ASF set to spread to other countries, 50% of pigs in China wiped out: Rabobank

African swine fever (ASF) has already wiped out half of China's pig population and will spread to new countries in 2020 because current biosecurity measures will fail to contain the disease, Dutch lender Rabobank said in a report on Wednesday.

Rabobank initially expected that half the Chinese pig population would be culled by the end of this year, while official Chinese figures have estimated that over 40% has been wiped out so far.

“ASF has already resulted in the loss of more than half of China’s hog herd in 2019. We expect ASF to spread to new countries in 2020, as we do not believe current measures will effectively contain the disease,” the bank said in its Global Animal Protein Outlook 2020.

The disease will continue to spread in China in 2020, and Rabobank expects pork production to decline between 10% to 15% in 2020 from 2019, given the low inventory of sows and the ongoing impact of the disease.

“Biosecurity will remain the key focus to prevent ASF from spreading further, but biosecurity measures have not, to date, proven to be effective in all areas,” Rabobank said.

The impact on feed demand in China will continue to be felt next year as demand will be slightly higher than this year – but well below 2018 levels.

Hog inventories in the world’s largest pig-breeding nation are expected to recover during the second half of next year, as larger companies make a wave of investment in response to pork prices more than doubling in the current quarter compared with Q2 2018.

“Driven by soaring hog prices and favourable policies, we expect investments in restocking and new farms to surge from 2020 onwards,” the bank said.

However, the new investment will be undertaken cautiously, with the consequence that smaller producers are swallowed up by larger pig producers in China. 

Following ASF outbreaks in Vietnam and the Philippines this year, pork production in South-East Asia is set to fall 5% in 2020 after shrinking 9% in the current year, the bank said.

There is further downside risk to those estimates, the report added. 

“Restocking efforts in Vietnam will remain slow due to recontagion risks, the existing debt burden of affected household farms, and limited production capacity of large biosecure farms,” Rabobank said.

It added that it expects ASF to spread to Laos, Cambodia, and Myanmar via various routes “given proximity to known outbreaks and probable unreported cases”.