soybean, corn and hog farmer near Keota, understands what those losses would mean to his family. He’s taking extra precautions to keep ASF out of his herd. He’s working with his integrator, Eichelberger Farms, to monitor feed ingredients and limit traffic on and off the farm. He’s also keeping in close contact with his veterinarian to monitor herd health.

That’s always a good practice, but even more so with the threat of a foreign animal disease, says Chris Rademacher, associate director of the Iowa Pork Industry Center and an ISU Extension swine veterinarian.

“It’s really important that swine producers get educated about this disease. They should be having conversations with their feed suppliers to talk about feed sources, the processing steps that are in place and the biosecurity that happens at feed manufacturing plants,” Rademacher says.

China may be one of the few suppliers of certain amino acids or other ingredients used in pig production, which creates a dilemma for producers. Rademacher says one option is to put in a voluntary quarantine to reduce the survivability of ASF in potentially contaminated ingredients coming from China.

“In some cases, holding ingredients for a time period allows for the pathogen survivability to be reduced, depending on the ingredient,” he says.

What to watch for

ASF is a viral disease which causes high death loss in domestic and wild pigs, according to Liz Wagstrom,

chief veterinarian for the National Pork Producers Council. ASF spreads through close contact with infected animals or their excretions or through feeding uncooked contaminated meat to susceptible pigs.

In Africa, it is also spread by warthogs and other native pigs that do not show clinical signs of the disease, as well as by soft-bodied ticks. ASF is very hardy in the environment. The ASF virus does not infect other animals or humans, and there are no food safety implications.

ISA takes precautions

Business and trade relationships with China are vitally important to the Iowa Soybean Association, says ISA’s Leeds. But the format of trips to the country looks a little different these days in light of ASF.

Recent ISA trade missions to the country shifted ISA members from visiting Chinese farms to instead meeting in corporate office buildings or other off-farm locations.

Greiner, who took part in a trip to China earlier this year, says he put other precautions into place to protect his herd.

“I wore shoes over there that I’ll never wear again. I took the clothes that I wore over there directly to the dry cleaner when I got home. I washed and dried my clothes twice, as my veterinarian recommended,” he says.

He also stayed away from his hogs for an additional 10 days.

IT’S DEVASTATING FOR CHINESE PRODUCERS AND COULD HAVE HUGE IMPLICATIONS NOT ONLY ON THE U.S. PIG HERD, BUT TO GLOBAL SOYBEAN DEMAND AS WELL.

— LINDSAY GREINER

The travel itinerary for an ISA board development trip to China and Japan this summer was revised to take extra precautions.

“Even though part of the trip was focused on soybean production in the northeast part of China, we cancelled all farm visits. We wanted to make sure we didn’t inadvertently cause the further spread of this disease,” Leeds says.

Healthy pigs on the Lindsay Greiner farm.

ISA is also adhering to the suggested travel protocols from the National Pork Producers Council, which cancelled the World Pork Expo this year due to the risk of ASF.

A delegation of Chinese reporters hosted in Ankeny by the ISA in September also had to update its itinerary. Farm visits were replaced by meetings with farmers in area restaurants.

“We have to take every precaution we can because it’s devastating for Chinese producers and could have huge implications not only on the U.S. pig herd, but to global soybean demand as well,” Greiner says.

Contact Bethany Baratta at bbaratta@iasoybeans.com.