Sunday, April 28, 2019

"Why African Swine Fever Will Have a Devastating Impact on the Pork Industry"

As we've tried to highlight when linking to Rabobank ag analysts:

Rabobank: "World Vegetable Map 2018"
Over the years we've found Rabo to rank among the sharper (read: more accurate in forecasts) analysts in the food and agtech sectors.
Plus, we've never seen something out of the Dutch behemoth to match this from "The great global avocado trade flow chart":
Correction: An earlier version of this item incorrectly described all the avocados exported by the Netherlands as having been grown there....
No sir, Rabobank knows the sourcing of their avocado toast.
That's from 2016. our praise goes back much further, they're pretty good at this stuff.

From's Successful Farming, April 16:

Exclusive interview with the world’s leading food and agricultural bank. 
When Christine McCracken, senior protein analyst for global lender Rabobank, predicted early last fall that the African swine fever (ASF) virus spreading in China would change the whole landscape of meat production worldwide, some of her clients thought she was exaggerating. Or just plain crazy. Not now.
ASF has spread to every province in mainland China and will soon affect an estimated 150 to 200 million pigs, says McCracken. She expects Chinese pork production losses of 25% to 35%. This loss is at least 30% larger than annual U.S. pork production and nearly as large as Europe’s annual pork supply. In addition, Rabobank expects production losses to exceed 10% in Vietnam – the world’s fifth largest pork-producing country and a significant supplier to China.
Rabobank believes there will be a net supply gap of almost 10 million metric tons in the total 2019 animal protein supply, which will increase farmgate and consumer prices.

We asked McCracken a few burning questions:
SF: Are you confident in the data?
CM: Our team in China meets with producers, packers, feed companies, equipment companies, genetic suppliers, animal health companies, and other banks. We are the world’s leading food and agricultural bank, so we have relationships with a majority of the largest industry players. We build our forecasts using input from our global team of protein analysts and model all of the potential scenarios. It is a mosaic, and you have to put all of the pieces together to get the complete picture.

Initially there were a lot of conflicting data points and it was difficult to separate fact from fiction. As evidence grew and the magnitude of the losses became clear, we were able to provide a better estimate of the loss.
It is difficult to remember any event having such a devastating impact on the pork industry. It will be nearly impossible for China to find enough protein to fill that gap in supply in the short run. There are just too many logistical hurdles and not enough surplus protein.

SF: Do your clients understand the impact of ASF?
CM: The U.S. protein industry does not fully comprehend the magnitude of the losses or the potential impact on the global market. It’s hard to wrap your head around it. Some of the companies further downstream, like further processors and other buyers of meat, still don’t think it is a big deal. There is really a wide range. There are very well-informed people in the industry that understand ASF and all of its implications. There are others who are in denial or think the impact will be short-lived, and really everything in between....MUCH MORE