China’s state-owned agriculture conglomerate COFCO said on Wednesday it had agreed to buy $100 million of pork from European pork producer Danish Crown in 2020 to help ease a domestic pork shortage following a widespread pig disease.
The two companies signed a preliminary purchase agreement on the sidelines of the China International Import Expo in Shanghai.
COFCO said in a statement the deal would help it to diversify the origins of its imports and product variety, and make purchases more sustainable.
Lars Albertsen, sales director at Danish Crown, said no volumes had been agreed yet, but he said the sale was “one of the biggest deals we’ve done out here in a long, long time”.
He said it could be expanded, given the huge needs from China.
“There’s a shortage of pork so the likelihood is that it will become more,” he told Reuters.
Europe’s top pork exporter, Danish Crown has done several deals with COFCO this year, turning it into a preferred supplier, said Albertsen.
China’s huge hog herd has shrunk by 40% since African swine fever reached the country in August 2018, killing millions of pigs and pushing pork prices to record levels.
The pork shortfall in the world’s top producer is having global repercussions, driving up demand for imports of all meat and pushing Danish pork prices to their highest since 1997.
Albertsen said demand was also increasing in Southeast Asia, where the disease is also spreading rapidly and production in Europe is also declining after outbreaks in Eastern Europe.
“It’s a nice cocktail of support for prices,” he said, referring to the boost to prices for exporters after years of low prices.
China said on Wednesday that it had reopened the market to pork and beef imports from Canada, a move likely fuelled by the need for more pork supplies.