Donald Trump and Swine Fever Are Creating an Economic Crisis

A deadly outbreak in China and trade tariffs in the United States are threatening to send global markets into a tailspin.


By Laurie Garrett, Foreign Policy 

May 10, 2019


Garrett is a former senior fellow for global health at the Council on Foreign Relations


As trade tensions between the Trump administration and Chinese President Xi Jinping’s negotiating team escalate, with U.S. President Donald Trump threatening to impose drastic new tariffs starting on Friday, the negative fallout for farmers—from soybean growers in Iowa to hog farmers in Shandong—is potentially very high. But it’s all made worse by an obscure African virus that is threatening to transform the trade woes into a snowballing catastrophe affecting everything from the food on your family’s plates next week, to the stability of global financial markets and agricultural industries, to the health of dialysis patients around the world.


Last summer a hog farmer with a small, 400-pig operation in Shenyang, northeastern China, reported a disease was sweeping through his herd, with lethal outcome. By the time government investigators reached the scene, the disease had already spread to neighboring farms, swiftly killing over 10 percent of the swine. On Aug. 3, 2018, Zhang Zhongqui, the director general of the China Animal Disease Control Center, announced that African swine fever had, for the first time in history, broken out in China, where more than half of the world’s pork is consumed—56 billion pounds of it annually—and much of it is produced.


The extremely contagious virus causes animals’ vascular systems to collapse, bleeding out into organs and tissues throughout their bodies and killing them within four days. The disease is also notoriously hard to control, as there’s no rapid diagnostic tool farmers can use to tell if animals are infected, no treatment, and no vaccine—and anything including contaminated farmers’ shoes, feed buckets, and virus-laden transport vehicles can pass the virus on to pigs. The disease is not harmful to humans, but people can carry the virus on their clothing, hands, and equipment, unwittingly spreading it from pig to pig. And nobody has yet found an infected pig or boar that has survived African swine fever: It is nearly 100 percent lethal.


In 2017, experts warned that China was ill prepared to handle African swine fever if it reached the country, particularly now that the nation’s hog farming is rapidly shifting from a mostly family-based village model to massive-scale, U.S.-style industrial swine farming. Family farmers could be quarantined, their homes and animals typically confiscated by the Chinese state. But the industrial operations house thousands of hogs in tight confinement, fed and tended to by a small staff that moves from pig to pig, potentially acting as a vector for viral spread in a matter of a few hours to tens of thousands of animals.


China has proven the experts right—it has not been ready for an outbreak. Within a month of Zhang’s announcement of the first Shenyang outbreak, African swine fever spread to three other nearby districts. And it kept spreading, engulfing every pork-rearing area of the nation by early 2019. Some hog producers agreed to slaughter their entire herds, hoping to stop the epidemic. But when they brought in uninfected sows and piglets to restock their herds, the new animals quickly sickened, thanks to contaminated facilities. The virus is so contagious that one outbreak was traced to a courier mailing pouch delivered to a farm—the pouch, not its contents, spread the disease.


In October, Chinese authorities realized that their quarantine measures were failing because family-scale farmers were feeding kitchen waste to their pigs—a traditional practice that essentially renders the animals cannibals, eating remnants of other pigs. This is reminiscent of the 1988 mad cow epidemic in the United Kingdom, which was caused by feeding sheep and cow bone meal to cows, spreading bovine spongiform encephalopathy to entire herds of animals across the nation. Today it is illegal in the U.K. and EU to feed livestock meal made from body parts of their own species or other mammalian species. But with Chinese swine, the practice continues, which hastens the spread of African swine fever even when all other possible control measures are imposed. Worse, some factory-scale feed manufacturers in China have produced and sold contaminated protein powders made from hog cadavers.


China culled nearly a million pigs by the end of January, frantically trying to slow the epidemic. But by early May, China had logged at least 129 African swine fever outbreaks, located all over a nation with a $1 trillion hog industry, and the virus has spread to hogs in nearby pork-consuming nations: Taiwan, Vietnam, Mongolia, Cambodia, and North Korea. Thailand and Laos are both bracing for the likely arrival of swine fever to their herds. Smugglers and food exporters trying to bypass quarantine controls have taken pork products infected with the swine fever to markets in Japan, Taiwan, Australia, and South Korea. In October, the U.S. Department of Agriculture said there was no testing method for it to screen imported pork products for the disease. In March, U.S. Customs and Border Protection officials captured 50 shipping containers at the Port of New York and New Jersey loaded with 1 million pounds of deliberately mislabeled Chinese pork—a discovery that has American hog farmers worried that China’s swine fever will eventually hit U.S. pigs.


Under the Chinese zodiac, this is the Year of the Pig, but China has already lost an estimated 134 million pigs out of its 440 million swine and $128 billion pork industry. Forecasters say a total 2019 pig loss of 134 million—nearly half of China’s entire herd—seems likely. Pork products worldwide have been affected: The cost of pork in China is up 21 percent since this time last year, bacon prices spiked 20 percent in Spain in March, and pork shoulders are 17 percent more expensive in Germany. And other meats are costing more as people switch from high-priced pork to beef or chicken. The economist Arlan Suderman told Bloomberg Businessweek, “This is an unprecedented situation. This will impact food prices globally.”


Meanwhile, some 80 percent of Chinese farmers have decided not to restock their swine herds—until the government gives a green light, or they are sure African swine fever is gone. “The impact on China’s pork industry has been catastrophic. Farms are empty across China. Farmers have been directed to wait up to [six] months before restocking,” Brett Stuart, a co-founder of Global AgriTrends, told Time.


This, in turn, has had a major impact on the U.S. agriculture industry, which was once the main supplier of the soybeans and corn that China used to feed its pigs. As Chinese farmers have lost or culled their herds, demand for U.S. soybeans and corn has plummeted. By this time in 2018, American farmers had sold 28.7 million tons of soybean meal to China; so far in 2019, they have sold less than half that, 12.9 million tons. In mid-April, U.S. soybean exports sank from 888,700 metric tons one week to 460,700 tons the next—a fall likely due to African swine fever and swine herd losses in China. One commodities expert predicts 2019 and 2020 will both see a drop of 2 billion bushels in U.S. exports to China, dubbing the disease a “ train wreck in slow motion” for the American soybean market.


And that’s before accounting for the impact of new Chinese tariffs...


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U.S. on the cusp of a China trade deal

Free Market Reflections with Steve Dittmer


By Steve Dittmer, Contributor, Canadian Cattlemen

May 10, 2019


Dittmer is the CEO of Agribusiness Freedom Foundation


Despite not meeting the end of March deadline originally set in the President Xi Jinping-President Trump meeting, the trade negotiations between China and the U.S. moved along at a relatively rapid clip in March and April. The revised goal was to have an agreement ready for the leaders to sign by late April-early May. Rather than leave any dramatic moves for the leaders to announce at the summit, the plan was to have the final agreement already nailed down with time for review, before the summit.


Reportedly, the Chinese did not want any loose ends that could tempt President Trump to get up and walk as he did in North Korea. They also want everything approved by the Communist Party leadership and President Xi beforehand. Why the Chinese would make any comparison between their negotiations with President Trump and those with the unpredictable, sanity-questioned Kim Jong-Un, I’m not sure. But I do like the idea of having things buttoned down beforehand, rather than gambling that the Chinese would make some last-minute concession.


So by the time you read this, either history has been made or it may be close.


Probably the most important news coming out of late-term negotiations was that the Chinese were regarding — and we’re assuming telling the folks back home — the significant structural changes they were agreeing to were steps to open up China’s economy to the rest of the world. That actually is true but that they have settled on an explanation that involves no loss of face is critical to the success of the deal.


Into late stages of negotiations, only the status of intellectual property protection and overall enforcement mechanisms were still being thrashed out. Hormone or ractopamine restrictions on beef were still on the table.


Pork producers here in the U.S. are wishing Congress would get its act together and pass the USMCA very soon, as the lack of sales to Mexico because of retaliatory tariffs has been very damaging. The lack of sales to China has also been hurting. But the impact of African swine fever (ASF) has finally forced the Chinese to buy over 23,000 tons of pork in early March, despite a 62 per cent tariff, Reuters reported. That’s the biggest purchase in two years. The official ASF count is 111 cases in 28 provinces in China. The official count of pigs culled is one million but is estimated by outsiders as many times that number.


Whatever that number is — and climbing — the Chinese will eventually need a lot of pork. As the largest pork producer in the world, just a 20 per cent drop in production for them would equal 50 per cent of U.S. production, Scott Brown said. Brown is extension economist at the University of Missouri. China has been getting 70 per cent of their pork from the EU during the trade war but that could shift quickly if ASF spreads from eastern Europe into Western Europe, noted Don Close of Rabo AgriFinance. Both appeared on the April 6, 2019 episode of U.S. Farm Report.


The potential Chinese purchase needs could not only support pork prices in North America but ease any competitive price pressure on beef from cheaper pork prices. In the U.S., we’re heading into prime grilling season, which should help demand, but getting more pork exports in gear would certainly help.


Congressional sources...