Chinese beef prices soar as local cattle herds shrink
A supply shortage has meant wholesale beef prices have been pushed to the “critical juncture” of CNY60/kg in the second half of 2013, according to a report entitled ‘China Livestock Research and Investment 2013-2017’ produced by the Beijing-based China Suppliers Institute (CIS) – www.hyzsyjy.com - a China business consultancy.
China’s cattle herd has fallen from 89m to 65m in the period from 2008 to 2012, according to the report, which blames rising prices on dramatic shifts in the Chinese countryside as peasants abandon oxen and other cattle once kept for beef as well as work purposes. “This means the number of cattle being bred has decreased,” said the report.
The report also blames the exodus of rural labour to the cities and government subsidy programmes, which have encouraged the roll-out of larger pig farms and dairy production. Data on key beef-producing regions show sharp reductions in herd numbers, with Hebei province cattle numbers sliding from 10m in 2012 to 2.5m in 2013. Meanwhile, figures for Shandong province have halved, from 10m to 5m, between 2000 and 2013.
In a recent interview with the financially-focused China Securities Journal, head of animal husbandry in Shandong provincial government Zhai Guiyu, covering a region between Beijing and Shanghai, blamed a sharp focus on dairy production in the province in recent years for the decline in beef output.
He noted that research efforts and funding of local agriculture had switched to dairy, but added that his government was considering a raft of new subsidies to support the beef sector. “A lot of villages abandoned cattle once they no longer needed them for work… there has also been a switch to pigs as these are more efficient to breed, especially since farmers now often spend a part of the year in the cities working,” he said.
Cattle shortage
China’s imports of fresh and frozen beef climbed an astonishing 1,379% and 978% respectively in the first half of 2013, claims the CIS report. A shortage of cattle means there are up to eight years of price climbs left, it predicts. This should be good news for exporters: the US Meat Export Federation ranks Australia first among China’s beef exporters this year, selling 92,680 metric tonnes to China in the first eight months, followed by Uruguay with 52,866 metric tonnes.
They are among the handful of countries allowed to export beef to Chinese markets. Smuggling, however, accounts for between 40% and 50% of supplies, according to local Chinese language media reports.While those figures are debatable, China National News CNR radio reported recently that large amounts of Brazilian and Indian, as well as US, meat are entering China overland through Hong Kong as well as Vietnam. Wholesale prices are considerably lower in Hong Kong – which formally allows imports of US and Brazilian beef – at CNY40/kg. It is barred from mainland China on BSE grounds.
Meanwhile, soaring prices for meats such as beef and mutton, relative to pork, are prompting one of China’s poorer provinces to encourage farmers to breed steers and sheep. In central China’s Shaanxi province, agricultural officials say they have earmarked CNY50m in 2013 and CNY100m to be spent next year on expanding local beef and sheep herds. However, the officials have not explained how they will have the land, feed supply and breeding know-how required to meet an ambitious target of producing 1.8 million tonnes of beef and 12 million tonnes of mutton by 2017.
