Can Chinese cattle withstand American cattle?

Thirteen years later, once American beef can enter the Chinese table aboveboard, it will certainly put pressure on the domestic beef market, although it is unknown how much American beef will be officially imported into the Chinese market in the future. but it is certainly much higher than the level of 4000 tons a year before the ban in 2003.

After a 13-year ban, there was sudden news that China planned to resume imports of beef products from the United States. China's Ministry of Agriculture and the General Administration of quality Supervision, Inspection and Quarantine said in a statement on the 22nd of this month that according to the results of risk assessment, the Ministry of Agriculture and the former State Administration of entry-exit Inspection and Quarantine have the conditions to lift the ban on eviscerated beef and bony beef under the age of 30 months in the United States. American beef that meets the requirements of China's traceability system and inspection and quarantine is allowed to be exported to China.

The USDA was quick to say that this is a key first step for the Chinese government to resume the re-entry of US beef and beef products into the Chinese market, and looks forward to further negotiations on specific conditions for allowing beef imports to resume. In fact, American beef suppliers can't wait to enter the Chinese market, and some have already begun substantial steps. But the news can be said to be a mixed blessing for China. On the one hand, Chinese consumers are expected to enjoy cheaper imported beef, but then people start to wonder: can China's cattle industry handle it?

This week, the "2016 China International Meat Industry week" kicked off in Beijing, where meat organizations or enterprises from Brazil, the Netherlands, the United States, France and other countries gathered. They obviously have great hopes for China's meat market. This scene is actually a microcosm of the hope that the foreign industry places on the Chinese meat market. "now at least more than 70 brands around the world are planning to open the door of the Chinese market as soon as possible." According to an industry source, Chinese meat intake is significantly increasing, "and the increase is mainly in beef and mutton rather than traditional Chinese pork, which is a huge market opportunity for foreign meat merchants. On the other hand, the proportion of meat intake of Westerners is significantly higher than that of Chinese people who take grain and vegetables as the main food intake, and this difference in living habits is also regarded as a huge business opportunity by many foreign meat traders. "

Market

The United States misses the golden growth period of Chinese beef.

At the end of 2003, American beef and beef products were detected to be infected with bovine spongiform disease, commonly known as "mad cow disease". China then stopped importing most American beef. Prior to this, the United States was the main source of Chinese beef. According to USDA statistics, China's beef imports totaled US $15 million in 2003, of which US beef imports reached US $10 million. With the development of Chinese society, China's beef imports began to show a blowout after 2010. Last year, China's beef imports reached 2.3 billion US dollars, more than 15 times higher than 12 years ago. The USDA expects China's beef imports to reach 825000 tons this year, which could overtake Japan to become the world's second-largest beef importer after the United States and one of the fastest-growing markets for beef consumption in the world. But in this beef feast, the United States barely grabbed a share because of the import ban.

At present, most of China's beef comes from countries such as Australia, Uruguay and New Zealand. Especially in recent years, after China successively signed free trade agreements with Australia and New Zealand, beef from these two countries began to pour into the Chinese market.

Of course, as the annual market gap of beef and mutton in China has reached more than 2 million tons in recent years, in addition to importing beef through formal channels, smuggling is also a channel that can not be ignored in beef imports. According to customs officials, at present, China's smuggled beef mainly comes from Brazil, India and the United States, which enter the Chinese market through non-standard e-commerce and wholesale markets. At present, the price of beef smuggled into the Chinese market is about 25 yuan per kilogram, and the cost advantage is obvious. It is said that the gross profit for every ton of beef smuggled is 20,000 to 30,000 yuan. However, smuggling is not the mainstream of the market after all, which means that during the golden period of the rapid growth of Chinese beef demand, the United States can only be a spectator on the outside and cannot enter the game.

Current situation

10 yuan per jin of American beef is "too cheap"

Many Chinese who have visited American supermarkets have this exclamation, "Meat is too cheap!" Beef is the main meat category for Americans. In ordinary supermarkets in the United States, promotional beef worth 1 to 2 dollars per pound is not uncommon, equivalent to about 10 yuan per catty. In particular, in the past year, the price of beef in the United States is at a low point in recent years. Data in July showed that the average price of American beef cattle fell 25% from a year earlier. According to the US Meat Export Association, the United States exported about 1.07 million tons of beef in 2015, with a value of $6.3 billion, a drop of more than 10 per cent. Forecasts from the USDA show that the average price of high-quality beef cattle in the United States will continue to fall by 2017, about 17 to 19 yuan per kilogram.

The rapid decline in prices includes the reason for the decline in demand for beef, so opening the way to export to China as soon as possible is an important way to save American beef, because exports are vital to the US beef industry. In 2015, the United States exported beef to 112 countries around the world, totaling 5.8 billion US dollars. Overall, U.S. beef exports account for about 14% of the total beef supply in the United States. The loss of China, the most potential market, makes the American beef industry clearly incomplete. To this end, in the past decade, there have been many reports that China and the United States have discussed the resumption of beef trade, but they have not been realized in the end. If the road to the Chinese market can be restored this time, there will be a qualitative leap in US beef exports, both in terms of scale and structure.

Analysis.

The difference in cost will put a lot of pressure on Chinese cattle.

In the Chinese market, although beef prices have not soared as sharply as pork in the past year, they are still at the level of 40 to 50 yuan per kilogram, which is significantly different from that of beef in the United States. In this regard, some people in the industry said that the main reason for the high cost of beef in China is that the lack of scale leads to higher breeding costs, and there is a big gap between China and foreign developed countries in safety management, process management and efficiency management. In addition, the high feed price in China is also an important factor, especially the raw grain, where the cost of corn and wheat is about twice as high as that of the United States.

Although the cost of breeding has been high, but at present, China's cattle industry is still in a low-profit industry, even in the event of changes, there may be losses, so the impact of the industry after the liberalization of American beef can not be underestimated. "Thirteen years later, once American beef can enter the Chinese table aboveboard, it will certainly put pressure on the domestic beef market, although it is not known how much American beef will be officially imported into the Chinese market in the future. but it is certainly much higher than the level of 4000 tons a year before the ban in 2003." As the problems in these links can not be improved overnight, industry insiders expect Chinese beef to be under great pressure from American beef for quite some time after the ban is lifted.

Prospect

Ban may be gradually lifted to ease pressure on Chinese cattle

But others say the ban may also be phased out to ease pressure on Chinese peers. In addition, industry insiders said that there are fewer large-scale cattle companies in China, and a considerable part of the source of beef comes from eliminated cows. After the resumption of US beef exports to China, the sales price of eliminated dairy cattle in farms is also expected to be affected, which will even affect the dairy industry chain.

On the other hand, once the ban on American beef is lifted, it will also put great competitive pressure on other beef exporters. The first one to be affected may be Australia. Australia's beef exports to China have fallen by 35% this year as a result of a shortage of cattle to be slaughtered by drought, which has led to a surge in Australian beef prices. The lifting of the ban on US beef could lead to a further decline in Australia's market share.

When the United States returns to the Chinese market, another major competitor is Brazil. At present, the price of Brazilian beef is lower than that of the United States and Australia. In response to this situation, American operators have focused on seizing the high-end market.