China’s ‘freedom to eat beef’ belies farmers’ mood of udder chaos as cash cow hits tipping point

Beef prices are trending downward in China as the nation’s most expensive livestock meat finds itself sandwiched between a double whammy of oversupply and weak demand – a trend likely to continue for the rest of the year, according to analysts.

Despite beef’s smaller weighting versus pork in the consumer price index (CPI), the falling price does not bode well for China’s efforts to tackle persistent deflationary pressure. The National Bureau of Statistics (NBS) is set to announce May’s CPI today.

The average wholesale price of beef was 61.20 yuan (US$8.45) per kilogram as of last week, down 14.5 per cent from the beginning of the year and a 17.4 per cent decline from the same period last year, according to the price report released by the Ministry of Agriculture and Rural Affairs of China.

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The market retail price of boneless beef in April was 72.58 yuan (US$10) per kilogram, a 14 per cent year-on-year decrease, according to the NBS.

On the supply front, an incoming surge in cheaper beef from overseas, large inventories, and an increased slaughter of milk cows as a result of milk-price declines have all contributed to the oversupply, said Wang Chen, senior analyst for the Bric Agriculture Group’s database, a leading big-data resource covering China’s agriculture and food sectors.

“Last year, China’s combined domestic-plus-imported beef supply reached 10.26 million tonnes, breaking the 10 million tonne benchmark for the first time, hitting a new record,” according to He Zhonghua, an analyst with the China Meat Association, which operates a comprehensive agricultural industry website.

China consumed more than 9.8 million tonnes of beef last year, according to data from American market-research firm Frost & Sullivan. And customs data shows that China imported 2.73 million tonnes of beef in 2023, while the NBS indicates that domestic beef production reached 7.53 million tonnes. In comparison, China’s pork imports are tiny relative to domestic production, meaning the import supply does not sway pork prices to the degree seen in beef imports.

In the first four months of the year, China’s beef imports saw a year-on-year increase of 22 per cent, totalling 1 million tonnes, coupled with a 10 per cent year-on-year decrease in import prices per kilogram, customs data shows. China mainly imports beef from six countries: Brazil, Argentina, Uruguay, Australia, New Zealand and the United States.

A domestic inventory pile-up is the result of increased cattle farming over the past few years, Wang said. Additionally, milk prices in China have begun to fall this year after a decade of increases, leaving farmers with a surplus of cows.

“The drop in milk prices has caused losses for small and medium-sized farming operations, prompting them to send low-producing cows to the slaughter, thereby increasing the beef supply and driving prices down,” Wang said, adding that the price fall should continue in a short period, which will dampen farmers’ outlook.

While some consumers have taken to social media to hail their new-found “freedom to eat beef” thanks to the falling prices, the farmers are indeed feeling the pinch.

The market demand for beef has not kept pace with supply growth
He Zhonghua, China Meat Association

Wang Zhangai, who runs a cattle farm in Henan province, told the Post that beef prices from his farm have fallen by about half compared with last year.

“Basically, 90 per cent of farmers are losing money this year, profitability persists only for traders, slaughterhouses and processors,” the farmer said. “So, we can only endure until the market returns to normal.”

On the demand side, He from the meat association said that the current weak macroeconomic environment could mean that Chinese consumers are becoming more price-sensitive.

“The market demand for beef has not kept pace with supply growth,” he said, adding that “beef prices remain the most expensive category of livestock meat in the country, which can easily be replaced by lower-priced pork and poultry”.

China’s National Cattle Industry Association said in late March that the nation’s beef cattle price was likely to remain low in 2024.

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