What China's pork apocalypse means for America

 

By Thomas Parsons and Scott Michael Moore, Opinion Contributors, The Hill

11/05/19

 

Parsons is a professor at the School of Veterinary Medicine and Moore is China Program Director at the University of Pennsylvania. The views expressed by contributors are their own and not the view of The Hill.

 

Over the past year, an animal apocalypse has been unfolding in China. A disease known as African Swine Fever (ASF) has devastated the country’s pig population. Though harmless to humans, the disease is deadly for pigs. Tt has killed hundreds of millions across China, likely more than 25 percent of the pigs in world have died because of this disease in the last year.

 

But the real costs of this calamity go beyond the destruction of China’s pig herds. Perhaps more than any other commodity, pork shows that the costs of the U.S. — China trade war are as much political and environmental as they are economic. And even if Washington and Beijing manage to end their commercial conflict, they’ll need to find new ways to cooperate to prevent threats like ASF from reaching American shores. 

 

For both China and the United States, pork stands out among the hundreds of thousands of commodities that make up nearly $700 billion worth of annual trade for its political importance. In the United States, this significance comes by way of the political clout of pig farmers, who are a critical part of President Trump’s base.

 

Ninety-seven of the top 100 pork producing counties voted for Trump in 2016 and in most cases by an overwhelming majority. Allegiance to the president remains strong despite the negative consequences of the trade war to their businesses.

 

In China, pork’s political salience stems from the extent to which its consumption is embedded in the Middle Kingdom’s culture and cuisine. China is both the world’s largest producer and consumer of pork, and pork accounts for over 75 percent of its meat consumption, with pork dishes a staple during holidays, festivals, and formal banquets.

 

Given this importance on both sides of the Pacific, politicians in both countries have grown nervous as the trade war devastates what should have been a classic gains-from-trade scenario for American pork producers and Chinese consumers.

 

Over the past year, pork prices in China have skyrocketed. Chinese farmers selling pigs to market are gleaning four times the amount of their American counter parts. Ordinarily, this would present a great opportunity for America’s highly-efficient pork producers to fill the gap caused by diminished domestic production in China.

 

But because Beijing responded to the Trump administration tariffs by imposing their own fees on U.S. agricultural imports, American pig farmers largely have been priced out of the Chinese market, leaving other countries to fill the void. The U.S. Department of Agriculture estimates the loss to U.S. producers at $860 million, and the National Pork Producers Council at over $1 billon.

 

So far, U.S. pig farmers have tried to compensate for the fall-off in exports to China by expanding into markets like South Korea. But this is unlikely to be a viable long-term strategy as export opportunities in South Korea are only a fraction of that in China.

 

The Chinese market is worth over a billion dollars to America’s pig farmers, second only to that of Mexico.

 

China’s leaders, meanwhile, are clearly concerned about the long-term impact of both ASF and the trade war. Recently, Beijing has agreed to buy large quantities of US agriculture products, including pork, as part of a “phase one” trade deal. But it would be a mistake to read too much into this move: similar overtures have been made before by the Chinese but have never been fully implemented and Beijing is already starting to waiver on its most recent commitment.

 

When it comes to the trade war at large, Beijing has shown no signs of willingness to throw in the towel. And even as it makes short-term concessions on pork and other agricultural imports from the U.S., it is making long-term investments in self-sufficiency in swine production — signaling that for pork, like other commodities, Beijing’s long-term objective is not to increase imports from the U.S. but rather to phase them out altogether.   

 

Meanwhile, the fallout from the combined effects of ASF and the trade war continue to imperil the pork industry on both sides of the Pacific. The Chinese government is working to incentivize the return of swine production by offering lost cost loans to support the construction of new industrial scale farms as well as reducing environmental regulations for these farms.

 

But losses from ASF are so great that even after the deployment of their strategic pork reserve, China will be faced with insufficient pork supplies and high consumer pork prices for years to come. Meanwhile, in the US, the pork industry is still reeling from the billion dollars of lost income in the previous year. Volatility from on-again/off-again Chinese pork purchases driven by the ebbs and flows of the trade war has confounded strategic planning by individual business.

 

ASF has now spread from China to nine neighboring countries and thus a lingering fear among many experts that it’s not a question of whether ASF reaches American shores, but when. 

 

Pork, though just one of the many items that make up China’s trade with the United States, tells the story of the two countries’ political and economic interdependence more poignantly than any other.

 

No other commodity so vividly illustrates the trade war’s economic, political, and environmental costs — or the reality that, whatever the state of tensions between Washington and Beijing, the fate of farmers in both the U.S. and China is fundamentally shared...

 

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https://thehill.com/opinion/international/469113-what-chinas-pork-apocalypse-means-for-america