Lower price, better quality will prompt domestic farmers to expand: experts
Restarting U.S. beef imports will hit China's industry and allow U.S. farmers to grab market share from other foreign rivals, analysts said Tuesday.
The U.S. Department of Agriculture announced Friday that bilateral talks on restarting U.S. beef exports to China are advancing fast and final details will be in place by early June, according to Reuters. The two sides are negotiating to meet a deadline for shipments to begin by mid-July, the report said.
China banned beef imports from the U.S. in 2003 to prevent the spread of mad cow disease. Before the ban, the U.S. was China's largest beef supplier and about 70 percent of China's imported beef came from the U.S.
The restart of U.S. beef exports to China will allow U.S. farmers to "vie for business that has been lost by rival Brazil," said Reuters report.
China curtailed beef imports from Brazil starting from March after Brazilian police accused inspectors of taking bribes to allow sales of rotten and salmonella-tainted meat.
Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant, said that "China will not impose too many restrictions on U.S. beef companies after it opens its market to them … therefore, U.S. farmers will grab some market share from other foreign rivals such as from Brazil and Australia, but will not completely squeeze them out of the Chinese market."
According to the U.S. Meat Export Federation, China's largest suppliers are Brazil, Uruguay, Australia and New Zealand. Argentina and Canada also export big volumes of beef to China.
In the first half of 2016, Brazilian beef suppliers including JBS, Minerva Foods and Marfrig Global Foods, increased their exports to China by 65 percent year-on-year, according to information released on March 27 on the website of market research and analytical firm ChinaAg.
Ma told the Global Times on Tuesday that the Chinese government may issue more import certificates to U.S. beef producers than to those from other countries like Brazil because U.S. beef companies are well-managed and their meat quality is better.
In March 2016, at least 16 Brazilian meat processors acquired Chinese government certificates, Economic Information Daily reported.
"But the U.S. beef producers may not easily get Chinese government certificates at once because they must go through some reviews, which will take time," Ma noted.
In September 2016, China lifted a 13-year ban on some beef from the U.S., but the procurement amount since then has remained low, said media reports.
China's beef imports grew rapidly during the past 13 years when U.S. beef was banned.
China's beef imports in 2016 totaled 579,800 tons, up 22.37 percent on a yearly basis and valued at .5 billion, news website chyxx.com said on May 16.
Experts warned that restarting beef imports from the U.S. may also hurt China's beef industry.
"The domestic beef sector will be hit if China opens its market to U.S. beef due to U.S. producers' comparatively low prices," Yu Linju, secretary-general of the Shanghai Meat Association, told the Global Times Tuesday.
The good news is that Chinese consumers will have more options once U.S. beef enters the market, Ma said, adding domestic firms need to be ready for competition.
"To address fierce competition, the Chinese agricultural industries should improve their levels of production," he said.
Inner Mongolia Kerchin Cattle Industry Co said that despite rising competition, the restart of U.S. beef imports will not affect the domestic market that much.
"During recent years, China's beef market has seen several booms caused by imports from some world-class beef production countries. Neither Australian nor Brazilian beef had a damaging impact on the Chinese beef market, and the upcoming U.S. beef inflow won't be that much of a problem," the company told the Global Times on Tuesday.