Wandile Sihlobo: How African swine fever is likely to hit global meat prices

Wandile Sihlobo
Wandile Sihlobo

While the discussion about African swine fever has largely focused on China, the likes of Vietnam are also reeling from its effects. The Vietnamese authorities are now asking farmers to diversify away from pork to other livestock – a difficult task, I imagine, for a nation that is among the world’s top ten highest per capita pork consumers.

But there is progress in this diversification approach. I hear that Vietnamese farmers are now switching to raise ducks, ostrich and chickens instead. This is done the hope of finding a substitute for pork, and still providing affordable meat to consumers.

We are fortunate here in South Africa, as we are still in good shape, although there were a few reports of African swine fever cases last month.

In short, the first reported case was on a farm in North West earlier in April, and it affected specifically wild pigs. The outbreak was detected early, with good response from the government veterinarians.

There was no threat to the South African pork industry nor consumers, as is still the case.

On 24 April 2019, the South African Pork Producers’ Organisation reported another diagnosis on a small farm in the Delmas area of Mpumalanga. The farm had about 180 pigs, mainly fattening pigs and a few sows bought from an auctioneer in the area. The farm was immediately quarantined, and there was no imminent threat to the industry, nor consumers.

The reduced pork supplies in a number of Asian countries, however, has had a notable impact on global meat prices.

Figure 1 below illustrates the FAO Meat Price Index, which has been on an upward trend over the past few months.

wandile pork

Figure 1: Global Meat Price Index. Source: FAO, Agbiz Research

Moreover, given that there seems to be no end in sight to this African swine fever, my view is that global meat prices are likely to remain at fairly high levels in the near-to-medium term.

This is likely to spill over somewhat to the South African meat industry, particularly pork. Conversations I had with South African pork producers at a conference in Pietermaritzburg in May this year echoed this.

While SA has not faced a severe outbreak, therefore, it does not mean there has been zero impact.  

Wandile Sihlobo is a South African agricultural economist. He is on Twitter @WandileSihlobo

ZAR/USD
17.38
(-0.05)
ZAR/GBP
22.72
(-0.10)
ZAR/EUR
20.56
(-0.12)
ZAR/AUD
12.45
(-0.12)
ZAR/JPY
0.16
(-0.19)
Gold
1942.90
(+0.07)
Silver
26.42
(+0.07)
Platinum
941.16
(+0.46)
Brent Crude
44.74
(-0.36)
Palladium
2104.73
(+0.41)
All Share
57077.48
(-0.60)
Top 40
52737.48
(-0.65)
Financial 15
10156.41
(-0.69)
Industrial 25
75107.47
(-0.84)
Resource 10
58926.78
(-0.40)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 1004 votes
It depends on how the funds are used.
74% - 6748 votes
No. We should have gotten the loan elsewhere.
15% - 1417 votes
Vote