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China's African swine fever epidemic drives down American milk prices

By Jessie Higgins
China's African swine fever epidemic drives down American milk prices
The price of American milk, like that produced by these Holstein dairy cows, is dropping in part because China is importing fewer milk products to feed its rapidly shrinking hog population. Photo by Scott Bauer/U.S. Agricultural Research Service

EVANSVILLE, Ind., June 14 (UPI) -- African swine fever's annihilation of China's hog population is driving down the global prices of the various products used to make hog feed -- including milk.

And America's dairy farmers are feeling the pain.

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Before the outbreak, the United States was China's main supplier of a milk byproduct called whey. Whey is a substance that is left over after milk is made into cheese. It is made mainly of lactose (or sugar), protein, vitamins and minerals. The pork industry uses it to make feed more protein-rich.

"Whey prices have significantly fallen, which has a direct impact on farmer milk prices," said William Loux, a global trade analyst with the U.S. Dairy Export Council. "The reason African swine fever is so important for whey markets is China was by far the largest importer of whey in the world."

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China held more than half of the world's 780 million pigs before the outbreak, but experts say that number is dropping fast. The food and agribusiness bank and research firm Rabobank estimates that some 200 million of China's pigs have been infected with the disease, which is deadly to the animals but does not infect humans.

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Experts predict China will have lost between 25 and 35 percent of its herd in the next two years, Loux said.

China already was importing less whey from the United States before African swine fever began killing its herd. In June 2018, China placed a high retaliatory tariff on the dairy product -- including whey -- in response to similar tariffs levied against Chinese goods.

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U.S. whey exports to China dropped by 43 percent under the tariff, according to the U.S. Dairy Export Council. Since African swine fever hit, they've fallen 61 percent.

"Now, with African swine fever on top of the tariff, not only has the U.S. market share shrunk, but the entire market has shrunk," Loux said.

This is the latest blow to the already suffering dairy industry.

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Various economic factors -- including overproduction -- have kept milk prices historically low over the last four years. Dairy farms across the country are going out of business in record numbers.

"We're really struggling," said Jim Burdette, the owner of a small, family-owned dairy in Pennsylvania. "We've used up most of our savings. In the dairy industry, you're used to ups and downs. But three years, now going on four, is just too long. It's too long."

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Dairy isn't the only agricultural industry impacted by the combination of trade tensions and the viral outbreak. Soybean growers are in similar straits.

RELATED Animal feed could carry African swine fever into U.S., researchers say

Before last year, the United States exported about 30 percent of its soy to China for hog feed. Those exports all but stopped after China placed a high retaliatory tariff on the oilseed, and now industry experts worry that African swine fever will eliminate the demand for soy even after the tariffs are removed.

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