US, Canada vie to sat­isfy China’s vo­ra­cious ap­petite for pork

China Daily (Hong Kong) - - BUSINESS -

BEI­JING — Canada has over­taken the United States as the top North Amer­i­can sup­plier of pork to China as farm­ers and meat pack­ers in both na­tions bat­tle for lu­cra­tive shares of the big­gest global mar­ket.

Canada’s pork sales to China, af­ter a sharp rise last year, ex­ceeded those of the US in the first quar­ter of 2017.

That’s only hap­pened a hand­ful of times in two decades, ac­cord­ing to US and Cana­dian gov­ern­ment data.

Ris­ing af­flu­ence is driv­ing China’s vo­ra­cious ap­petite for pork, in­clud­ing parts of the pig — feet, el­bows, in­nards — which com­mand lit­tle value in most coun­tries.

Nev­er­the­less, it doesn’t mean the pro­duc­tiv­ity of farms in China has been re­duced.

Ac­cord­ing to the data of the Food and Agri­cul­ture Or­ga­ni­za­tion, China, which is both the lead­ing pro­ducer and the largest con­sumer of pork, ris­ing pork con­sump­tion has led the sell­ers to take up the slack in sup­ply by im­port­ing.

In fact, the im­ported pork prod­ucts are not as pop­u­lar as the im­ported beef in China. Some con­sumers have even never heard of im­ported pork.

“The fresh pork is lo­cal pro­duc­tion, we don’t have any im­ported pork sup­ply,” said Ito Yokado Bei­jing store of­fi­cial who is in charge of the store’s fresh pork sup­ply.

Bei­jing Cen­tral Key Trad­ing Co Ltd, a Bei­jing-based food im­porter, said that the com­pet­i­tive price of im­ported pork was the ma­jor rea­son for it to do the busi­ness. The im­ported meat must be frozen dur­ing the trans­porta­tion as a pre­con­di­tion, there­fore the price is much lower than the fresh meat.

Drug-free ex­ports

Cana­dian farm­ers have al­most com­pletely re­moved the growth drug rac­topamine from their pigs’ diet, largely be­cause it is banned in China, which con­sumes half the world’s pork.

In con­trast, the US ex­ports to China are lim­ited be­cause only about half of the na­tion’s herd has been weaned off the drug, ac­cord­ing to US hog pro­duc­ers, meat pack­ers and an­i­mal feed deal­ers.

But ma­jor US-based firms are now mov­ing to pro­duce more rac­topamine-free hogs — in­clud­ing the three big­gest pork pro­duc­ers, Smith­field Foods, Se­aboard Foods, a di­vi­sion of Se­aboard Corp, and Tri­umph Foods, a hog farmer co­op­er­a­tive.

The rise of Canada’s pork ex­ports un­der­scores the power of the gar­gan­tuan Chi­nese mar­ket to in­flu­ence agri­cul­tural prac­tices and prof­its in sup­plier coun­tries world­wide.

As re­cently as 2013, an­nual US pork sales to China, some 333,000 tons, more than dou- bled Canada’s ship­ments of 161,000 tons.

That’s the same year Canada’s hog in­dus­try started to re­move rac­topamine, best known as Eli Lilly & Co prod­uct Paylean.

In the first quar­ter of this year, Canada shipped nearly 93,000 tons of pork to China, on pace to hit 372,000 tons an­nu­ally. That eclipsed the 87,500 tons that the US shipped, ac­cord­ing to data from both gov­ern­ments.

The Eu­ro­pean Union, which has long banned rac­topamine, is among China’s top for­eign pork sup­pli­ers, ex­port­ing 393,365 tonnes in the first quar­ter.

Chi­nese author­i­ties banned the use of rac­topamine in live­stock in 2002. They say meat raised with the drug can cause nau­sea and di­ar­rhea in peo­ple and be life-threat­en­ing to suf­fer­ers of heart dis­ease.

US stance odd

The US Food and Drug Ad­min­is­tra­tion, how­ever, did not see the same dan­gers when it ap­proved rac­topamine in 1999, con­clud­ing that it would “not have a sig­nif­i­cant im­pact on the hu­man en­vi­ron­ment”.

The FDA’s stance has drawn some crit­i­cism, in­clud­ing a 2014 law­suit by en­vi­ron­men­tal groups al­leg­ing the agency has not fully ex­am­ined the drug’s im­pact. The suit was later dis­missed on tech­ni­cal grounds but is be­ing ap­pealed.

Hog farmer and rancher groups de­fend rac­topamine use, say­ing it al­lows them to grow live­stock more ef­fi­ciently, with less feed, said Dave Warner, spokesman for the Na­tional Pork Pro­duc­ers Coun­cil. Cana­dian health author­i­ties also al­low con­sump­tion of pork from hogs raised with the drug.

The China mar­ket is so lu­cra­tive that Canada’s HyLife started sell­ing pork on­line di­rectly to Chi­nese con­sumers last year.

The small Man­i­toba pro­ces­sor hawks pig feet and el­bows on e-com­merce site, a com­peti­tor of Alibaba Group Hold­ing Ltd.

“They’re big on­line buy­ers,” said Claude Vielfaure, HyLife’s chief op­er­at­ing of­fi­cer. “You try to move your pork all kinds of ways.”

Costly by-prod­ucts

Ris­ing Chi­nese pork de­mand has driven up prices for by-prod­ucts in­clud­ing pigs’ feet, kid­neys and liv­ers.

Pigs feet sell for more than $1.85 per kilo­gram — about dou­ble their value two years ago, said Richard Davies, ex­ec­u­tive vice-pres­i­dent of sales and mar­ket­ing at Oly­mel, one of Canada’s big­gest pork pack­ers.

Sell­ing by-prod­ucts can squeeze another $10 per pig from a car­cass that other­wise earns pack­ers about $180, said Ray Price, pres­i­dent of Al­berta-based pro­ces­sor Sun­terra Meats.

Stewed pigs’ feet with white beans is a fa­mous dish from Sichuan prov­ince, one of China’s culi­nary cap­i­tals, while blood sausage, made from in­testines and cooked with pick­led veg­eta­bles, is a tra­di­tional win­ter dish in the North­east.

Chi­nese con­sumers en­joy the strong fla­vor of of­fal — in­ter­nal or­gans and en­trails. In Bei­jing, stir-fried pig’s liver with veg­eta­bles is com­mon on din­ner ta­bles and known for its nu­tri­tional value.

In all, China con­sumed 55 mil­lion tons of pork last year. Al­though that is the low­est to­tal in four years, im­ports are ris­ing fast be­cause mil­lions of China’s small-scale farm­ers have left the pork busi­ness in re­cent years be­cause of fall­ing prices.

In fact, it did not lead to short­age of pork at the con­sumer level. The huge do­mes­tic de­mand of pork en­sured pork was im­ported.

Chi­nese di­etary struc­ture is such that many dishes are made from pork. It is cer­tain that the mar­ket de­mand for pork is much more than that for beef and mut­ton, ac­cord­ing to Bei­jing Cen­tral Key Trad­ing Co Ltd.

China key to trade

China be­came Que­becbased Oly­mel’s big­gest ex­port mar­ket last year, vault­ing over the US and Ja­pan. It plans to open a sales of­fice in China as early as next year.

“Just a tweak in that mar­ket can change the game for any­one in the world,” Davies said.

US pork pro­duc­ers have moved more slowly than their Cana­dian com­peti­tors to raise rac­topamine-free pigs, pri­mar­ily be­cause the US is the world’s third-big­gest do­mes­tic mar­ket for pork.

Pre­cisely be­cause of that rea­son, Bei­jing Cen­tral Key cut its im­ports from the US, the com­pany said. It also made it clear that any im­port of the pork con­tain­ing this drug is not its pri­or­ity.

Tyson Foods Inc and Hormel Foods Corp con­tinue to process hogs that were fed rac­topamine in part be­cause they do not raise their own pigs.

Hormel’s hog sup­ply “comes from more than 500 fam­ily farms”, the com­pany spokesman said, many of which use the growth drug.

US firms can also send pork from rac­topamine-fed hogs to Mex­ico and Ja­pan, the top US pork ex­port mar­kets.

But many US-based sup­pli­ers are none­the­less scram­bling to take ad­van­tage of Chi­nese de­mand for rac­topamine-free pork.

Smith­field, the world’s big­gest pork pro­ducer and a sub- sidiary of Hong Kong-listed WH Group, has raised most of its hogs with­out the drug for more than two years, a spokes­woman said.

As the top ex­porter of pork to China, Smith­field firm shipped 300,000 tons there from the US and Eu­rope last year.

The se­cond- and third-big­gest US pork pro­duc­ers — Se­aboard and Tri­umph — are jointly open­ing a pork pro­cess­ing plant in July in Sioux City, Iowa, where nearly all hogs slaugh­tered will be rac­topamine-free, ac­cord­ing to lo­cal hog pro­duc­ers and an­i­mal feed mills.

Build­ing ded­i­cated rac­topamine-free pork plants al­lows pro­ces­sors to limit risk of China re­ject­ing ship­ments that con­tain trace amounts of the drug.

Se­aboard de­clined to com­ment about rac­topamine. Tri­umph did not re­spond to re­quests for com­ment.

The Co­op­er­a­tive Farm­ers El­e­va­tor in Ochey­dan, Iowa, is con­struct­ing a new feed mill that by 2018 will pro­duce only rac­topamine-free an­i­mal feed.

“It was re­quested from some of the cus­tomers we deal with,” said Steve Peter­son, the co­op­er­a­tive’s vice-pres­i­dent of feed. “The one that is push­ing the hard­est is Se­aboard.”

US hog pro­ducer Prestage Farms also is plan­ning a new Iowa slaugh­ter­house for as many as 10,000 rac­topamine­free hogs an­nu­ally by 2018, said Ron Prestage, its pres­i­dent.

With the US hogs in record sup­ply, for­eign de­mand is es­sen­tial to prof­its, Prestage said.

“When we have plen­ti­ful hogs, as we do to­day, pack­ers pre­fer not to have rac­topamine,” Prestage said. “They want to be able to ex­port as much prod­uct as they can.”


Chi­nese cus­tomers pur­chase pork at a su­per­mar­ket in Ji­u­jiang, Jiangxi prov­ince.

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