Bangkok Post

Canada beats the US in pork sales to China

EU remains top foreign supplier


WINNIPEG/CHICAGO/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 United States 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. At the same time, tightened environmen­tal standards in China have forced farm closures and boosted demand for cheaper imports.

That’s a bonanza for Canadian farmers, who 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.

US exports to China, by contrast, 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 ascension 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 tonnes, more than doubled Canada’s shipments of 161,000 tonnes.

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 tonnes of pork to China, on pace to hit 372,000 tonnes annually. That eclipsed the 87,500 tonnes that the United States shipped, according to data from both government­s.

The European Union, which has long banned ractopamin­e, is China’s top foreign pork supplier, sending 393,365 tonnes there 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.

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 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 Inc, 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.”

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

“Pigs feet sell for more than C$2.50 (US$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.

China is the biggest byproduct market, followed by Taiwan and Philippine­s.

In all, China consumed 55 million tonnes 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 and rising environmen­tal standards.

The government forced thousands of farms to close because of severe water pollution.

China became Quebec-based Olymel’s biggest export market last year, vaulting over the United States and Japan. It plans to open a sales office there as early as next year.

“Just a tweak i n 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 United States is the world’s third-biggest domestic market for pork.

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,” a Hormel 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 ractopamin­efree pork.

Smithfield — the world’s biggest pork producer and a subsidiary of Hong Konglisted 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 tonnes there from the United States and Europe last year.

The second- and third-biggest US pork producers — Seaboard and Triumph — are jointly opening a pork processing plant next month in Sioux City, Iowa, where nearly all hogs slaughtere­d will be ractopamin­efree, 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.

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