One pandemic that has been overlooked in the last few months, for understandable reasons, is the African Swine Fever outbreak which has caused the untimely, and unproductive end of 100 million pigs since August 2018, either by dying from the disease, or being culled and disposed of to avoid it spreading further. 100 million pigs. That’s a lot of souvlaki. Facts on the ground are hard to confirm, but the pig farming industry in China has been devastated by this outbreak, and although there were some reports of farmers not reporting outbreaks of the disease early enough in order to sell the healthy pigs at market, and others that health restrictions on imports were made for political reasons to deter attention away from their own problems, 100 million dead pigs, and dead for the wrong reasons is a crisis of meta-biblical proportions.

 

The African Swine Fever Virus is not as photogenic as our own beloved coronavirus, and is also, thankfully, not harmful to humans, but incredibly infectious and resilient. According to the National Pig Association in the UK the virus can be spread by ticks, direct or indirect contact with infected pigs, faeces or body fluids, and may survive 11 days in pig faeces, and months or years in pork products. Sadly it is not unheard of for pigs to eat pork products, as if we hadn’t learnt anything from the days of mad cow disease, and the continuing practice of factory farming means that faeces and other waste products are probably circulating in less than hygienic facilities. The phrase ‘happy as a pig in shit’ does not bear too much close examination in the world of industrial agriculture.

 

Let me say that I like pigs, and I like pork. I am fond of saying that if a dish of food I have prepared needs a little something extra, it probably needs some Vitamin P (Pork). The smell of frying bacon is enough to lead the most committed vegetarian astray. The pig also has an honourable history as one of the most versatile domestic animals: nothing is ever wasted. The family pig was one, slaughtered around the beginning of winter, that would feed the family in the many months head. It could be preserved – ham, bacon, gammon – with salt, or smoke, or both, or in it’s fat, or in sausages, salami, puddings and pies, with many of the awkward parts further preserved in jars, as rillettes, pâtes, pickles. Even the trotters, and the skin, were used the former as a delicacy, the latter as a snack. When I was working in pubs as a young man in the English midlands, men in white coats and baskets would go from pub to pub selling little paper bags of salted pork scratchings, which sound disgusting but are delightful around the second or third pint of bitter.

 

France knows this – the charcuterie is a wonderful emporium – and Germany knows this too, as does any European country with a peasant population in the past, which means all of them. Every country has their own traditions in preparing pork, and every region has their version. I could start to list all of them, but this would only have the effect of leaving the blog unfinished as I research more and more, and then dream of cooking, and eating, and once again never get around to what I wanted to really say.

 

The pig, therefore, is a wonderful resource, productive, and an easy seller. Apart from being a valued source of protein and fat for the peasant economy, it is also valuable for the same reason for urban populations. It is no wonder that China, the world’s biggest consumer of pork, can move global markets when the supply of pork becomes problematic.

 

Pigs have also played an important role in helping economists to understand how market cycles occur and why. Samuel Benner, a successful farmer, was wiped out financially by the 1873 panic and a hog cholera epidemic. In retirement, with time on his hands, he set about to establish the causes and timing of fluctuations in the economy. In 1875, he published business and commodity price forecasts for the period 1876 to 1904. In his book, charts were produced giving:

  • an 11 year cycle in corn and pig prices with peaks alternating every 5 and 6 years
  • cotton prices which moved in a cycle with peaks every 11 years
  • a 27 year cycle in pig iron prices with lows every 11, 9, 7 years and peaks in the order 8, 9, 10 years

 

It’s a strange jump: from pigs to pig iron, but he is sometimes called the father of the Efficient Market Hypothesis, for his attempts to work out how things work, and why things don’t.

 

Benner was not a pig farmer, but a corn farmer. But as demand for corn was derived from the demand for pigs, the two were intertwined. In order to understand how much corn to plant, you had to understand how many hogs were going to be reared. How many pigs were going to be reared depended on the predictions of the demand for pork in twelve months’ time. As pigs take around six months to reach market weight, naturally, and corn takes around three months to grow from planting (but can only be planted in season), the timings lead to a delay effect in over and undersupply of corn and pigs, and therefore of their prices. It was this insight that led to a further understanding of business cycles.

 

Typically, people that want to know about cycles are more interested in the timings of them – their predictability – than understanding the dynamics and the causes. But I find that there are many insights to be gained from this that can be transferred both to the freight market and the ship sale and purchase market.

 

China bought a record 11.3 million tonnes of corn last year, more than a third from the US. In January China bought another 2.1 million tonnes from the US alone. Prices of corn are now above US$ 5 a bushel, at eight-year highs. These purchases of corn come from – you guessed it – the replenishing of the pig population after the African Swine fever crisis. These purchases are more important as China plants less corn than in the past, due to the end of domestic stockpiling which was seen as being inefficient, and led to hoarding by farmers unwilling to take the official prices. In any case the 2020 harvest was severely affected by typhoons in one part of China – remember the flooding? – and droughts in others. Some analysts believe that the harvest could be 25% less than officially stated. Demand rises due to a larger number of pigs, supply falls due to state inefficiency and bad weather. The pig crisis did not happen yesterday, but unfolded over two years; the same could be said of the factors affecting corn supply. And these events create waves, waves create cycles.

 

In shipping too, these will affect our own cycles. Corn isn’t the only food that pigs, eat, and corn isn’t the only cargo that dry bulk vessels carry. Soy beans, iron ore, coal, steel products and so on, compete for a finite number of ships, and in order to get the ships when and where they want, they will have to pay more. The ships that carry corn are smaller in comparison with those – generally speaking – than those that carry iron ore and coal – but with Australian coal looking for other markets, and coal imports into China coming from different places in smaller ships, the demand for the smaller ships increases. Owners with existing ships are rubbing their hands in expectation, those without them are searching the market, and finding the prices rising.

 

But of course, the ships that exist now, and the lack of ships ordered in the last few years mean that there is no chance of the fleet being replenished enough to satisfy all demand at todays freight rates. New orders – which owners are reluctant to sign due to impending, and largely unknown, environmental regulations – points to a boom in freight rates and ship prices. Are pigs the driver of this? No of course not. Are pigs adding a delightful flavour to today’s freight markets? Yes, I think they are, however small the cargoes that feed them are in comparison with others.

 

 

My thought – my hope – is that if something as overlooked as the African Swine Fever pandemic will drive the freight markets for the next few months, as the fundamentals of the pork market readjust, imagine what will happen when the effects of the coronavirus pandemic begin to ease, and human consumption markets readjust. We could just see an upsurge in pent up demand that will lead a further improvement in all shipping markets, tankers included. I still have in the back of my mind what happened at the end of avian bird flu epidemic in 2005, although admittedly there were other factors at play. So on that happy note, I will leave you now, pack up and go home, and order a Friday night souvlaki takeaway, one of the few unexpected pleasures of an increased lockdown here in Athens. After writing so much about pigs late on a Friday, there could be no other outcome. I will also be doing my bit, however small, to bring the freight market boom that little bit sooner to some very hungry shipowners, who have, financially speaking at least, not been properly fed for a very long period of time.

 

Simon Ward