China issues disease warning to Australia

By Mark Godfrey

- Last updated on GMT

China will lower its import duty on Australian cattle by 10% over the next four years
China will lower its import duty on Australian cattle by 10% over the next four years

Related tags: Cattle, China, Beef, Livestock

A stern warning over disease control has come from an inspection boss at one of the largest ports on China’s east coast, which is ramping up preparations for importing live cattle from Australia.

A stern warning over disease control has come from an inspection boss at one of the largest ports on China’s east coast, which is ramping up preparations for importing live cattle from Australia early next year.

A senior official at the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) has warned that his officials will “destroy or return​” a whole ship of cattle if any one animal on board fails to meet his bureau’s standards during tests in quarantine.

The head of the AQSIQ’s office in Ningbo, Jinhong Yang was speaking during a signing of a memorandum of understanding with the provincial agriculture ministry on live imports. Quarantine and bonded slaughtering facilities are being built for the live cattle trade in the Zhenhai sub-region of Ningbo, a port city on China’s east coast, with local authorities appearing nervous about any possible import of disease.

Zhenhai will handle 100,000 cattle per year under a national licence granted to 12 Chinese ports to each handle a maximum 100,000 live cattle per year from Australia. Those licences were announced last year and Ningbo was the only port in the wealthy province of Zhejiang, adjacent to Shanghai and encompassing cities like Hangzhou, home to the Alibaba e-commerce empire.

China lowers import tax

By slaughtering cattle –Australian animals have to be killed within two weeks of arrival - “Ningbo residents will get to eat safe, fresh meat​” from Australia, said the local agricultural ministry in a statement. There is also a clear tax rationale for the increase in the slaughtering of live cattle over frozen meat.

Chinese import duties on live Australian cattle will be reduced by 10% over four years (from 2014) while there will be a 12-25% cut in taxes on meat products over a nine-year period under a 2014 free trade agreement signed between Australian and China. As of January 2016, the Chinese tariff on live cattle from Australia fell from 8% to 6% and will be phased out to zero in 2019.

Local authorities have been keen to support the beef slaughtering projects particularly given ports like Ningbo have been casting around for alternative sources of income following the slow-down in China’s enormous imports of commodities​ in line with slower economic growth. Authorities in Zhenhai have also been forced to find alternative industries after residents protested over an over-concentration of petrochemical industries​ in the town, which are blamed for high levels of cancer and chronic air pollution.

Australia fueling China’s expansion

The freshness and tax advantages of Australian live cattle imports could provide important advantages for Australia given the competitive pressures from an influx of Brazilian beef into China​ this year. Beef cattle numbers in Australia however remain comparatively tight in 2016.

Australia, which remains the only nation licensed by China for live cattle imports, has supplied much of the expansion of Chinese dairy farms over the past decade. China – where beef processors struggle to find sufficient domestic cattle numbers - could potentially add one million head of cattle per year in extra demand for Australian cattle breeders.

Indonesia has traditionally been the largest market for Australian cattle​, taking 619,000 head (including dairy cattle) in 2015. China’s import-for-slaughter scheme might see it overtake Vietnam, which bought 313,000 head in 2014. Third-placed China bought 82,000 head of Australian cattle last year. It remains to be seen how animal welfare concerns - which have led to suspensions of the live trade to Indonesia and Vietnam – will impact the growth in numbers of cattle shipped to China.

Preparations are ongoing for live cattle imports in other parts of China. In November, State-run conglomerate Zhong Ao Nong Mu Ltd Co is set to open a plant to process 30,000 imported cattle per year. The plant will be located in Haixing, a rural part of Hebei province which surround Beijing.

Several Chinese meat companies have bought beef farms and processing plants in Australia, among them Chinese pork processor Shandong Delisi. Another firm with a huge processing presence in China, the New Hope Group has pledged to invest RMB17 billion in overseas meat assets up to 2021.

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