African swine fever supports demand for Australian beef exports
The spread of African swine fever in China could halve its pig population, pushing up pork prices and causing consumers to substitute pork with other protein sources, potentially driving demand for Australian beef.
African swine fever is a highly infectious disease that only affects pigs but has spread to every province in China. This will have sweeping effects on
the world market for pork as China accounts for 50% of both the world pig population and world pork consumption. Official government statistics show
a 26% decline in the number of pigs over the year to June 2019 and industry reports suggest a 50% fall by the end of 2019.
In the year to September 2019, Australian beef exports to China grew by 73% year–on–year (Chart). Cheaper frozen beef accounts for much of the increase because it is a more affordable substitute for pork compared to fresh beef or lamb.
Exports to China look set to grow further in 2019 and 2020 with China expected to become Australia's second-largest market for beef (after Japan) according to the Australian Bureau of Agricultural and Resource Economics and Sciences. If, as seems possible, the African swine fever situation worsens, there is a risk that China could grant market access to low-cost producers, such as India, to control meat prices. Then competition for Australian exporters would offset to some extent the boost from rising Chinese demand.
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