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USDA GAIN: Livestock and Products


11 March 2013

USDA GAIN: China Livestock and Products Semi-Annual 2013USDA GAIN: China Livestock and Products Semi-Annual 2013

This report contains OAA/Beijing’s estimates for 2013 and also includes revisions for 2012. OAA/Beijing’s 2013 forecast for China’s production, supply, and demand for cattle and beef is virtually unchanged. Beef production is expected to slightly increase to 5.59 million tons. Imports will likely reach record levels as foreign products are becoming price-competitive to domestic products. OAA/Beijing’s 2013 forecast for China’s pig production will increase by four percent to 710 million head. In late 2012, trade sources noted that there were no major disease outbreaks or losses in key producing provinces during the winter season. As a result, OAA/Beijing’s 2013 forecasts for China’s pork production, exports, and imports are trending upward.

USDA GAIN: Livestock and Products

Cattle and Beef

Production:

OAA/Beijing’s 2013 forecast for China’s calf crop production is revised upward by one percent to 41.5 million head reflecting China’s revised data raising dairy cow beginning stocks by three percent to nearly 14.4 million head.

Imports:

OAA/Beijing’s import forecast of 120,000 tons remains unchanged. OAA/Beijing will continue to monitor trade impacts of China’s new pedigree requirements for breeding cows implemented on January 1, 2013.

Beef and Veal

Production

OAA/Beijing’s 2013 forecast for China’s beef production is virtually unchanged at 5.59 million tons, carcass weight equivalence (CWE). This increase of less than one percent is based on improved feed nutrition.

Policy

In October 2012, China’s Ministry of Taxation and State Administration of Taxation removed the valueadded tax (VAT) of 13 percent for fresh, chilled and frozen meat products and 17 percent for processed meats. This policy reduces distribution costs for both imported and domestic meat products.

Consumption

China’s consumption is also slightly revised to 5.64 million tons (CWE), up nearly one percent from the initial forecast of 5.57 million tons (CWE). The majority of consumers, who can afford it, prefer to eat high-quality beef (both domestic and imported) at high-end hotels or restaurants. However, the demand for high-quality fresh beef for home preparation is showing growth potential.

Imports

OAA/Beijing’s 2013 forecast for China’s beef imports is revised to 90,000 tons (CWE), a significant increase of 56,000 tons, largely due to China’s record import level of 99,000 tons (CWE) in 2012. The 2013 forecast is lower than the previous year because China suspended Brazilian imports in December 2012 due to Brazil’s confirmed outbreak of Bovine Spongiform Encephalopathy (BSE).

In 2012, China’s beef imports reached a record high because of the following reasons:

  • When China tightened its monitoring and enforcement practices in receiving re-exports at the ports, key suppliers sent more direct shipments to China; and
  • As China’s currency strengthened against the U.S. dollar, imported beef products became price-competitive to domestic beef. The average import price in 2012 was nearly $4,150 per ton compared to the average domestic price of $7,188.

Exports

OAA/Beijing revised its 2013 forecast for China’s beef exports to 40,000 tons (CWE), a decrease of 3,000 tons (CWE) from the initial forecast. Recent developments in Hong Kong and Japan, China’s top export markets, contributed to this downward revision:

  • China’s exports face high domestic beef prices and strengthening currency (value) against U.S. and Hong Kong currencies;
  • Despite the recent BSE outbreak, Hong Kong has no import restrictions on Brazilian beef products. With adequate beef supplies in Hong Kong, Brazil will continue to compete with China on prices; and
  • China will also face competition in Japan from the United States. In February 2013, Japan granted market access to U.S. beef from cattle less than 30 months of age. The previous age limit was less than 21 months of age. This change is expected to increase total US beef exports to Japan.

OAA/Beijing revised its 2012 estimate for China’s beef exports to 42,000 tons (CWE) from 46,000 tons (CWE), due to adequate supplies reported in Hong Kong.

Swine and Pork

Production:

OAA/Beijing’s 2013 forecast for China’s pig production increased by nearly three percent to 710 million head. This revision is due to higher-than-expected sow and piglet inventory. Swine producers are adopting better practices to prevent and manage disease which limited losses during the peak winter season. The herd increase is also attributed to the Chinese government’s decision to subsidize sow production at RMB100 ($15.90) per animal through June 2013. Sources note that the sow ratio to total swine inventory soared over 10 percent in 2012 and is expected to reach 11 percent in 2013. Normally, this ratio is between 8-9 percent.

Note: OAA/Beijing raised its 2012 estimate for China’s pig crop production by two percent to 698 million head based on the developments discussed above.

Exports:

With higher domestic production, OAA/Beijing estimates that China has additional exportable supplies for Hong Kong and Macao.

Pork

Production:

OAA/Beijing raised its 2013 forecast for China’s pork production by nearly four percent to 54.1 million tons (CWE) because of more swine supplies for slaughter and improved feed nutrition.

Consumption:

OAA/Beijing’s 2013 forecast for China’s pork consumption is increased by three percent to 54.4 million tons (CWE). Growth in urbanization and increased disposable incomes will continue to boost pork consumption.

Imports

OAA/Beijing revised its 2013 forecast for China’s pork imports to 730,000 tons, a 10 percent decline from the initial estimate of 815,000 tons. Higher domestic production and beginning stocks will likely dampen import demand. The United States is expected to be China’s primary supplier of imported pork products. Last year, the United States exported $890 million of pork and pork products to China (including direct shipments to China and official re-exports from Hong Kong) and held 52 percent of China’s market share. U.S. exports face a new import requirement in 2013. On February 19, 2013, China’s General Administration for Quality Supervision, Inspection, and Quarantine (AQSIQ) published a Notice Concerning the Request for Ractopamine Testing Reports for Pork Imports from the U.S. (Risk Warning Notice 2013, No 1). As of March 1, 2013, all pork shipments from the United States must be accompanied by lab results proving the product is free of ractopamine.

In September 2012, Mexico completed its pork export market access with China. The value of Mexican shipments for 2013 is estimated at $35 million.

Exports

OAA/Beijing revised its 2013 forecast for China’s pork exports to 250,000 tons, an increase of 50,000 tons from the initial forecast, largely due to stronger demand in Hong Kong.

Policy for Processed Meats

Despite the long history of market access for U.S. processed meat products to China, China’s General Administration for Quality Supervision, Inspection, and Quarantine (AQSIQ) halted trade for U.S. processed meat products in November 2012. Several U.S. government agencies are working together to resolve this issue.

March 2013

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