BEIJING (Reuters) - COFCO Meat Holdings Ltd has imported pork from Chile, the European Union and alternative countries, the Chinese pig farming company said on Wednesday, as Beijing’s hefty tariffs on U.S. pork upends traditional trade routes.
The subsidiary of China’s state-owned grains-to-property conglomerate COFCO said its trading division had diversified origins for its pork imports and developed customers from other countries to cope with the impact of the deepening trade war between the world’s top two economies.
The cost of imported pork from the United States has significantly increased after Beijing imposed two sets of import duties on U.S. pork in recent months in response to similar taxes by Washington.
Beijing also slapped 25 percent tariffs on U.S. soybean imports, driving up prices of key animal feed ingredient soymeal, further increasing costs for Chinese pig farmers already struggled with falling hog prices.
Every 100 yuan (£11.3) per tonne rise in soymeal prices leads to an increase in production costs of 0.05 yuan per tonne, said COFCO Meat Chairman Jiang Guojin at the company’s first-half results briefing.
The company reported a sharp drop in first-half profit, the latest Chinese pig farmer to post weak results, hurt by the decline in hog prices.
Chinese pig prices reached a multi-year low in May, but staged a short-lived recovery in July and early August before resuming the drop over recent weeks, as the country reported first outbreaks of deadly African swine fever cases.
COFCO Meat will continue to expand its hog production in northern China in the second half of the year, according to the company statement.
China’s largest pig farming companies and new entrants are racing to build vast, modern hog farms in the north-eastern cornbelt, as Beijing aims to turn its northeastern grain basket into a meat and dairy hub to boost demand for the region’s main crops, and fight farm pollution in populated areas further south.
COFCO Meat will also start building a factory with an annual slaughtering capacity of 1 million heads in the second half of 2018, in Huanggang, central Hubei province, to meet the needs in the central China market, the company said in the statement.
It already has a factory in the province with a capacity of 500,000 heads.
Reporting by Hallie Gu and Josephine Mason; Editing by Amrutha Gayathri