China’s huge losses in its pork production have opened tremendous opportunities for American farmers, a livestock industry expert said Wednesday.
Randy Blach, CEO of CattleFax, spoke to around 120 people during AgriVisions 2020, sponsored by First Dakota National Bank. The annual event was held at the Kelly Inn.
During Wednesday’s program, Blach pointed to the major hit which the Chinese pork farmers have taken on two fronts: swine fever and the coronavirus.
“The Chinese lost half of their hogs, which amounts to 10 percent of the global meat supply,” he said. “They have a massive hog industry over there that’s on the ropes.”
At the same time, the Chinese population consists of around 1.4 billion consumers who are enjoying a higher income, he said. In turn, the Chinese are improving their diet and demanding more protein.
“They’re willing to spend more for high quality protein,” he said. “They’ll buy whatever they can buy from whoever they can buy it from. I see huge growth going into that market.”
The Chinese will need 2-3 years in order to build up their supply of pork and other protein, Blach predicted.
“They are to a spot where the Chinese are out of options,” he said.
And that’s where the American farmer comes into the picture, Blach said.
Currently, the U.S. provides only 6.5 percent of the Chinese imports for protein, he noted. However, he sees potential for the U.S. share of that market to rise dramatically and relatively quickly.
“The Chinese are heavy pork consumers, and I think the Chinese demand will grow 100 million pounds a year during the next 4-5 years,” he said. “I expect the United States will fit very well into that market.”
The American farmer also faces tremendous opportunities in other global markets because of rising demand around the world but falling production among other major world competitors, Blach said.
“We are the No. 1 protein producer in the world, and we have the safest food supply in the world,” he said.
The Chinese appetite for more American pork will help fuel greater demand for the U.S. hog supply by other nations, Blach predicted.
“We (in the United States) export 1 of 4 pigs in the world, and I think we’ll hit 30% export of pork production,” he said.
But pork isn’t the only U.S. livestock in global demand, Blach said.
“Japan is our largest export destination for beef,” he said. “We used to be No. 1, but we haven’t had that ranking since the BSE (“mad cow”) scare of 2000.”
The U.S. holds a reputation for a safe, high-quality food supply, Blach said. The recent trade agreements around the world should increase demand for American agricultural products, he said.
U.S. producers are seeing the increased demand and opened markets at a time when other nations are struggling with their production, Blach said.
Australia has endured massive drought and wildfires, Blach said.
“In Australia, their beef supply is down 15 percent,” he said. “They’re going to spend the next 12-24 months rebuilding their supply.”
The American farmer has become much more efficient in recent years, which has become a necessity in a time of leaner profit margins, Blach said. The U.S. livestock industry has responded well and must continue to ratchet up its production.
“In the short term, we need to harvest 250,000 more cattle than last year,” he said. “We also need to add capacity at our packing plants. We’ve added 10% hog capacity over the last 10 years.”
Corn and soybean prices don’t appear headed for any upwards spikes, but the American farmer has realized greater profitability by using those commodities in raising livestock, Blach said.
“It’s an example of creating value-added agriculture,” he said. “We’re exporting a lot more corn and soybean as red meat and protein, and it’s high quality red meat and protein.”
U.S. agriculture looks to receive other good news that will provide a needed boost, Blach said. He pointed to favorable weather trends that call for pulling out of the wet pattern of the past year.
In addition, he sees much more favorable input costs.
“As far as energy, the United States has emerged as the top global crude oil producer, surpassing both Russia and Saudi Arabia,” he said. “We are the biggest oil producers, and we have become nearly energy independent.
“Because of the softer markets, we’ll save money on the energy side. Nothing scares me. We’re going to be OK on the overall energy situation.”
The remaining challenge for U.S. producers is battling misinformation toward the industry, he said. In that respect, the American farmer practices outstanding production and conservation measures, he said.
“This conversation in sustainability isn’t going away,” he said. “You have a great story to tell. We just have to figure how to tell it.”
Blach pointed to past trends and misinformation that has harmed the U.S. agriculture industry. For example, domestic beef demand was cut in half from 1980-2000 because of consumer health scares and the emphasis on “cutting fat” from diets, he said.
In that case, U.S. farmers didn’t defend themselves or promote enough the health benefits of American beef, he said.
He noted similar criticisms of U.S. livestock as the main source of greenhouse gas.
“Just 4% of the greenhouse gas in the United States comes from cattle production, and the figure is declining,” he said. “We’ve got the data to tell the story.”
Currently, the livestock industry is seeing a new challenge in the rising popularity of animal-based protein in place of hamburger and other meat, Blach said.
“Aren’t you just sick of hearing about ‘fake meat?’” he asked the audience. “If we can’t answer this question, where the consumer is satisfied, that’s going to be at our own risk.”
Blach praised the U.S. farmer and rancher for rising up to the many challenges they face. He foresaw the potential for bright days ahead.
“The American producer has reached tremendous efficiency,” he said. “I look at this, and I see tremendous opportunity.”
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