Russia’s leading meat producer on Thursday said it is ready to fill the “food gap” in China created by retaliatory tariffs against American products and a devastating outbreak of swine flu.
CEO Sergey Mikhailov of Russia’s Cherkizovo Group told the South China Morning Post on Thursday that his company “began shipping poultry products to China last month and is now looking forward to selling pork and soybeans there.”
“We estimate the potential for Russian poultry exports to China may be around 200,000 tonnes a year, and Cherkizovo alone is targeting to reach 40,000 tonnes of poultry products to China next year,” Mikhailov said.
China slapped retaliatory tariffs on U.S. pork and chicken in May and has suspended imports of American soybeans. The soybean blockade has been one of the most effective counter-punches China has thrown in the trade war, pushing sentiment in the U.S. agricultural industry to gloomy three-year lows.
While China is both the largest producer and consumer of pork in the world, domestic production of pork has been ravaged by an outbreak of African swine flu. Production is down by an estimated 20 to 30 percent this year because of the swine flu, with no end to the epidemic in sight.
In fact, Bloomberg News noted on Wednesday that it might be effectively impossible for China to eradicate the flu and restore full production as the virus is poorly understood, extremely difficult to control, and likely to spread back into China from surrounding countries that are even less capable of eradicating it.
Much of China’s pork production comes from small farms with a tendency to bypass expensive procedures intended to eliminate the disease, while local governments have either failed to pay compensation promised by Beijing or actively punished farmers who report having sick pigs.
China’s agricultural trade with Russia increased by 30 percent last year. Presidents Xi Jinping and Vladimir Putin committed to “expand trade of good quality agricultural products and food” in a joint statement on Wednesday, with a particular interest in restructuring China’s soybean supply chain.
Mikhailov acknowledged that Russia’s pork and soybean industries are too small to meet China’s needs at present, but said both could be significantly ramped up over the next few years.
“For the pork industry, you must have a long-term mission and long-term commitment from both sides. I think Russia could play some role in helping China to close the gap in its shortage of pork production,” he said.
Russian Agriculture Minister Dmitry Patrushev said on Friday that Russia plans to double its global food exports over the next five years, with China among its biggest customers.
The Russians offered to sell a large amount of arable land to Chinese farmers last summer, but observers expressed skepticism about the quality of the land on offer, infrastructure in the area, and the willingness of Russian residents to let Chinese farmers take over. Chinese agriculture officials have announced plans to significantly increase domestic soybean production.