Investment Report on China Beef Industry

by Editor fleischwirtschaft.com
Tuesday, March 10, 2009

China, with beef production above 7 million tons, is the 3rd largest beef producer in the world; but backyard farms and manual slaughter units are main players of the industry, according to a new study titled “Investment Report on China Beef Industry” by Research and Markets.

Large cattle farms with annual cattle crop higher than 100 heads only gain a market share of 11% while modern slaughterhouses' market share is only 13%. For beef products, Room Temperature Beef account for more than 80% of total beef production. In recent years, China breeder cow inventory kept declining due to poor earnings from breeder cow business, which will make China cattle inventory and beef production decline from 2008. China’s beef production will only recover in 2012.

In 2007, there were about 1,000 cattle slaughterhouses in China with total capacity of 12 million heads per year and total beef production less than 1 million tons, which accounts for 20% of national beef cattle crop and 13% of national beef production, respectively. The largest company only slaughtered 150 thousand heads in 2007.

Declining cattle inventory make public company Fucheng (Hebei)'s beef production fall by 18% in 2007, and other large beef companies also suffer with capacity utilisation rate only 20%. Small companies will soon suspend production or exit the industry, which will allow integration opportunities for large companies. The largest beef company in China – Jilin Haoyue group – planned to double its capacity to 1 million heads before 2010.

Because of serious meat quality problems of illegal cattle slaughter units, we predict China’s government will restrict small slaughterhouses and punish illegal slaughtering; in 2007 'Interim Measures of Appointed Slaughter for Cattle, Sheep & Goat and Poultry' was issued by Hebei Provincial government and came into force from April 1st of the same year. In this Measure, qualification and quantity of cattle slaughterhouses in Hebei were confined. This was the first province-level regulation requiring cattle Appointed Slaughter; these measures all benefit large companies. By lobbying of large companies, some areas like Heilongjiang province began to give subsidy for breeder cow farmers. Although low subsidy make the support policy to be not so effective, it's still a good start toward more subsidies and we predict more areas will follow. These support policies will help recover breeder cow inventory.

In this report, the author comprehensively analyses China's beef consumption and supply from 2000 to 2017. By combining the value chain of the beef industry and comparison with beef industries of the U.S. and Brazil.
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