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Export to China Already Beats Record Due To Swine Fever

With value around 42% higher than in 2018, the Brazilian pig market well profiting from the Asian crisis, but the grain sector is worried



The Brazilian economy is already beginning to feel the first impacts of the African Swine Infestation (PES), which since August 2018 has forced China to sacrifice between 150 and 200 million pigs and can bring down 35% of pork production of the largest producer and worldwide consumer of this protein. Last month, Brazilian pork exports to the Asian giant reached US $35.8 million.

It was the highest monthly value sold since the beginning of the historical series in 1997. The result is 42% higher than that obtained with exports in April 2018, according to the Center for Advanced Studies in Applied Economics (Cepea/Esalq).

“China has greatly increased imports of pigs and chickens because the supply of protein is lower because of swine fever,” says Cepea analyst Maristela de Melo Martins. Since February, China has come to Saudi Arabia as the largest buyer of Brazilian chicken. Last month, the Asian country consolidated as the main importer of pigs and chickens, accounting for 28% and 11.5%, respectively, of Brazilian exports of these products.

There are still no projections of the impact on the increase of exports of these two products, according to the Brazilian Animal Protein Association (ABPA), which brings together the chicken and pork chain. For Francisco Turra, president of the entity, as the chicken has a much shorter production cycle, it can help to supply more quickly the demand for protein. Each Chinese consumes 40 kilograms of pigs per year.

Brazilian exports of pork in 2018 totaled 646 thousand tons and the country was fourth largest in foreign sales, behind the European Union, USA and Canada. For this year, the expectation is that it reaches 900 thousand tons. But there are factors that play against a sudden surge in Brazilian supply.

The first is proper cycle of pig production, which is long. The time between the gestation of a womb and the first puppy ready for slaughter is almost a year. The second factor is that China only buys products from licensed refrigerators. Currently, only nine Brazilian slaughterhouses are allowed to export there.

“This is a great opportunity for Brazil because the Chinese production of pigs should not be recomposed before two to three years,” Turra predicts. He says that with the bird flu epidemic in 2005, Brazil has become the largest chicken exporter in the world. In its evaluation, it may be the chance of the Country repeating the story with the pigs, since the Brazilian production has competitive costs.

As swine fever spreads across China and other Asian countries, pig farmers in Santa Catarina, the largest producing state and exporter, take advantage of rising prices. Since February, the remuneration for independent producers, who are not connected to a refrigerator, has increased by 33%. The integrated producers, which are linked to a meat industry, had prices readjusted by around 20%, says the president of the Association of Pig Producers, Losivanio Luiz de Lorenzi.

“We are reaping the fruits of this problem in China and I believe that from next month on, the price will burst,” says Lorenzi. Clair Lusa, owner of the Suruvi farm in Concordia (SC), which provides swine herds for producers, says that in the last two years it has sent more than half of the pig farms in the state. reproductive matrices for slaughter because demand was weak and, discouraged, pig farmers worked with old animals. “They did not rebuild the squad,” he says.

Now, with the heating of pig sales, the farm has suspended the slaughtering of dies. In the last 60 days, the demand for animals grew between 30% and 40% and the price of the matrices rose between 20% and 30%. “The misery of some is the salvation of others,” says Lusa, referring to the gains made by producers this year because of the plague in China.

There is also a reflection on inflation. The price of pork in the wholesale, which rose 17.09% this month, according to the Getulio Vargas Foundation.

The other side of the crisis coin in the Chinese pig production is the reduction of Brazilian exports of soybeans used in animal feed. Abiove, which brings together the soybean industry, projects a $2.1 billion drop in grain export revenue to the country this year.

Sao Paulo pig and chicken producers remain cautious, despite the increase in Brazilian pork exports in April due to swine fever that hit China and other Asian countries. Pig farming comes from a difficult year in 2018, with declining exports and low prices. Producers see a chance to recoup losses, but they prefer to contain optimism. “We have a scenario that looks exciting, but we can not celebrate anything yet,” says pig husband Antonio Ianni, from Ianni Agropecuária, in Itu, in the interior of Sao Paulo.