Inspiration
Pigs have played an important role in Chinese culture, cuisine, and family for thousands of years. They are a central role in Chinese customs, ceremonies, and festivals. Pigs are one of the 12 Chinese zodiac signs. They symbolize prosperity, fertility, and virility. 1
How will the economic growth of China, it’s huge population, and the pig as a part of its cultural identity, affect hog farming in the United States? Is it a market opportunity or does it possess tremendous challenges?
One of my own personal Chinese experiences was taking my family to visit Hong Kong in 2014. Hong Kong had changed quite a bit in the decade since I last visited the city. Now, it is crowded with mainland Chinese visitors. Hong Kong is a densely populated city of 7 million residents and yet it received 60 million visitors in 2014. 2 A hot Hong Kong political issue is discussion about limiting the number of Chinese visitors to the city. From that visit, I learned that when a small group of the Chinese decide to do something (like visit Hong Kong), it can have a huge unforeseen disruptive effect.
As China’s middle class expands, along with its appetite for pork, I decided to use this challenge to analyze American hog farming in the global economy. The analysis includes the topics of economics, trade, innovation & environment and future economic forecasts.
Data Sources
I started this challenge using the NASS (Quickstats) from the Farm Data Dashboard. I selected the national survey data for all classes of hogs slaughtered. I used this data set measure hog production in the United States.
In order to analyze hog farming in the global economy, I would need data which included other countries. The publically accessible data sets were available from the United Nations Food and Agricultural Organization. I used many data sets from their FAOSTAT archive to analyze global hog farming for production and consumption, global trade, and innovation as it relates to greenhouse gas emissions.
The United States, China, and European Union account for 72% of all global hog production since 1961. I decided to focus on these three hog farming producers for the analysis.
Technology Tools
I used R Studio as my development environment. The R packages include dplyr, tidyr, and sqldf to shape the data, ggvis and shiny to create interactive visualizations, and the stats and forecast packages for the time series analysis. The time series forecast uses the auto ARIMA model. It can handle both both seasonal and nonseasonal ARIMA models and select the best fitting model based on several different time series data modeling scenarios. I used the ORB admin dashboard template to create the web app. The interactive visualizations are hosted on the cloud at shinyapps.io.
Interesting Data Insights
The web app features eight interactive visualizations in four categories: economic, trade, innovation, and forecasts. You can explore the plots by turning them on or off to compare the United States, China, and European Union. The examples in this section highlight some of the possibilities you can do with the app.
Innovation & Environment
Innovation in agriculture has historically been measured by production inputs and outputs such as producing higher yields with fewer resources. However, innovation can have many different perceptions. In this challenge, I asked “Is the global hog industry thinking about the future and doing something about it?”
Greenhouse gas emissions from agriculture production are a global concern. According the United Nations Food and Agricultural Organization, hog farming manure management represented 28% of emissions for livestock from 1990-2012.
Emissions by animal type (average 1990 - 2012)
If the United States, European Union, and China are taking actions to reduce their greenhouse gas emissions associated with hog farming, then they are innovating in their industry and looking forward to the future.
The European Union has a focused effort on reducing its CO2 equivalent emissions related to hog farming since 2007 while the United States appears to be satisfied maintaining the status quo.
2028 Production Forecast
The United States has been successful to increase its production for export despite flat domestic consumption. Will it be able to continue this trend in the future?
This graph forecasts hog production to 2028. It demonstrates the huge scale of Chinese production and its growth trajectory relative to the European Union and the United States. By 2023, it is possible that China’s production could reach one billion head.
Analysis
American hog farming has many challenges it faces in the next 20 years. It is a distant third behind China and the European Union in terms of production. Although It has been able to increase its exports, it still trails the European Union substantially in export volume.
The American hog farming industry has done little to reduce its greenhouse gas emissions, while the European Union has made a focused effort and is at least five years ahead on innovation in this area. The European Union stands likely to be in a position to export their technology to America and China should the governments from both countries start to impose stricter environmental regulations on their hog industries.
China is the real juggernaut in this sector. It’s domestic consumption continues to rise at an ever increasing rate with production increasing along the same rate. In 2012, China’s consumption surpassed 200 kg/capita, while the United States has remained flat for the past 25 years around 29 kg/capita.
Should consumption start to plateau in China, the global hog industry must brace for an export tsunami from China. The European Union may be able to withstand the shock with its established brands … think German Brätwurst, Parma Ham, Spanish Jamón. However, American hog farming could be a casualty. It lacks established high value branded products, has a decades long flat domestic market, and has made miniscule efforts towards innovation.
The time is now for the American hog farming industry to focus on innovation and branding while the middle class is still expanding in China. It’s survival is at stake.
References
- Empire Of The Pig. The Economist. December 20 2014. http://www.economist.com/news/christmas-specials/21636507-chinas-insatiable-appetite-pork-symbol-countrys-rise-it-also
- Tourism Commission. The Government of the Hong Kong Special Administrative Region. http://www.tourism.gov.hk/english/statistics/statistics_perform.html
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