China Livestock and Products Annual - September 2005
By the USDA, Foreign Agricultural Service - This article provides the pork industry data from the USDA FAS Livestock and Products Annual 2005 report for China. A link to the full report is also provided. The full report includes all the tabular data which we have ommited from this article.Report Highlights
During July 2005, China announced that 52 U.S. facilities are approved to export bovine
semen and embryos, though the December 2003 import suspension remains on U.S. beef,
live cattle and other beef products. USDA is coordinating an October visit to the U.S. by a
Chinese expert team to further study the BSE situation and beef safety. China's beef
production in 2006 is forecast to increase 6 percent to 7 MMT, and pork production will
increase 4 percent to 50 MMT.
Effective on July 1, 2005, China will not longer issue import
quarantine permits for processing meats, and export plants in all other countries, except the
U.S., must be audited and registered. However, meat from approved plants in these other
countries will now directly compete with U.S. products in China's retail meat market. The
pre-inspection in Hong Kong for transshipped meat to China will also lead to a higher volume
of direct shipments to China.
Executive Summary
In July 2005, China announced approval of 52 U.S. facilities to export bovine semen and
embryos to China, though China agreed to lift the ban on these BSE low risk products at the
technical bilateral meetings back in November 2004. The final step is U.S.-China agreement
on language for the USDA health certificate. This marks the first market access for U.S.
bovine products since China suspended all U.S. live cattle and beef products in December
2003. The Chinese Government and USDA officials are also coordinating a visit to the U.S.
by Chinese experts to study the BSE situation in October 2005.
On July 11, 2005, USDA’s Secretary Johanns and AQSIQ Minister Li initialed a bilateral
Memorandum of Understanding (MOU) regarding food safety and animal and plant health
cooperation. This agreement will also foster U.S.-China discussions on resolving meat trade
issues.
Post forecasts China’s beef production in 2006 at 7.6 million MT, a 6.4 percent increase from
2005. Strong demand and lagging production, combined with reduced imports due to BSE
restrictions, will drive expansion of China’s cattle and beef industry in 2006. Foot and mouth
disease (FMD) will not significantly impact China’s beef production due to the government’s
apparent efforts to stem any spread. Beef prices are forecast at high levels for the
remainder of the year. Beef consumption for 2006 is forecast to increase over 6 percent to
7.6 MMT due to slaughter increases and the slower pace of export growth.
Post forecasts China’s pork production during 2006 at 50.9 MMT, a 4-percent increase from
2005. Pork production will continue growing due to steady domestic consumption and export
increases. The pork and beef production increases have offset the slower pace of broiler
meat production because of avian influenza (AI) outbreaks in China. Pork prices are forecast
from steady to weak due to lower feed grain prices. Pork consumption is forecast to increase
4 percent to 50.4 million MT mainly due to steady population growth.
Post forecasts China’s beef imports will drop 40 percent to 6,000 MT in 2005, and during
2006 imports will remain flat because of continued BSE restrictions, domestic production
increases, higher international prices and import policy changes. China’s live cattle imports
for are forecast to decrease 20 percent to 80,000 head. Higher international prices and
domestic import policy change reversed China’s import picture.
Australia and New Zealand have captured almost all China’s cattle and beef import market.
The pace of growth in China’s beef exports is forecast smaller, at 20 percent, to 90,000 MT in
2006. The slightly appreciated RMB will make China’s exports less competitive.
Post forecasts China’s pork imports to decrease 28.5 percent to 50,000 MT also due to
domestic production increase, higher international prices and import policy change. China’s
pork exports in 2006 are forecast to increase 4.8 percent to 584,000 MT due to export
market demand increase, especially Japan and Russia. China is a net live swine exporter to
Hong Kong and Macao accounting for 99 percent of its total exports.
China’s pork production during 2006 forecast to increase 4 percent to 509 MMT
China is the world’s largest pork producer and consumer. Post forecasts China’s end-of-year
swine inventory in 2006 at 519 million head, a 3.7 percent increase from the estimated 500
million head in 2005. Slaughtered swine in 2006 are forecast at 692 million head, a 5.9
percent increase from the estimated 653 million head in 2005. Pork production for 2006 is
forecast to increase 4 percent to 509 million MT from the estimated 489 MMT in 2005 due to
slaughter increase driven by high prices.
China’s swine production has benefited from efficiency gains due to improved breeds and
feed. This is reflected by increased imports of breeding swine. Regarding China’s feed
improvements, please refer to the poultry annual report (CH5064). The sow ratio in 2006 is
forecast at 8.8 percent of the total beginning swine stock, slightly higher than 2005. In main
swine production areas like Hunan, Henan, Shandong and Hebei provinces, the sow ratio
reached 10, 11.8, 11.6 and 11.4 percent respectively in the first quarter of 2005, far above
the normal ratio of 8 percent. This will translate into a continued strong swine production in
both 2005 and 2006.
The steady growth in pork production is driven by China’s population growth and by slight
average consumption increases due to continued urbanization and wealth. Also, pork is the
cheapest meat among all red meats. It is still the first choice of many lower-income
consumers for animal protein.
Improved processing has contributed to pork production and consumption as well. There
were 2,232 meat-processing plants till the end of 2004, each with an annual sales’ value
above RMB 5 million. Most of them are pork-processing plants. Investment in slaughter and
processing sector has increased considerably. Foreign investment through joint ventures
using international health standards and HACCP management has helped improve pork
quality. Commercial sales of domestic pork inside China in 2004 reached 20.8 MMT
accounting for 44 percent of the total pork production, a 2.5 percent increase over the
previous year.
Like the broiler industry, China’s swine and pork production is mainly constrained by limited
feed resources, water and energy (please refer to poultry annual report CH5064 for more
details). Disease control is a huge challenge, but China is making huge efforts to strengthen
its veterinary system—supported by significant USDA collaboration.
Pig-born disease, Streptococcus suis
During May to August, a pig-borne bacterial disease, Streptococcus suis, spread to 32
counties and 10 cities in Sichuan Province, killing 40 humans and sickening over 200 people.
Over 600 pigs died of the disease. Streptococcus suis is not an unusual disease in swine,
though the rapid infection of humans has surprised world health experts. Insufficient
management of swine on small-scale, family farms in Sichuan would explain the spread of
the bacterium in the swine population.
The last outbreak of Streptococcus in swine occurred
in China in 1998. This incident demonstrates the critical importance of timely, public
information and education on destroying sick animals, in addition to the need for proper
management of swine. Sichuan is the largest swine producing province and a swine and
pork exporter to Hong Kong. Hong Kong market accounts for one-third of China’s total pork
export markets. Trade was suspended for a short period, but shipments started moving
again after the disease is under control. As a result, China’s pork exports will not
significantly impacted.
Pork consumption for 2006 forecast to grow 4 percent to 50.4 million MT
China’s pork consumption in 2006 is forecast at 50.4 MMT, a 4 percent increase from the estimated 48.4 MMT in 2005. The pace of growth in consumption for 2006 is forecast slightly higher compared with 2005 due to the above-mentioned reasons (see production). Pork is consumed widely in China, especially in northern and central China (such as Sichuan), while beef and sheep and goat meat is heavily consumed in West, Southwest and Northwest China due to religious and food cultures. Northern consumers like fresh or frozen pork, while southern consumers eat a lot of prepared pork salted or smoked. Pork fillet is popular for making all kinds of fried dishes at home or in restaurants. Pork offal is popularly used for soup, hot pot or cold dishes. Pork ears and tongues and other offal are for cold dishes. Consumers particularly like pork feet, especially front feet, because front feet are shorter with more meaty, and feet tendons are not destroyed by hooking on trails like rear feet during slaughter.
Pork prices forecast from steady to weak in the second half of 2005
In the first half of 2005, China’s average retail pork price was $1.63, a 7 percent increase over the same period of 2004. Average retail prices in the first quarter increased 13.5 percent. Overall production costs rose for feed grains, water, electricity, transportation and animal disease control, putting upwards pressure on prices. Seasonal demand for pork during the calendar New Year and the traditional Chinese Spring Festival contributed to higher prices. The prices started falling during the second quarter, and the average retail price in June almost dropped to the same level in June 2004. Increased domestic swine slaughter, driven by high profit and increased poultry imports after China lifted its ban on U.S. poultry, combined with decreasing feed grain prices due to domestic grain production increase and large imports of soy bean for soy meal in feed, pushed prices downwards. Pork prices are forecast to remain steady in the second half of 2005.
Pork imports in 2006 forecast to decrease 28.5 percent to 50,000 MT due to domestic production increases, higher international prices and import policy changes
China’s pork imports for 2006 are forecast at 50,000 MT, a 28.5 percent decrease from the
estimated 70,000 MT in 2005, and pork offal imports for 2006 are forecast to decrease 20
percent to 145,000 MT. Pork and pork offal imports in 2005 are estimated to decrease
considerably as well. Imports are falling, instead of rising as forecast in the previous semiannual
report (CH5010), due to domestic production increases, higher international prices
and import policy changes.
In the first half of 2005, China’s average imported pork price increased 34 percent over the
same period of 2004, while the price for most popular unboned hams and shoulders
increased 48 percent from $0.71 to $1.04 per kilogram. The average price for China’s
imported popular pork offal from world went up 16 percent, while U.S. origin pork offal
increased 23.5 percent from $0.81 to $1.00 per kilogram. U.S. direct pork shipments to
China decreased 79.8 percent from 20,616 MT to 4,217 MT and indirect shipments through
Hong Kong decreased 96 percent from 7,390 MT to 266 MT during the same period. U.S.
direct pork offal shipments to China decreased 41.7 percent from 64,408 MT to 37,564 MT
and indirect shipments decreased 82.9 percent from 20,343 MT to 3,482 MT during the same
period. When HK re-export numbers are available for 2004, post revised the import number in the
PSD table for 2004 up to 155,000 MT multiplied by 1.3, except carcass and bone-in products,
to convert from product weight to carcass weight.
Import policy change impact China’s imports and challenge U.S. exports
Effective on July 1, 2005, China no longer issues import quarantine permit for imported meat
used for processing. Exporting plants in origin countries must be audited and registered
upon their application before July 1 in order to be eligible (except the U.S.). The alreadyissued
permits for processing are valid until the end of the year. Once registered, plants in
third countries will also be eligible to export meat to China’s retail market, which was not
allowed in the past when processing was permitted.
The U.S. is the only national meat safety system accepted by China. As long as U.S. plants
comply with USDA’s health requirements, they are eligible to export to China. Plants in other
countries have to be audited and registered one by one (see list below). The new regulation
permitting a plant-by-plant approval in these third countries will lead to less gray channel
trade through Hong Kong. In the past, meat from other countries was often smuggled into
China under forged USDA health certificates or mixed with U.S. products to enter China’s
retail market. The new policy will result in new competition for U.S. suppliers in China’s
retail meat sector.
As of May 2005, all meat transshipments to the mainland through Hong Kong are subject to
pre-inspection in Hong Kong. The additional cost of pre-inspection, costing $300-500 per
container, has made China’s indirect imports less competitive. This will further encourage
direct shipments to China in the future.
China’s pork exports during 2006 forecast at 584,000 MT, a 4.8 percent increase from 2005
Post forecasts China’s pork exports for 2006 at 584,000 MT, a 4.8 percent increase from the estimated 557,000 MT in 2005, mainly due to export market demand increases, especially Japan and Russia. Exports are forecast to increase for 7 years’ running from 73,000 NT in 2000 to 584,000 MT in 2006. Asian countries are China’s main export markets. Most of the export increases lies in cooked or prepared pork. Frozen carcass or frozen carcass of sucking pigs decreased considerably due to Russia TRQ Regime. Russia’s imports of processed pork are not subject to TRQ limit, and Russia’s importers have shifted to more boneless meat from other countries to maximize the use of their import licenses for better profit.
Live cattle exports in 2006 are forecast to increase 5 percent to 2.2 million head
Post forecast China’s live swine exports for 2006 at 2.2 million head, a 5 percent increase
from the estimated 2.1 million head, due to Hong Kong and Macao demand increases. Hong
Kong and Macao account for 99 percent of China’s total live swine exports. This trend will
continue into the next couple of years, as long as China can control pig-born diseases.
Further Information
To read the full report please click here
Source: USDA Foreign Agricultural Service - September 2005