China cuts import tariffs on pork
6th Jan 2020 / By Alistair Driver
China has cut its tariffs on pork products, as part of a wider programme of tariff cuts covering 859 items.
Tariff rates on frozen pork were reduced from 12% to 8% from January 1, as China takes further steps to address the shortages caused by its devastating African swine fever outbreak.
China’s ministry of finance said the tariff changes would be made to ‘increase imports of products facing a relative domestic shortage, or foreign speciality goods for everyday consumption’.
Other affected products include frozen avocado, some wood and paper products and some medical products.
The authorities will reduce the rates by implementing temporary import tariffs, lower than the standard rates, on its list of targeted goods, a move it also made last year, according to the BBC.
The move will cover UK pork exports to China, which doubled in volume year-on-year, to reach 63,000 tonnes in the first 10 months of 2019. With a spate of plant approvals in the second half of the year, the trend is likely to continue.
But, according AHDB lead analyst for red meat, Duncan Wyatt, the change in tariff is unlikely to significantly influence trade, given the current state of the market and high Chinese prices.
"I don’t think the lower tariff will make more product available to send that wouldn’t have gone to China anyway," he said. "With the market as it is, exporters were already keen to send volumes that way, even at a 12% tariff. Overall, UK trade will be influenced by European supply and domestic demand."
Separately, China and the US are also moving towards ending their long-running trade dispute. In December, they agreed a preliminary deal under which the US will cut some tariffs in exchange for more Chinese purchases of American agricultural products, including pork.
China’s pig herd, typically numbering about 440 million, is estimated by Rabobank to have declined by 55% in 2019, with an even larger decline in the sow herd. Pork production is estimated to be down by about 25%. Further reductions are forecast for 2020.
Despite China drawing down on its frozen pork inventories and fast-tracking trade deals and plant approvals around the world to fill the huge gap, Chinese pork prices have reached record levels, more than doubling year-on-year in the fourth quarter, fuelling inflation.
China imported 230,000 tonnes of pork in November, up more than 150% on the previous year, according to CNN.
In December, the Ministry of Agriculture launched a detailed three-year action plan to ‘accelerate the recovery and development of pig production’.
The immediate goals were to curb the decline in pig numbers and stop the soaring pig price before the end of 2019 and ensure the pork market stabilised during the Chinese New Year (January 25). The plan is then to recover production capacity to near to the yearly average by the end of 2020 and achieve full recovery by 2021.
Some big pork companies have already started to restock, backed by Government, but with mixed success due to the risks of re-infection. Small farms, which account for nearly half of China’s pork output, have generally been wary of restocking due to disease risk and a lack of capital.
Under the plan, there will be support for large-scale farms in the form of grants for construction and machinery, policies to secure land, insurance and more. There will also be support for small farms, including linking them up with large farms.
However, most experts believe recovery is still a long way off. Rabobank expects further herd decline in the first half of 2020, but as ‘aggressive’ restocking and investment gathers pace in the second half, pig numbers could end up slightly higher by the end of the year, at best by 8%.
However, given the low inventory of sows and the fact that many gilts are being kept for restocking, allied with the ongoing impact of the disease, it expects pork production to decline by a further 10% to 15% in 2020.