Beef prices of CNY62/kg (US$10.24/kg) are being charged in meat wholesale markets in Beijing, according to data collected by the agricultural ministry – that’s a significant climb on CNY33/kg ($5.45/kg) in 2008.
But processors in Shandong cannot get enough cattle to cash in on demand. Capacity utilisation is running as low as 30% at Jin Rui Meat Co in Shandong province. “We can’t get the cattle,” said buying manager Dai Xiaopeng.
Small herds
In the nearby beef farming area of Gaoqing County, farmers keep the local yellow (huang niu) cattle breed, as well as a local variety of Black Angus. Farmers pointed to new interest in cattle-breeding, but a shortage of land and capital means herds are small.
One farmer, Huang Xiaojun in Tongcun, explained the profitability: “We’re buying young cattle at 200kg weight for up to CNY5,000 ($826) and then we’re selling them after 10 months at 500kg for maybe RMB5,000 profit. That’s if all goes well, but we are finding it increasingly difficult to get calves and feed is getting more expensive.”
A local government official charged with overseeing animal herds in the region, Sun Xueming, vice-head of the animal husbandry department of Gaoming County, says his department is keen to increase the scale and professionalism of local beef farms. “Beef farming is attractive, but there’s a lot of trouble getting farmers to invest in calves, given current prices. Also, farmers are worried about the longer time taken to finish cattle compared to pigs.”
China’s national 2011 beef figures were up 94% on the 2006 data with 11.4m head slaughtered on farms with 50 head or more. Yet the proportion produced on so-called ‘backyard’ or small-scale holdings is high, at 57%.
Processing profits
Meanwhile, meat processor Jinrui is averaging profits of 15% per year, according to Xiaopeng. But it plans to double its herd (the company feeds cattle in feed lots near the slaughtering facility) and process 20,000 animals a year. There are many smallholders seeking to expand, but access to feed, land and capital are issues, he adds. “There is severe competition from low-cost frozen beef imports. But local beef has a clear advantage in the market for fresh or chilled meat. More stringent food safety standards will favour companies with scale.”
China plans to increase beef output volume by 2.5% a year until 2015 – that means adding 660,000 tons to reach 7.7m tons in 2015, according to the ‘Beef and Development Plan 2013-2020’, set by the National Reform & Development Council (NDRC), a national government policy body. To get there, it plans to increase the percentage of farms with 50-plus head of cattle from 24% to 33%. The NDRC forecasts per capita beef consumption rising by 0.32kg to 5.19kg per year between 2011 and 2015, largely due to increasing average incomes.