On August 31, 2011, 1,265 pure bred U.S. pigs worth of $3.8 million were shipped by air to South China following 45 days of quarantine (and the culling of six piglets). The piglets entered into production in China’s largest pork consumption province – Guangdong, in a farm located in Qingyuan.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
GAIN Report Number: CH11619
China - Peoples Republic of
US breeder swine clear quarantine and settle in Guangdong
Market Development Reports
U.S. breeder swine clear quarantine and settle in Guangdong
On August 31, 2011, 1,265 pure bred U.S. pigs worth of $3.8 million were shipped by
air to South China following 45 days of quarantine (and the culling of six piglets). The
piglets entered into production in China?s largest pork consumption province ?
Guangdong, in a farm located in Qingyuan. From 2001-2010, Guangdong imported
9,993 head live hogs from the United States, Canada, United Kingdom, France,
Denmark, and Australia. The recent onslaught live U.S. breeder swine into China
comes as result of the central government?s relaxation of import policies that were implemented prior to
the H1N1 swine epidemic outbreak three years ago in 2009. Wens Group, now the largest swine and
poultry producer in China imported the August shipment. The Guangzhou based feed manufacturing
giant is estimated to produce 6 million head swine by the end of 2011.
Sales facilitation: ATO Guangzhou and USDA cooperator groups such as the U.S. Grains Council and
the U.S. Soybean Association ? International Marketing have been working closely with the Wens
Group and sourcing U.S. feed ingredients. For example, in June 2011, ATO Guangzhou, with support
from the Emerging Markets Program funded and escorted a U.S. swine technical expert from Nebraska
to Wens corporate headquarters and provided the senior manager the latest know-how on swine nutrition
practices. ATO Guangzhou then presented research on the benefits of U.S. alfalfa hay products for
gestating sow feed. Besides breeder swine, the Wens Group is a large buyer for U.S. soybeans, corn,
corn DDGS, alfalfa hay, and breeder chicken. ATO Guangzhou has also assisted U.S. agricultural
companies, state governments, and organizations from many States such as Iowa, Illinois, Nebraska,
Missouri, Wisconsin, Washington and California to develop business relations with this company.
South China continues leading breeder swine production
Since the recent lifting of the import ban on live U.S. hogs, ATO Guangzhou has assisted several
importers from Guangdong and Guangxi provinces to visit the States for breeder swine purchases. A
joint delegation, consisting of swine farmers from three large Guangxi companies just returned from a
trip to Illinois; and as a result, another jet cargo of live U.S. breeder hogs worth of $1.6 million was
purchase and destined to arrive in South China in late December 2011 or early 2012.
According to a veteran Guangdong swine importer/breeder interviewed by ATO recently, South China
(Guangdong and Guangxi in particular) have led the breeder swine industry in China and will continue
to do so given the industry?s shared years of experience, know-how, and tacit knowledge amassed
throughout the last two decades (specifically referring to Guangdong). In the meantime, Hubei, Henan,
Shandong and other large swine producing provinces all plan to import breeder swine to build nucleus
herds and expand production capacities. However, South China breeders do not anticipate head-on
competition, since the China market is facing shortages of pork supply given meat consumption growth
in urban cities grows at staggering rates of 200 percent by some measures. The growth in animal meat
protein consumption is mostly driven by increased prosperity as a result of higher disposable incomes.
As the largest pork consumer in China, Guangdong annually purchases 20 million head swine from
neighboring provinces such as Guangxi, Hunan, and Jiangxi.
Competition: Industry contacts also mentioned that United Kingdom breeders are increasing their
promotion of breeder swine in China. In 2010, the U.K. industry impressed local swine breeders as trial
shipments to South China farms during the ban on U.S. hogs yielded favorable and unexpected results
that created a paradigm shift for many of those in the industry. However, the U.K. exports will be
unable to capture a considerable market share even after the ban on U.S. hogs is lifted given their small
scale farm production and limited supply capability. Compared to the United States, the U.K.?s recent
success was almost miraculous given it is much harder to find enough high quality hogs in a short period
to fill a cargo jet (approximately 500-600 head). Furthermore, U.K. exporters are still not familiar with
business practices in China. This unfamiliarity led to delays due to logistical and transportation issues
that ended up costing both U.K. exporters and local importers unusually higher costs. Lastly, it seems
that the U.K. industry has limited funding mechanisms for periodic promotions and that the recent sales
were connected to political goodwill orchestrated by the machinations of the central government.
The general impression on U.S. breeder hogs is good with well managed pedigree recording systems in
place in every exporting breeder farm, modernized production facilities, years of consistent genetic
improvement that is backed by research, and a favorable business reputation (from farmers, technicians,
and supplier agents).
Challenges: Though demand is strong, potential importers face many challenges:
Quota set by Ministry of Agriculture (MOA): All live breeder animal importations require
approval from MOA which implemented a quota system to manage total import volume.
Industry contacts complain that the application of the MOA quota is time consuming and lacks
Quarantine: It requires a substantial amount of paperwork and coordination to arrange visits
from quarantine and inspection officials to the United States. These are required to personally
supervise hog selection, segregation, and transportation for the buyers. Plants must be approved
to export to China before quarantine and inspection officials can even consider purchasing U.S.
Lack of segregation farms in China: All imported animals are required to be segregated for 45
days at designated sites before they are released into production farms. Located in Beijing,
Tianjin, Shanghai, and Guangzhou, the four designated national segregation farms are not
enough to house increased imports of live animals. Swine importers have to have local
quarantine and inspection bureaus? approval to build temporary segregation farms which
increase costs of importing and complexity of the business model.
High shipping and insurance costs: All swine shipments require chartered airplanes with on
board technicians. Insurance is purchased by most importers in South China to cover potential
losses during the transportation or for other unexpected risks.
These costly barriers considerably drive up costs. For example, a breeder hog (piglet) is sold several
hundred at a U.S. farm can easily be worth over $3,000 when it arrives at China?s production farms.