Graphics/GT
Prices may fall, but what will the change mean to domestic farmers?
Chinese authorities have announced the lifting of restrictions on beef imports from the U.S., a move industry insiders said may jeopardize the interests of domestic ranchers and farmers and intensify competition with other beef suppliers to China.
The Ministry of Agriculture (MOA) and General Administration of Quality Supervision, Inspection and Quarantine jointly announced Thursday morning that the nation will reopen the market to imported boneless beef and bone-in beef from the U.S., according to an announcement published on the website of the MOA.
Products that meet China's inspection and quarantine requirements will be able to enter the market, and the related product tracking and inspection requirements will be announced eventually, the announcement showed.
The move followed Chinese Premier Li Keqiang's speech in New York Tuesday. Li said during a meeting with U.S. business leaders that China will soon resume beef imports from the U.S.
China shut the door to U.S. beef in 2003 after the discovery of mad cow disease, or bovine spongiform encephalopathy, in a dairy cow in the U.S. state of Washington, according to a post published on the website of the U.S. Department of Agriculture (USDA) on September 6.
The domestic livestock and dairy industries are under increasing pressure from shortages of capital, rising feed costs and lack of land.
Rising demand for meat, dairy and other high-value food and beverages is considered as an opportunity for U.S. suppliers, the post noted.
"Reopening the market to the U.S. will ease the pressure on the rising demand for beef in the country, which can't be fully met by domestic products for now," Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant, told the Global Times on Thursday.
The average beef price is at a high level, as cattle feed prices and labor cost have been rising in recent years and there is a shortage of land, Ma noted.
"The U.S. government gives more subsidies to its farmers than we do, which makes U.S. beef products much cheaper than Chinese ones," Ma said.
Major Chinese beef suppliers have a different view on reopening the market to their U.S. counterparts.
"The looming competition triggered by imported cheap beef is not necessarily a bad thing," Wang Zhengtao, general manager of Inner Mongolia Kerchin Cattle Industry Co, told the Global Times on Thursday.
"It may give us opportunities to process different types of high-quality foreign beef and make it suitable for Chinese consumers," Wang said.
But an industry representative from another cattle company who declined to be identified said the move will have an impact on the current huge imports from Australia.
Beef imports from Australia account for 47 percent of total imports of the meat, according to a report published by the Shenzhen-based market -consultancy firm askci.com in April.
Next come Uruguay and New Zealand, with 29 percent and 14 percent, respectively, the report noted.
China has been more and more dependent on beef imports in recent years, as domestic supply can't meet rising demand, according to the report.
The total beef import volume in 2010 was 40 times bigger than in 1992, and it reached 417,000 tons as of 2014, the report showed.
"Considering the productivity of the U.S. beef cattle industry as well as the technology used in the sector, U.S. prices may be much lower than Australian prices," the industry representative said, noting that many Chinese restaurants that buy beef from Australia may turn to U.S. suppliers.
However, a large amount of imported beef from the U.S. has already flowed into the Chinese mainland through Hong Kong.
"The price is a key factor driving more imports," the industry representative noted.
Hong Kong is one of the fastest-growing markets for U.S. beef, with sales reaching a record high of $1.2 billion in 2014, according to the post on the USDA website.
But more beef imports may also push out domestic products, which have been struggling in recent years, as they are less competitive in terms of price than foreign meat, Ma noted.
"The question is how those ranchers and farmers in China will survive in this situation?" Ma said.
