December 26, 2013

 

China's beef imports to double, cattle herds to grow

 

 

The world's biggest meat consumer may double beef imports by 2018, as Chinese consumers can afford to buy more products deemed to be safer and healthier, according to Rabobank International.

 

Shipments from overseas may exceed 500,000 tonnes as domestic output fails to meet demand, said Beijing-based analyst Pan Chenjun.

 

China's imports of fresh and frozen beef climbed 1,379% and 978% respectively in the first half of 2013, claims the a report 'China Livestock Research and Investment 2013-2017' produced by Beijing-based China Suppliers Institute (CIS), a China business consultancy.

 

The US Meat Export Federation ranks Australia first among China's beef exporters this year, selling 92,680 tonnes to China in the first eight months, followed by Uruguay with 52,866 tonnes.

 

China said last week that it is seeking an agreement to resume US beef shipments by July 2014 after they were banned in 2003 due to a mad cow disease scare. It is also studying to lift a ban on Brazilian meat, Agriculture Minister Antonio Andrade said on November 8.

 

"China has a structural beef shortage" after losses in 2006 prompted farmers to slaughter herds, Pan said yesterday. Rising grain prices and the long growth cycle for cattle have prevented a quick rebound in output, she said.

 

A shortage of cattle means there are up to eight years of price climbs left, as predicted in the CIS report. A supply shortage also meant wholesale beef prices have been pushed to the "critical juncture" of CNY60/kg (US$9.88/kg) in the second half of 2013, according to the report by CIS.

 

China's cattle herd has fallen from 89 million to 65 million 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.

 

The CIS 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 10 million in 2012 to 2.5 million in 2013. Meanwhile, figures for Shandong province have halved, from 10 million to 5 million, between 2000 and 2013.

 

Head of animal husbandry in Shandong provincial government Zhai Guiyu, covering a region between Beijing and Shanghai, said in a recent interview with the financially-focused China Securities Journal that his government was considering a raft of new subsidies to support the beef sector.

 

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 CNY50 million (US$8.23 million) in 2013 and CNY100 million (US$16.47 million) to be spent next year on expanding local beef and sheep herds, with an ambitious target of producing 1.8 million tonnes of beef and 12 million tonnes of mutton by 2017.