Source: Michael Fielding, MEATINGPLACE, 4/28/14

Rabobank’s Food & Agribusiness Research team says that local Chinese beef producers are facing many challenges, making it difficult for domestic production to catch up with demand in China’s beef market. The bank forecasts five years of 15 percent to 20 percent annual growth in China’s beef imports.

Although the Chinese government is providing some support, the gap in productivity between China and other beef-producing countries continues to widen, according to Rabobank’s latest report. China will need to allow a substantial increase in imports in order to cover the supply gap.

“China became a huge importer of beef in 2013,” Rabobank analyst Chenjun Pan said in a news release. “According to official statistics, China’s beef cattle stock has been in continual decline since 2004, due to a lack of government support, low productivity, and the lack of farmers willing to invest in beef production, deterred by high costs and a shortage of labor.”

Rabobank expects rising urban income levels and government support to spur a slow recovery, but not fast enough to catch up with accelerating demand. The structural supply deficit will force an increase in China’s beef imports, including smuggled beef, of nearly 20 percent -- or even double the current import volume by 2018.
China’s beef cattle supply shortage is a structural issue and the industry itself faces many challenges. It lags behind other major beef-producing countries in all the key aspects, such as genetics, breeding, productivity, farm management and grassland/feed resources. According to Rabobank’s report, the Chinese government will need to decide which agricultural products it wishes to maintain self-sufficiency in, and which it will allow to be more exposed to imports.

Rabobank analysts say that beef is not a strategically important agricultural product in China, although the government needs to keep a certain ratio of self-sufficiency to ensure beef supply to the Muslim population. Support for beef producers in China will increase but will remain lower than support for other livestock sectors, leaving beef producers to face the challenges of limited land, water and feed resources.

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