China's pig herd to recover in 2020 after African swine fever devastation: official

By Hallie Gu and Dominique Patton

BEIJING (Reuters) - China's hog production capacity should bottom out this year after outbreaks of African swine fever decimated the world's biggest pig herd, an official said on Thursday, forecasting a return to usual pig numbers in 2020.

Analysts, however, said the time frame appeared ambitious, with the disease still spreading in parts of the country and so much of the herd gone.

The year-long pig epidemic has slashed China's pig herd by more than 40%, and has pushed prices of the country's favorite meat to record levels.

At a briefing on Thursday, Yang Zhenhai, director of the Husbandry and Veterinary Bureau of China's Ministry of Agriculture and Rural Affairs, said inventories at large farms have started to rebound.

"Various supporting policies and market factors have helped boost confidence in (pig) farming significantly, and enthusiasm for production among small and big farmers is further improving," Yang said.

Pig production has recovered rapidly at farms that slaughter more than 5,000 pigs a year, Yang said. Inventories reached 44.46 million animals in September, up 0.6% on a month earlier, while sow herds climbed 3.7% to 6.10 million head.

Major producing provinces including Henan, Shandong, and Liaoning also saw a considerable pick-up in pig inventories in September from the previous month, he said.

And production and sales of pig feed have rebounded strongly, with output of hog feed up 10% in September from the previous month.

TIGHT TIMETABLE

Analysts, however, said a forecast for a return to normal herd levels in 2020 was optimistic, with stopping the spread of the disease key to a recovery and no cure or vaccine yet available.

Pig production is recovering in the north, but is still falling in the south and southwestern regions, said an analyst with a Chinese consultancy, who declined to be named because of sensitivity around the issue.

"If the disease can stabilize and doesn't reoccur, stocks might start to recover," she said, but even then would not reach normal levels until at least the second half of 2020.

And while large farmers - including corporate pig producers such as C.P. Pokphand Co and New Hope Liuhe - have been expanding rapidly, eyeing large profits from soaring pork prices, small farmers have traditionally made up the bulk of pork production.

The country's hog inventory stood at 428 million animals at the end of 2018, according to official data.

It also takes about 18 months to build, stock and produce pigs at a new farm, said Pan Chenjun, senior analyst at Rabobank, who said the ministry's goal was unrealistic.

"In the first half of next year I think the herd will continue to drop," she said.

Some companies have restocked farms that were infected with the disease only to see it reoccur, she said, while many small farmers have neither the capital or the will to boost their herds.

For a graphic on China pork prices seen surging further as African swine fever spreads click, https://fingfx.thomsonreuters.com/gfx/ce/7/6916/6898/ChinaPorkPricesOct2019.png

(Reporting by Hallie Gu and Dominique Patton; Editing by Kenneth Maxwell and Richard Pullin)