Livestock and Products Semi-annual

An Expert's View about Animal Husbandry and Support Services in China

Posted on: 12 Mar 2012

China's increase reflects fewer than expected outbreaks of foot and mouth disease (FMD), as well as higher slaughter weights, which were driven by improved feed quality.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 2/27/2012 GAIN Report Number: 12017 China - Peoples Republic of Livestock and Products Semi-annual Approved By: Laura Scandurra Prepared By: Ryan R. Scott and Zhang Jianping Report Highlights: The Office of Agricultural Affairs in Beijing (OAA/Beijing) revised the 2012 forecast for China?s beef production upward by 24,000 metric tons (MT), carcass weight equivalent (CWE), to 5.5 million metric tons (MMT). The increase reflects fewer than expected outbreaks of foot and mouth disease (FMD), as well as higher slaughter weights, which were driven by improved feed quality. Cattle exports are expected to increase 13 percent to 33,000 head, largely due to growing demand from slaughter facilities in Hong Kong and Macau. The revised forecast for pork production is 51.6 MMT, a nominal increase from the initial 2012 estimate of 51.2 MMT. The pork import estimate remains unchanged and imports are still expected to fall 26 percent to 560,000 MT. China?s rising pork production and lower domestic prices in 2012 are expected to limit imports. The swine import estimate remains unchanged because China?s new import policy could hinder trade. Meat, Beef and Veal 2010 2011 2012 China M ark et Year Begin: J an 2010 M ark et Year Begin: J an 2011 M ark et Year Begin: J an 2012 U SD A Of f ic ia l N ew Pos t U SD A Of f ic ia l N ew Pos t U SD A Of f ic ia l N ew Pos t Slaughter (Reference) 41,170 41,170 40,850 40,850 40,556 40,603 (1000 HEAD) Beginning Stocks 0 0 0 0 0 0 (1000 MT CWE) Production 5,600 5,600 5,550 5,550 5,520 5,544 (1000 MT CWE) Intra-EU Imports 0 0 0 0 (1000 MT CWE) Other Imports 40 40 42 28 45 28 (1000 MT CWE) Total Imports 40 40 42 28 45 28 (1000 MT CWE) Total Supply 5,640 5,640 5,592 5,578 5,565 5,572 (1000 MT CWE) Intra EU Exports 0 0 0 (1000 MT CWE) Other Exports 51 51 60 55 65 59 (1000 MT CWE) Total Exports 51 51 60 55 65 59 (1000 MT CWE) Human Dom. Consumption 5,589 5,589 5,532 5,523 5,500 5,513 (1000 MT CWE) Other Use, Losses 0 0 0 (1000 MT CWE) Total Dom. Consumption 5,589 5,589 5,532 5,523 5,500 5,513 (1000 MT CWE) Ending Stocks 0 0 0 (1000 MT CWE) Total Distribution 5,640 5,640 5,592 5,578 5,565 5,572 (1000 MT CWE) Cattle/Beef: AniCmal Numbers, Cattle 2010 2011 2012 Marke Imp. from U.S. 0 0 0 (1000 MT CWE) t Year: Jan USDA New Post USDA New Post USDA New Post Total Cattle Beg. Stks 105,430 105,430 104,814 104,814 103,944 104,322 (1000 HEAD) Dairy Cows Beg. Stocks 12,603 12,603 12,960 12,960 13,290 13,350 (1000 HEAD) Beef Y. Exp. to U.S. 0 0 0 (1000 MT CWE) Cows Beg. Stocks 47,000 47,000 46,480 46,480 46,200 46,250 (1000 HEAD) Production (Calf Crop) 41,500 41,500 40,900 40,900 40,700 40,950 (1000 HEAD) Total Imports 85 85 95 90 100 97 (1000 HEAD) Total Supply 147,015 147,015 145,809 145,804 144,644 145,369 (1000 HEAD) TotaBl Exports a 36 36 30 32 29 33 (1000 HEAD) C lance 0 0 0 0 0 0 (1000 MT CWE) ow Slaughter 0 0 0 0 0 0 (1000 HEAD) Calf Slaughter 0 0 0 0 0 0 (1000 HEAD) Other Slaughter 41,170 41,170 40,850 40,850 40,556 40,603 (1000 HEAD) Total Slaughter 41,170 41,170 40,850 40,850 40,556 40,603 (1000 HEAD) LossI v e9n95 to995 ry985 B600 a8l00a n550 c(1000e HEAD) 0 0 0 0 0 0 (1000 MT CWE) Ending Inventories 104,814 104,814 103,944 104,322 103,259 104,183 (1000 HEAD) Total Distribution 147,015 147,015 145,809 145,804 144,644 145,369 (1000 HEAD) CY Imp. from U.S. 0 0 0 0 0 0 (1000 HEAD) CY. WExp. to U.S. 0 0 0 0 0 0 (1000 HEAD) Balance eights 136 136 136 136 136 137 (1000 MT CWE) 0 0 0 0 0 0 (1000 HEAD) Inventory Balance -616 -616 -870 -492 -685 -139 (1000 HEAD) Inventory Change 0 0 -1 -1 -1 0 (PERCENT) Cow Change -1 -1 0 0 0 0 (PERCENT) ProdPuction Change -3 -3 -1 -1 -1 0 (PERCENT) Produ roduction Change -3 -3 -1 -1 -1 0 (PERCENT) ction to Cows 70 70 69 69 68 69 (PERCENT) Slaughter to Inventory 39 39 39 39 39 39 (PERCENT) Slaughter to Total Supply 28 28 28 28 28 28 (PERCENT) TS=TD 0 0 0 Import Change 74 74 5 -30 7 0 (PERCENT) Export Change 34 34 18 8 8 7 (PERCENT) Consumption Change -3 -3 -1 -1 -1 0 (PERCENT) Imports Percent Consumption 1 1 1 1 1 1 (PERCENT) Exports Percent Production 1 1 1 1 1 1 (PERCENT) Population 1,330,141,295 1,330,141,295 1,336,718,015 1,336,718,015 1,343,239,923 1,343,239,923 (PEOPLE) Per Capita Consumption 4 4 4 (KG) TS=TD 0 0 0 Cattle/Beef Production: The revised 2012 forecast for China?s beef production is 5.5 million metric tons (MMT), carcass weight equivalent (CWE), an increase of 24,000 MT from the initial estimate. The increase is largely attributable to the following factors: 1) Fewer outbreaks of foot and mouth disease and warmer-than-usual winter weather are preventing sickness and early deaths in key producing provinces; and 2) Adequate domestic supplies (in grains and natural grass) and favorable pasture conditions in West and Southwest China are improving animal feeding and increasing cattle weights. Fresh grass production reached a record high of one billion metric tons in 2011. Consumption: Although OAA/Beijing?s revised forecast is 13,000 MT higher than the initial estimate, China?s production continues to trend downward over the past few years. A major factor constraining China?s beef consumption is high domestic prices. For instance, from October-December 2011, the average price for beef soared 21 percent compared to the same time in 2010. Inadequate beef supplies will continue to keep domestic prices at record high levels and drive consumers to cheaper broiler meat and/or pork products. Imports: OAA/Beijing revised the import forecast for breeding beef cattle down by 3,000 head to 97,000 head, largely because of higher than expected domestic production and rising import prices. China announced a new policy on November 25, 2011 that all imports of breeding animals and frozen semen and embryos must show three generations of pedigree (great grandparent, grandparent, and parent generations). China is also requiring a minimum Estimated Breeding Value (EBV) or Estimated Progeny Difference (EPD) of at least 120 for boars. According to industry contacts, China?s new policies may hinder trade. Post will continue to monitor and report on these new policies. Beef imports are forecast at 28,000MT, which is 17,000 MT lower than the initial estimate. The downward revision is mainly due to higher import prices, which is discouraging demand. During October ? December 2011, the average import price increased nearly 33 percent, which is well beyond the reach of many Chinese consumers. Lower-priced pork products are substituting beef imports. Exports: The revised forecast for live cattle is 33,000 head, a six percent increase from the initial estimate. The upturn is mainly driven by higher demand for live cattle from slaughter operations in Hong Kong and Macau. Exports of live cattle are expected to replace some beef exports, which are revised downward by 6,000MT to 59,000. Sales will continue to Hong Kong, the largest market for frozen cuts and prepared beef, as well as to Japan, the second largest market for cooked beef. Swine/ Pork Animal Numbers, Swine Marke 2010 2011 2012 t Year: Jan USDA New Post USDA New Post USDA New Post Total Beginning Stocks 469,960 469,960 477,115 477,115 459,146 473,338 (1000 HEAD) Sow Beginning Stocks 49,100 49,100 47,500 47,500 47,300 49,280 (1000 HEAD) Production (Pig Crop) 677,800 677,800 641,250 660,622 657,470 680,000 (1000 HEAD) Total Imports 6 6 10 13 12 12 (1000 HEAD) Total Supply 1,147,766 1,147,766 1,118,375 1,137,750 1,116,628 1,153,350 (1000 HEAD) Total Exports 1,636 1,636 1,560 1,712 1,600 1,750 (1000 HEAD) Sow Slaughter 0 0 0 0 0 0 (1000 HEAD) Other Slaughter 667,000 667,000 656,572 661,700 676,314 676,340 (1000 HEAD) Total Slaughter 667,000 667,000 656,572 661,700 676,314 676,340 (1000 HEAD) Loss 2,015 2,015 1,097 1,000 855 855 (1000 HEAD) Ending Inventories 477,115 477,115 459,146 473,338 437,859 474,405 (1000 HEAD) Total Distribution 1,147,766 1,147,766 1,118,375 1,137,750 1,116,628 1,153,350 (1000 HEAD) CY Imp. from U.S. 3 3 3 8 0 9 (1000 HEAD) CY. Exp. to U.S. 0 0 0 0 0 0 (1000 HEAD) Balance 0 0 0 0 0 0 (1000 HEAD) Inventory Balance 7155 7155 -17969 -3777 -21287 1067 (1000 HEAD) Inventory Change 2 2 2 2 -4 -1 (PERCENT) Sow Change 1 1 -3 -3 0 4 (PERCENT) Production Change 3 3 -5 -3 3 3 (PERCENT) Production to Sows 14 13.8 14 13.9 14 13.8 (PERCENT) Slaughter to Inventory 142 142 138 139 147 143 (PERCENT) Slaughter to Total Supply 58 58 59 58 59 (PERCENT) TS=TD 0 0 0 Meat, Swine M 2010 2011 2012 arket Year: Jan USDA New Post USDA Official New Post USDA Official New Post Slaughter 667,000 667,000 656,572 661,700 676,314 676,342 (Reference) Beginning 120 120 170 170 150 180 (1000 Stocks HEAD) Production 51,070 51,070 49,500 49,500 51,280 51,600 (1000 MT CWE) Intra-EU 0 0 0 0 0 0 (1000 MT Imports CWE) Other 415 415 550 758 560 560 (1000 MT Imports CWE) Total 415 415 550 758 560 560 (1000 MT Imports CWE) Total 51,605 51,605 50,220 50,428 51,990 52,340 (1000 MT Supply CWE) Intra EU 0 0 0 0 0 0 (1000 MT Exports CWE) Other 278 278 260 244 280 255 (1000 MT Exports CWE) Total 278 278 260 244 280 255 (1000 MT Exports CWE) Human Dom. 51,157 51,157 49,810 50,004 51,560 51,905 (1000 MT Consumption CWE) Other Use, 0 0 0 0 0 0 (1000 MT Losses CWE) Total Dom. 51,157 51,157 49,810 50,004 51,560 51,905 (1000 MT Consumption CWE) Ending 170 170 150 180 150 180 (1000 MT Stocks CWE) Total 51,605 51,605 50,220 50,428 51,990 52,340 (1000 MT Distribution CWE) CY Imp. from 0 66 0 478 0 315 (1000 MT U.S. CWE) CY. Exp. to 0 0 0 0 0 0 (1000 MT U.S. CWE) Balance 0 0 0 0 0 0 (1000 MT CWE) Inventory 50 50 -20 10 0 0 (1000 MT Balance CWE) Weights 77 77 75 75 76 76 (1000 MT CWE) Production 4 4 -3 -3 4 4 (1000 MT Change CWE) Import 54 54 33 83 2 -26 (PERCENT Change ) Export 20 20 -6 -12 8 5 (PERCENT Change ) Consumption 5 5 -3 -2 4 4 (PERCENT Change ) Imports Percent 1 1 1 2 1 1 (PERCENT Consumption ) Exports Percent 1 1 1 0 1 0 (PERCENT Production ) Population 1,330,141,29 1,330,141,29 1,336,718,01 1,336,718,01 1,343,239,92 1,343,239,92 (PERCENT 5 5 5 5 3 3 ) Per Capita 38 37 38 (PEOPLE) Consumption TS=TD 0 0 0 Swine/Pork Production: Post?s revised forecast for 2012 pork production is 51.6 MMT, a nominal increase from the initial estimate and four percent higher than the revised 2011 estimate. The slight upward revision is primarily due to the following factors: 1) China?s policies for breeding animals and productive sows are encouraging farmers to increase their inventories, in order to help prevent another year of tight supplies and record high prices. Domestic and foreign-owned farms are building new facilities for breeding animals. Reportedly, these new facilities have larger storage space than government-owned facilities. Local quarantine offices have agreed to conduct their 45-day review process at these new locations. This new policy is expected to help expedite the import process for large operations. China resumed its production sow subsidy, which provides $16 (100 Yuan) per sow to small backyard and large scale farms. As of January 1, 2012, China?s insurance subsidy now covers fattening swine (swine used for slaughter) in all provinces. The Chinese government insures 20 percent of a hog?s value if the cause of death is related to a disease outbreak. 2) China experienced warmer-than-average winter weather and fewer outbreaks of foot and mouth disease (FMD), blue ear disease (PRRS), and swine diarrhea in major producing provinces in late 2011. Sources reported that no major FMD or PRRS outbreaks have occurred to date for 2012 and that China?s improved veterinary service and new FMD vaccination have helped the death rate remain at a relatively low level compared to previous years. (Please refer to the Swine Disease Section below for additional information.) 3) At the end of 2011, the average profit for swine was $63.50 per head for 100 kilograms of slaughter weight, which was well above feed costs. Favorable market returns in 2012 have already allowed farmers to afford better animal feed. Furthermore, China?s adequate domestic supplies (in grains and natural grass) and favorable pasture conditions have improved the quality of animal feed, thereby increasing swine weights. Reportedly, for total swine feed production in 2011, nutritious feed (grain, natural grass, and silage) accounted for 82 percent (up six percent from 2010), while concentrated feed (feed mixed with other feedstuffs) accounted for 15 percent (down six percent). 4) Reportedly, China?s domestic ban on the use of clenbuterol and ractopamine has caused producers to purchase new breeding swine for better genetics and higher-quality feed to produce leaner meat. Sources also noted that China?s ban has restored consumers? confidence in purchasing pork products. With all that said, tight land resources, stricter environmental requirements, diseases, and short labor supplies all hinder China?s animal farming, which is gradually moving west where land is available for large modern farms. Consumption: Post?s new forecast for pork consumption is 51.8 MMT, which is 335,000 MT higher than the previous estimate, mainly due to larger domestic supplies and lower prices. Although China?s economy is expected to slowdown in 2012, it is unlikely that demand for China?s traditional meat preference will be impacted. Additionally, pork is cheaper than other red meats, and the central government requested that all provinces and municipalities establish price-subsidy systems by the end of 2011, which includes subsidies for low-income consumers if prices return to record levels. Imports: The pork import estimate for 2012 remains unchanged. In 2011, China made larger-than-normal purchases due to the following events: Foot and mouth disease outbreaks shortened normal timelines for slaughter, which calculated lower- than-normal slaughter weights; Despite of adequate, productive sow inventories and favorable grain/swine price ratios (at $7.64 in December 2011), farmers feared a repeat of 2010 when purchasing piglet replacements (used for slaughter) at the end of the year led to oversupply and significant declines in market prices. With this fear, large operations made fewer purchases of new piglet replacements and some backyard farms stopped pork farming; and To help dampen China?s record-high food price inflation, the Chinese government purchased large amounts of pork supplies from foreign sources to release on the domestic market and replenish its central reserves. Pork prices account for 33 percent of China?s food price index. The forecast for breeding swine remains unchanged at 12,000 head. As noted under beef/cattle production, China issued a new policy that all imports of breeding animals and frozen semen and embryos must show three generations of pedigree (great grandparent, grandparent, and parent generations). China?s new import policies may hinder trade. Post will continue to monitor and report. Exports: The revised forecast for live swine (all for slaughter) is 1.75 million head, largely due to high demand in Hong Kong and Macau. The revised pork forecast is 255,000 MT (CWE), which is nine percent lower than the initial forecast. This downward shift reflects replenishments of China?s central reserves and fewer pork purchases from Hong Kong. Looking Forward: Swine disease in China: Sixty percent of China?s meat protein comes from pork consumption, so addressing swine disease is a high priority for China. Swine diarrhea is a fatal disease for new piglets. Once affected, the death rate on small backyard farms is 50 percent and about one-third on commercial farms. Most cases occur in the winter, particularly south of the Yangtze River, where temperatures are cold and wet and no heating is available in pig pens. To date, there is no effective vaccine for this disease. In mid December 2011, there were cases found in Sichuan, Shanghai, Zhejiang, Jiangxi, Hubei, Henan, and Shanxi. Blue ear disease (PRRS) does not currently seem to be a major threat, but the industry reported that the PRRS vaccination only lasts between six and nine months and that outbreaks are still possible. China?s Ministry of Agriculture?s laboratory in Lanzhou successfully developed a new FMD vaccine against the Burma-98 strain, which is the main source of FMD outbreaks in China. In October 2011, there were low death rates from the FMD outbreaks in Heilongjiang, Liaoning, Shanxi, Hebei, Henan, Shandong, Fujian, Sichuan, Guangxi, and Guangdong provinces. Reliable sources have noted that the FMD vaccine is 80 percent effective and has reduced outbreaks in several key producing provinces, but current supplies are inadequate for the rising demand. As swine disease is a very sensitive topic in China, no incident or data reports are publicly available. According to various sources, China?s disease outbreaks decreased about 60 percent from October to December 2011, compared to the same period in 2010. Price Tables: Beef China?s Average National Retail Beef Prices, 2007-2011 (RMB/KG, $1=RMB6.39) 2007 2008 2009 2010 2011 % Change 2011/10 January 19.64 29.11 33.90 34.08 35.72 4.81 February 20.35 31.40 33.72 34.54 36.41 5.41 March 20.14 31.42 33.13 33.86 35.78 5.67 April 20.07 31.55 32.81 33.45 35.59 6.40 May 20.28 31.73 32.60 33.24 35.63 7.19 June 21.21 31.82 32.53 33.16 36.19 9.14 July 22.02 31.92 32.46 33.30 36.91 10.84 August 23.13 32.02 32.70 33.55 37.55 11.92 September 23.69 32.39 32.96 33.89 38.29 12.98 October 24.36 32.74 33.15 34.17 38.78 13.49 November 25.27 32.98 33.35 34.65 39.15 12.99 December 26.65 33.25 33.73 35.07 47.37 35.07 Source: The Ministry of Agriculture; data collected from 470 farm produce markets. Pork China?s Average Retail Pork Prices, 2007-2011 (RMB/KG, $1=RMB6.37) MONTH 2007 2008 2009 2010 2011 % Change 2011/10 January 14.91 25.53 21.25 19.31 22.17 14.81 February 14.97 26.08 20.62 18.67 22.97 23.03 March 14.50 25.56 19.30 17.32 23.09 33.31 April 14.39 25.68 17.60 16.21 23.39 44.29 May 15.86 24.71 15.68 16.09 23.97 48.97 June 17.74 24.10 15.46 16.04 26.71 66.52 July 20.77 23.58 16.27 17.54 29.31 67.10 August 22.95 23.18 17.94 19.30 29.88 54.83 September 22.10 22.59 18.97 20.11 30.35 50.92 October 21.15 20.86 18.71 20.42 29.78 45.84 November 22.35 19.46 18.47 21.33 27.94 30.99 December 24.05 20.34 19.11 21.94 27.17 23.84 Source: The Ministry of Agriculture; data collected from 470 farm produce markets. China?s Average Retail Hog Prices, 2007-2011 (Year-To-Date) (RMB/KG, $1=RMB6.37) MONTH 2007 2008 2009 2010 2011 % Change 2011/10 January 9.55 16.50 13.41 12.05 13.88 15.19 February 9.20 16.70 12.70 11.14 14.35 28.82 March 8.91 16.83 11.63 10.06 14.78 46.92 April 9.02 16.87 10.35 9.53 15.05 57.92 May 10.20 15.77 9.24 9.62 15.53 61.43 June 11.37 15.35 9.33 9.64 17.54 81.95 July 13.12 14.82 10.13 11.14 18.98 70.38 August 14.27 14.47 11.38 12.19 19.33 58.57 September 13.60 13.86 11.85 12.55 19.68 56.81 October 13.21 12.50 11.47 12.78 18.93 48.12 November 14.13 11.90 11.40 13.55 17.35 28.04 December 15.46 12.91 12.09 13.79 17.15 24.37 Source: The Ministry of Agriculture; data collected from 470 farm produce markets. China?s Average Retail Piglet Prices, 2007-2011 (RMB/KG, $1=RMB6.37) MONTH 2007 2008 2009 2010 2011 % Change 2011/10 January 12.12 29.66 20.06 17.41 18.65 7.12 February 12.26 30.62 20.11 16.60 19.46 17.23 March 12.68 35.29 19.75 15.61 22.81 46.12 April 13.31 38.23 18.27 14.74 24.99 69.54 May 15.09 36.11 15.41 14.77 26.71 80.84 June 17.17 34.55 15.08 14.39 31.11 116.19 July 20.11 33.01 15.88 15.77 35.26 123.59 August 24.09 30.94 17.74 17.61 36.28 106.02 September 23.70 28.55 18.78 18.24 37.15 103.67 October 22.62 23.44 18.14 18.21 35.84 96.81 November 23.84 20.02 17.39 18.55 31.40 69.27 December 26.21 19.42 17.55 18.64 29.43 57.89 Source: The Ministry of Agriculture; data collected from 470 farm produce markets. Feed China?s Average Retail Industry Feed Prices for Fattening Swine, 2007-2011 (RMB/KG, $1=RMB6.37) MONTH 2007 2008 2009 2010 2011 % Change 2011/10 January 1.98 2.51 2.50 2.69 2.82 4.83 February 1.98 2.55 2.48 2.68 2.83 5.60 March 2.03 2.55 2.46 2.68 2.86 6.72 April 2.01 2.60 2.46 2.69 2.88 7.06 May 2.05 2.60 2.45 2.72 2.88 5.88 June 2.07 2.65 2.48 2.73 2.91 6.59 July 2.11 2.73 2.53 2.73 2.96 8.42 August 2.17 2.73 2.57 2.75 3.00 9.09 September 2.24 2.71 2.62 2.76 3.04 10.14 October 2.23 2.71 2.62 2.77 3.05 10.11 November 2.33 2.57 2.64 2.80 3.03 8.21 December 2.42 2.50 2.68 2.81 3.02 7.47 Source: The Ministry of Agriculture; data collected from 470 farm produce markets. (End of Report)
Posted: 12 March 2012

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