According to the Global Agricultural Information network (GAIN) report, the Chinese government’s subsidy to support beef cow production will definitely help beef cow stocks and calf crop production in coming years.
Middle class making up for the lower class
The report pointed out that total beef consumption in China is expected to shift upwards in response to steady imports and slightly higher domestic beef production.
“Beef imports are expected to increase 12% ... to 34,000 tonnes, driven by robust demand from the rising middle-class,” the report said, with per-capita consumption at 4kg.
However, decreased consumption of beef by lower-income consumers is being offset by increased middle-class consumption—a trend that opens up more value for meat manufacturers in the country.
“Demand from the expanding Chinese middle-class will lead to higher market prices for domestic fresh cuts or imported frozen premium cuts.”
Government moves working
“The central government has been subsidising beef cow genetic improvement over the past few years. This subsidy tripled from 2010 to almost US$9.5m in 2011 and 2012. The 2013 subsidy is expected to be even higher.”
These subsidies would help beef production in 2013 to increase less than 1% to 5.58 million tonnes due to slightly higher calf production and slaughter.
Chinese authorities have also been working hard to increase the beef cowherds in the country. The central government invested US$21.59m to protect and improve natural grasslands in major cattle grazing areas in western China.
Herdsmen also receive US$3.40 if they occupy each hectare with reasonable stocks under a government program.
Export volume dwindling further
The report forecasts live cattle imports at 115,000 and 120,000 head in 2012 and 2013, up 21% and 4% respectively. Breeding cows account for 90% of this figure, driven by strong demand for dairy genetic improvement.
“Beef exports will likely decline 7% from the revised 2012 estimate to 43,000 tonnes, given slow economic growth in export markets and high Chinese export unit price,” highlighted the report.
China is also losing out to overseas neighbors when it comes to exporting beef thanks to its higher prices. Shipments to Hong Kong, China’s largest export market, have been strongly challenged by Brazilian exports as a result of competitive prices.
“While exports to Japan will likely be dampened by Japan’s relevant level consumption, higher stocks, and greater volume of imports of US beef cuts. Cattle exports are expected to remain the same due to flat demand in Hong Kong and Macau.”