WINNIPEG, Manitoba (Reuters) - China’s decision to block imports of Canadian meat has set off a global chain reaction in pork trading but it will do little to curb overall demand as a disease ravaging the Chinese hog herd elevates prices, industry experts say.
China said on Tuesday it wants the Canadian government to temporarily stop allowing meat shipments to China after bogus pork export certificates were discovered.
The move disrupts a lucrative pork trade for Canada, the world’s third-biggest shipper, and comes as China turns to meat imports after African swine fever killed millions of its pigs.
Canada and China are also embroiled in a dispute after the chief financial officer of Huawei Technologies Co was detained in Vancouver on a U.S. arrest warrant.
“It’s a big loss, a huge market,” said Martin Lavoie, CEO of Canada Pork International, an export marketing group. “You have alternative markets but (replacing) the volume of China, that’s the challenge.”
China bought C$310 million ($236.32 million) worth of Canadian pork from January through April, making it Canada’s third-largest market by value. It is Canada’s largest pork market by volume.
Canadian pork exporters are likely to find other buyers, such as Mexico, the United States and the Philippines, but may have to accept lower prices, Lavoie said. Canadian pork processors include Olymel, HyLife and Maple Leaf Foods.
Buyers for specialty products such as pig feet may be hard to find, Lavoie said.
In the short term, more European pork is likely to flow into China, he said. The European Union is the world’s biggest pork exporter, according to the U.S. Department of Agriculture.
The United States, the second-biggest global pork exporter, is unlikely to benefit, since it is subject to a 62% Chinese tariff, said Brett Stuart, president of U.S. advisory group Global AgriTrends.
Canadian pork that would normally ship to China could instead end up in the United States or competing with U.S. pork in Japan or South Korea, he said, but added the disruptions are unlikely to affect the direction of world prices.
“Global pork prices are moving sharply higher because of this surge in demand from China. It’s just beginning,” Stuart said.
In Canada, though, farmers fear that the prices they receive may dip. Industry officials are concerned China’s action may cost the sector C$10 million per week, said Manitoba hog farmer Rick Bergmann, chair of the Canadian Pork Council group.
China’s move also applies to beef, but Canadian sales to China amounted to less than 3% of Canada’s beef exports last year.
An investigation by Beijing into Canada’s export certificates revealed as many as 188 “counterfeit” veterinary health documents and the existence of “obvious safety loopholes,” according to the Chinese Embassy in Canada.
Ottawa has called in the Royal Canadian Mounted Police to investigate, but the Canadian government is not convinced the fraudulent meat shipments come from Canada.
Reporting by Rod Nickel in Winnipeg, Manitoba; additional reporting by Tom Polansek in Chicago; Editing by James Dalgleish