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Massive Losses in China Could Mean Big Rewards in U.S.

Christine McCracken at Rabobank spells out the upside and downside for pork producers.

Few people are as knowledgeable about the meat industry as Christine McCracken, executive director, animal protein, at Rabobank. I sat down with her at the company’s U.S. headquarters on Park Avenue in New York City to talk risks and rewards in the pig business right now.

SF: What’s top of mind today?

CM: African Swine Fever [ASF] in China. We’re so heavily dependent now on exports. About 26% of our pork is exported. It all comes down to China. Given the lack of biosecurity, the number of pigs in the country, and the fact that half are backyard pigs, there’s almost no way they can get ASF under control. So they’re likely to have massive losses, and the question is how do they backfill those losses? We are focused on how quickly they can ramp up production. How are they going to feed their people? Because if they don’t feed their people, they’ve got a massive political issue. Food insecurity is not a good recipe for future political aspirations.

SF: Are we getting good data on what’​s happening there?

CM: No. A lot of contacts have gone dark because there’s a press ban right now in China. There are people who have had contacts in China for years and they haven’t heard from them for a month. It’s kind of scary.

SF: What can we assume about the spread of the virus?

CM: It is all over China. They don’t have a great track record with controlling viruses. They are trying to trace contaminated blood meal from infected pigs, but it was distributed all over before this got full-blown.

The question isn’t whether or not ASF is there, it’s magnitude and speed. How quickly are the losses going to add up? We’re watching the pork supply leading up to the Chinese New Year. They’ll need a big supply for the holiday. After they move through all that inventory, how do they replenish it?

They’ve lifted the travel restrictions to get pigs to plants in some areas. They’re trying to get pigs killed because they’re backing up on the farms and can’t get to the packing plants. There’s no human health impact, so they are going to feed their people with the pork they can get from ASF-infected animals.

SF: Has China given up eradicating ASF?

CM: I think so. Why else would they lift the restrictions? It would be nearly impossible for them to have it under control at this point.

SF: Where will it spread next?

CM: All over Asia. Vietnam will probably be next, and that’s a top-10 producer.

SF: What does this mean for the U.S. pork industry? Some people say it could be a good thing.

CM: It could be good…until we get it. Risk and reward. The reward is fantastic, and that’s tangible and probable. Right now, the anticipation is pushing the market. We’re dealing with a lot of pork. If ASF wasn’t out there, it would be a far different picture today. We were looking at massive losses and some probable liquidation and bankruptcies in the industry through this fall and winter, and that looks a lot different today than it did in August. We were looking down the barrel of a disaster.

SF: Will we get the virus here?

CM: If we do, we will likely be one of the last to get it. I don’t think it will enter a commercial herd. It will come in with an infected wild boar, uncured meat, or feedstuffs.

SF: What happens if we get it?

CM: There will be an immediate trade ban for at least 72 hours on everything moving from the country. After that, the government will designate a containment area in a buffer zone, similar to what they’ve done in Europe, and that region is not allowed to trade. My view is, we’d likely be the last global region to get ASF. At that point, most trading partners are not going to have any other sources without ASF.

SF: What is another issue in agriculture you are following?

CM: Labor. There are seven new broiler plants coming online in the next 18 months, and each one needs hundreds of workers or more. So, that’s at least 5,000 new poultry plant workers. Where are they all coming from?

We are looking for labor solutions as an industry aside from automation, which everybody is doing to the extent possible. There’s no easy solution. Raising wages didn’t do it. Companies are putting in free health care programs for families, gyms, cafeterias, better parking, childcare programs, and more.

This is a global problem. Mexico is having similar issues. Even Cambodia has a worker shortage for their poultry plants. That’s not good.

We need to encourage kids to look at trades and rethink the educational skills people need. We’re running out of plumbers, electricians, and truck drivers. People in the older generation who had those skills are retiring and we have this void across many industries.

SF: More pork producers have entered the packing industry, such as Pipestone System (as WholeStone Farms) buying the Hormel plant in Fremont, Nebraska.

CM: Producers always want to own a packing plant because they feel like they’re losing out on huge margins. That’s great if you want to diversify and get involved in another part of the food system. The problem is, those plants don’t run themselves. They require a lot of investment in upgrades.

I’m really happy for Pipestone that they’ve fulfilled their dream of owning a plant. Now, the work starts. It is not clear if that plant will be as easy to fix as they expect. They have really smart people and they will figure it out, but it will take a lot of time and a lot of money. Labor will probably be an issue for this plant, too. Today they say they have enough labor. That’s great until the Costco broiler plant opens next door.

SF: What are some issues for agriculture down the road?

CM: I’ve been giving a lot of speeches lately on the development of alternative protein and what that means for traditional agriculture. There are people creating new products in that space that are very impassioned, well-funded, and confident that animal agriculture is ruining the environment. How this sector develops alongside traditional animal protein will matter.

Another big issue is succession. At least half of pork producers don’t do enough succession planning. There are a few that have done a nice job, like Schwartz Farms and Holden Farms in Minnesota. Otherwise, I think you’ll probably see more Pipestone-type management of farms.

On a positive note, I see more young people coming to ag meetings lately. I think they like farming. My son isn’t growing up on a farm, but he wants to go into agriculture. He’s really focused on gene editing. He says, “People will always have to have food.”

SF: Tell me about Rabobank.

CM: We work with all types of companies up and down the food chain here in the U.S. and around the world. In pork, we work with most of the packers and many of the large producers. Rabo AgriFinance, a U.S. subsidiary that provides financing directly to growers, has made it a priority to serve more in the pork industry.

SF: What’s one last prediction?

CM: A recession is around the corner. This could mean big change for the entire agricultural complex – pork included.


  • Name: Christine McCracken
  • Title: Executive director, animal protein, Rabobank
  • Hometown: Springfield, Minnesota
  • Education: Bachelor of science, University of Georgia, agricultural economics and international agricultural business. Masters, University of California-Davis, agricultural economics
  • Career: Spent 20 years on Wall Street following the food and agriculture stocks. Founded and merged several companies. Came to Rabobank in 2017 as a protein industry analyst.
  • Rabobank: Global leader in food and agriculture financing, headquartered in the Netherlands.
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