Australian cattle deal spurs Chinese interest

By Mark Godfrey

- Last updated on GMT

Beef has become a new buzzword among China’s corporate community
Beef has become a new buzzword among China’s corporate community

Related tags: Beef, Meat, Livestock, China

A recent deal between China and Australia, which could see one million cattle from Australia headed to China each year, has plenty of takers on the Chinese side.

Beef has become a new buzzword among China’s corporate community, with firms seeking to cash in on growing demand for red meat through investing in farming and processing facilities at home and abroad.

Faced with sluggish industrial profits this year – China’s average industrial profits dipped 2.5% year on year in October to the lowest level in two years – China’s large conglomerates are showing unprecedented interest in beef breeding and processing. A slowdown in capital-intensive infrastructure projects is prompting companies like Tianma Bearing Group Co to put money into acquiring farms to produce beef and dairy for export into China; the firm recently acquired Balfour Downs Pastoral in Australia.

Other industrial giants following this trend include beef processor Hengdou Beef in sprawling Sichuan province, which established its Hodo Beef brand with ambitions to eventually slaughter 200,000 cattle per year, though the firm has no previous record in meat processing; Hengdou is a steel and construction giant locally. The company will seek to source cattle and carcases overseas, vice-manager Zhou Gangyuan told a recent trade fair in the southerly city of Fuzhou.

Likewise, Dawn Run Beef in Tianjin, whose founder-CEO Lu Xiaosong is a real estate developer, is seeking to supplement company feed lots in northern China with carcases imported from Australia. China’s beef imports soared to 297,000 tons in 2013, three times the 2012 level, with a large percentage of the imports coming from Australia, a nation that benefits from a newly agreed free trade pact with China (its top trading partner) and a reputation here for being easy for acquisitive Chinese businesses to operate.

A continuous increase in beef imports is inevitable, explains Wang Mingli, a researcher at the China Academy of Agricultural Sciences who specialises in beef. He points to a “huge”​ fall-off in local cattle numbers, in part due to the kill-off of oxen traditionally used on local farms, which are fast mechanising. The other reason that suggests imports will grow is that a drop in cattle numbers in traditional beef-producing provinces like Anhui, Hebei and Shandong saw the herd in Hebei, for example, falling from 10 million in 2002 to 2.5 million in 2013 – of which only 1.6 million are purpose-bred for slaughter, according to the provincial Animal Husbandry Association.

The government has attempted to reverse the slide in numbers by subsidising villagers’ purchase of beef cattle, including imports. Shandong Wan Jia Niu Yang Breeding Co-op sells Simmental, Charolais and Limousin cattle to local farmers. The cattle are often financed with government subsidies and are largely bred by small-scale farms and co-ops, explained a spokesperson for the company. “We supply farmers with CDs and feed recipes, so they can study how best to care for the cattle,”​ he explained.

However, there is an intense debate going on in the agricultural ministry and in the central government, between people who want to build up the domestic animal husbandry business and those who see that as damaging the nation’s self-sufficiency in grains. “If we import or breed really serious numbers of live beef cattle, then we cannot expect to remain self-sufficient in corn,”​ suggested an official at the ministry’s international desk.

Related topics: Meat

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