China’s suspension of meat imports to reverberate through supply chain

China’s suspension of Canadian meat imports will ripple through domestic supply chains, locking exporters out of the world’s largest pork market during a time of unusually high demand.

A combination of escalating trade restrictions and an outbreak of African swine fever has reduced pork supplies in China, the world’s largest consumer and producer of the meat. Canadian producers have moved to fill the supply gap, posting a 52-per-cent increase in pork exports to China in the first four months of this year.

“China is an absolutely huge consumer of pork and African swine fever has eliminated a lot of its herd,” said Derek Brewin, head of the University of Manitoba’s department of agribusiness and agricultural economics. “So the demand there is very big now and for us to get shut out while everyone else is making a killing is just bad for our industry.”

Canada has launched an investigation after the discovery of forged veterinary certificates led to China’s temporary suspension of all meat imports, Trade Minister Jim Carr said Wednesday. The certificates were attached to a batch of Canadian pork products that Chinese customs inspectors said contained residue of “ractopamine,” a feed additive that is restricted in China.

Canadian officials confirmed they had found forged certificates.

“Somebody is trying to use the Canadian brand to move product into the Chinese market,” said Carr, telling reporters the government did not know whether the meat shipments in question had actually come from Canada. “There’s an investigation going forward and we’re taking it seriously and working very hard to get to the bottom of it because I don’t know why this is happening, in whose interest this could be.”

The demand there is very big now and for us to get shut out while everyone else is making a killing is just bad for our industry.

It is “unclear” why Canadian beef imports were also suspended, since the falsified documents were related to pork, the Canadian Cattlemen’s Association said in a statement. Canada is seeking clarification from Chinese officials, the organization said.

Shipments to China represented 2.6 per cent of all Canadian beef exports in 2018, though the market’s importance has increased dramatically in the past few months. Indeed, beef exports to China jumped 445 per cent to 5,300 tonnes in the first quarter — amounting to $48 million in trade. China is the fifth-largest export market for the sector.

Bob Lowe, vice-president of the Canadian Cattlemen’s Association, said while beef sales to China are growing, the suspension “is a way bigger deal for pork.”

China was the second-largest export market for Canadian pork producers in 2018 after the United States with producers shipping $514.3-million worth of products to the country during the year. With U.S. imports hobbled by Chinese tariffs and domestic supplies dwindling due to African swine fever, Canadian producers were on track to sell even more in 2019.

“This suspension is definitely an economic hit that will have reverberations all through the supply chain,” said Gary Stordy, director of government and corporate affairs with the Canadian Pork Council.

Nearly one-third of all Canadian pork exports go to China and roughly 30 per cent of every hog in the Canadian herd ends up in the country, Stordy said.

What’s more, China is a key market for hams, hocks and “offal” — the pigs ears, snouts and trotters that are staples in Chinese cuisine but are considered farm waste in the West.

“We get a good price for those products in China and now that market’s gone, so they’ll have to be absorbed somewhere else,” said Stordy. “We’re in the process of figuring that out.”

What’s certain is that the whole supply chain will be affected — from the farmers who grow the hogs, to the processors who slaughter and package them, to the traders and distributors who send them overseas, he said.

“All product destined for China and shipped up to yesterday is going to move. It’s what happens after that that is the question.”

An outbreak of African Swine Fever that began in China last August has since spread through Vietnam, Hong Kong, Taiwan and other Asian nations, wiping out large portions of the countries’ herds. A report from the United Nations Food and Agriculture Organization last week said that more than 3.7 million pigs in the region had been culled since the outbreak began — more than 1.1 million in China alone.

Beijing has also placed hefty tariffs on U.S. pork imports as part of its tit-for-tat trade war with Washington, squeezing another source of supply.

“If they are playing politics in this case I’m surprised that they’re doing it at a time of such dire need for pork,” said Brewin.