Rabobank Report: China's demand for pork could see corn imports reach 20 million tonnes per year

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Sep 26, 2012, 11:33 ET

NEW YORK, Sept. 26, 2012 /PRNewswire/ -- Rabobank has published a new report looking at China's increasing role in the global pork industry, particularly the rising influence that China's fluctuating imports have in affecting global supply and demand balances and prices.

In the report, titled "The Industrialization of China's Pork Supply Chain," Rabobank's Food & Agribusiness Research and Advisory group says that if current trends in China's pork production and industrialization continue, corn imports could approach 20 million tonnes per year within a five-year time frame. This is one of the changes in the landscape of China's pork industry that will have major reverberations on world markets.

The pace and success of the industrialization that is rapidly taking place across China's pork sector will be a major determinant of whether China will move back towards self-sufficiency or become an even bigger importer. If China could improve its corn yields and swine feed conversion ratios towards U.S. levels, then goals of self-sufficiency are achievable. If China does not have to import pork, it would need to import corn, and if current trends in China's pork production and industrialization continue, corn imports would rise significantly.

China has recently been importing over 0.4 million tonnes of pork per year, in a world market with trade of less than 7 million tonnes per year. In Rabobank's view, China is likely to continue to be an importer of both pork and corn for the foreseeable future, but how much of each will depend on improvements in the supply chain. China's pork supply chain is in a transition period, shifting from traditional household farming to modern commercial systems. While both farms and processing plants are growing rapidly in size, coordination between the two remains undeveloped. The pork supply chain is still based on the spot market in most cases.

China's chances for self sufficiency in pork is boosted by its great potential for improvement in hog productivity and a strong consumer preference for fresh meat. It also has a lack of comparative advantage in land intensive agriculture (e.g., for growing corn), so it should import this type of commodity rather than producing it, and focus on areas such as pork production. However, challenges in achieving success in pork production include the continuation of disease problems, food safety issues, logistics, and the lack of a cold chain.

A copy of the Rabobank report on the industrialization of China's pork supply chain is available to media upon request.

Rabobank Group is a global financial services leader providing wholesale and retail banking, asset management, leasing, real estate services, and renewable energy project financing. Founded over a century ago, Rabobank is one of the largest banks in the world, with nearly $1 trillion in assets and operations in more than 40 countries, and is among the highest rated private banks by S&P and Moody's. Internationally Rabobank focuses on food and agriculture and in North America it is a premier bank to the food, beverage and agribusiness industry. www.Rabobank.com

SOURCE Rabobank