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With the presence of African swine fever (ASF) just a few kilometers from the French border, the threat to the swine industry is increasingly present. The consequences would be significant due to the potential loss of Asian export markets. The French swine industry's already difficult economic situation could get even worse...
African swine fever continues to spread in Europe. France is deploying measures: health authorities are intensifying controls on wild and domestic populations and establishing protection and surveillance zones. Surveillance of wildlife is being reinforced, a census of pig farmers in border departments is being carried out, as well as a biosecurity assessment of farms.
The disease is once again on France's doorstep with the discovery of cases in Italy and the confirmation of an outbreak in domestic pigs in Germany, less than 7 km from the French border. Exports are at the heart of the economic effects linked to this disease. The presence of the disease would lead to the closure of several importing countries, which would result in a significant change in trade flows and a significant drop in producer prices and prices of different cuts. To prepare for this eventuality, professional organizations, companies in the swine industry, and the French government services have simulated, under real conditions, the implementation of an Emergency Sanitary Intervention Plan (PISU) in the event of possible contamination of a farm located in the Brittany region. One of the objectives of the exercise is to assess the economic impact on the French swine industry.
Germany's experience with the disease served as an object of study to extrapolate the situation and estimate the potential economic impact of ASF on the French industry. Following the discovery of the ASF virus in wild boar in Germany, several countries decided to suspend their imports of German products. Exports to the usual third markets were thus mostly redirected to the European market. The few third countries that accept German products have not been able to compensate for the loss in volume and value. In the case of France, the estimated loss to the export market is estimated at between 157 and 364 million euros. The amount varies depending on whether the virus is discovered in an economic context where the demand for imports from third countries is strong (as in 2020 - scenario 1) or more typical (average of the last 5 years - scenario 2). In France, some thirty trade agreements with companies in Asian markets, including China, would be affected with a loss of sales outlets. Given the customer base of French exporters, the economic impact of ASF would be significant. Redistribution of flows to the European market and other destinations would not compensate for the closure of the main Asian markets. Growth alternatives are limited and less profitable. Currently, a country affected by ASF is not obliged to completely stop its exports if it takes the measures recommended by the World Organization for Animal Health (OIE). However, the latest ASF experiences in Europe have shown that this principle, accepted by all WTO members, is not respected by several countries in the world. Major pork importers such as China, Japan, and South Korea suddenly stopped their purchases from infected countries.
Despite this, France recently signed an agreement on the recognition of regionalization with China, which accounts for two-thirds of French exports to third countries. This agreement should ensure that exports continue from the areas not infected with the virus. The impact assessed as part of the economic simulation exercise would then be minor.
Following the loss of export outlets, the French market would face a significant drop in the prices of pigs and pork cuts. With no exports to the main outlets, the domestic market would experience an imbalance between supply and demand for several months. The European market would not be sufficient to offset third-party markets and absorb volumes. The excess of pork cuts and products would lead to a drop in demand from slaughterhouses, which in turn would lead to a drop in the price of pigs. In France, ASF would lead to a drop in pig prices of around 14%, i.e. an estimated loss of 21 to 23 cents per kilo depending on the economic situation. The reductions in the price of pork cuts would be 27% for bacon, 19% for loins, 17% for hams, and 7% for shoulders.
The current sanitary situation shows that the threat of African swine fever is still present on farms. This confirms the interest of the French pork industry stakeholders to have lent themselves to this simulation exercise. If the impacts estimated by the study are substantial, the regionalization agreement negotiated by the industry should mitigate these economic effects and protect the French market, assuming that the main pork-producing regions are not affected by the virus.
