Gradually free.
Beef, among the national level meat such as chicken, duck, fish and meat, has almost always been the strongest presence that can only rise but not fall. But this year the situation has begun to change - beef is gradually becoming cheaper and more people can afford it. According to the summary of relevant price data, the current average price of beef nationwide is 73.41 yuan/kg, down 1.0% from the previous week and 14.6% year on year. In the 19 week price of livestock products and feed market released by the Animal Husbandry and Veterinary Bureau in 2024, except for a 0.6% month on week increase near the Spring Festival, beef prices fell in the other 18 weeks. The price dropped by 7.45 yuan/kg from 80.95 yuan/kg in the first week, a drop of more than 9%. In fact, the decline in beef prices began in 2023. By 2024, consumers will be closer to "beef freedom". The reasons for the change of beef price include both internal and external factors. The domestic beef output has reached new highs, and the foreign cheap beef from overseas continues to pour in. With the combined efforts of internal and external forces, the high price of beef that has been strong for many years has become a thing of the past. Ups and downs For thousands of years, cattle have been an important productive force in the agricultural society of China, and the supply of cattle is far from enough, and the consumption of meat is even more extravagant. In most feudal dynasties, there were laws about not killing cattle easily. Even after the founding of New China, there were a series of policies to protect cattle to maintain the stability of rural agricultural production. Until the reform and opening up, with the improvement of people's living standards, the demand for meat has increased. As a kind of high-grade meat, beef is gradually coming to people's table. There are even some exports. According to the National Bureau of Statistics, before 2011, China continued to export about 20000 tons of beef every year. But after that, the number dropped sharply. After 2019, this data has simply not been included in the statistics. Why are there fewer exports? The reason is simple: the domestic market is too large, and the output is not enough for the Chinese to eat. In recent years, the meat consumption structure of Chinese residents has undergone a major change. The proportion of pork consumption has declined significantly, from 64.2% in 2010 to 57.9% in 2023, while the proportion of beef consumption has climbed from 7.8% to 10.0%, becoming the fastest growing meat consumption category. Frost Sullivan data shows that in 2023, China's beef consumption will exceed 9.8 million tons, ranking second in the world. But this is not the end. According to the report of the Beef Branch of China Animal Husbandry Association, it is estimated that by 2035, China's beef consumption will reach 14 million tons, with a gap of more than 3 million tons. In terms of per capita consumption, China's per capita beef consumption in 2023 will be 7.0 kg/person, which is still far lower than that of the United States, 25.3 kg/person, and also lower than that of South Korea, Japan and other Asian countries with similar eating habits. On the whole, China's per capita beef consumption is still at a low level in the world. With strong demand and potential, beef prices have been rising to new highs in the past years. According to the data of the National Bureau of Statistics, the average annual price of beef (boneless meat) market has soared from 61.39 yuan/kg in 2014 to 85.8 yuan/kg in 2022, an increase of nearly 40%. However, after the peak in 2022, the beef price has gone out of a significant downward trend, which is very rare for many years. According to the monitoring data of Beef Branch of China Animal Husbandry Association, the average price of fattened cattle nationwide in June 2023 is about 25.39 yuan/kg, falling to the lowest point since November 2017. By the end of 2023, the price of live cattle will hover between 27 and 28 yuan/kg, down about 30% from the end of 2022, a new low in recent years. The rise and fall of beef prices have made the industry complain incessantly. ST Tianshan, an A-share listed company, said in its annual report that the sharp drop in the price of live cattle has seriously affected the company's breeding business. Another A-share listed company, Fucheng Shares, said in its annual report that the price of domestic live cattle would fall sharply in 2023, which would seriously damage many meat cattle breeding and breeding participants and dampen their enthusiasm for breeding. The reason for the sharp drop in beef prices. The industry coincidentally points to the "culprits" in two aspects. Price reduction The external factor is the impact of imported beef. According to the data of the General Administration of Customs, China is gradually increasing the import of beef. In 2016, the import of beef and beef offal was only 580000 tons, and by 2023, it will have reached 2.77 million tons, with an increase of 377.58%. The import amount also jumped from 10 billion yuan to 100 billion yuan. Imported beef is gradually influencing the domestic beef market at a low price. Consumers may have an inertial thinking that imported products are more expensive than domestic ones. However, in fact, imported beef is one of the rare products that can comprehensively crush the Chinese counterparts depending on the price advantage. In the 2023 annual report of Fucheng Shares, it was described that the cost of overseas cattle breeding was low, which led to the price of imported beef being more advantageous than that of domestic beef, which seriously restricted the development of domestic beef cattle breeding and breeding. ST Tianshan said that the continuous accumulation of imported frozen meat has curbed the demand of live cattle market. How cheap is imported beef? According to the data of the General Administration of Customs, in 2016, it was only 28.63 yuan per kilogram, the highest point was only 44.07 yuan, almost half of the domestic beef. Moreover, since 2023, the imported beef has shown a trend of increase in quantity and decrease in price, that is, the increase in import amount is lower than the increase in import quantity, which indicates that the unit price of beef is also declining. In the first four months of 2024, the average price of imported beef is 34.06 yuan/kg, which has dropped to the level three years ago. From the price of the three major importing countries, the average import price of Brazilian beef fell to 4.71 dollars/kg in October 2023, hitting a new low in recent two years; The average monthly price of Argentine beef arriving in Hong Kong will be 3.68 dollars/kg in October 2023, a new low for nearly three years; The average monthly price of Uruguayan beef arriving in Hong Kong will be 3.49/kg in October 2023, a new low in recent two years. Despite the impact, the proportion of imported beef is still a small part. Even in 2023, the proportion of imported beef will be less than 30% of the total market. This leads to another important reason for the price reduction of beef, which is the continuous increase of domestic beef production. Since 2017, the growth rate of beef production in China has been at a high level. Except for the special situation in 2020, the growth range is basically above 3%, which is far higher than the level before 2017. In particular, the growth rate of 4.84% in 2023 reached the highest level in nearly 15 years. ST Tianshan said in its annual report that the sharp increase in beef production in 2023 was due to "on the one hand, the beef cattle projects supported by local governments' industrial policies in the past few years have entered the centralized marketing period, the unsold cattle at the end of 2022 only need to be sold as soon as possible, the panic selling caused by the continuous decline in the price of live cattle and other multiple reasons, leading to a phased increase in the supply of domestic live cattle." With domestic worries and external difficulties, price reduction has become the only choice for domestic beef. replace Even if the price is reduced, the price of domestic beef is too high after all. This is higher than pork. As a meat product for ensuring people's livelihood, when there is fluctuation in pork, the national forces often directly intervene in the market. Beef, as a food with strong substitutability, is rarely treated in this respect, and is obviously affected by the price of pork. When the price ratio of beef to pork is high, consumers are more inclined to choose pork or other relatively cheap poultry to replace. According to the annual average price ratio of beef and pork (boneless meat) market published by the National Bureau of Statistics, although there was an abnormal growth of pork in 2020 due to special reasons, it quickly fell back to the normal level of about 25 yuan later, which is not a big price difference compared with ten years ago. This has led to the high price ratio of beef to pork in the past four years, which has exerted significant pressure on beef consumption. Especially in the context of consumption pressure, people pay more attention to the cost performance ratio of consumption than ever before. It is not impossible to spend three times the price of pork to enjoy beef, but it is doomed not to be normal. Therefore, from 2017 to 2020, the annual growth rate of beef production is 1.9%, and the annual growth rate of consumption is 7.8%; However, from 2021 to 2023, the annual growth rate of beef production doubled to 3.9%, while the annual growth rate of consumption dropped to 5.0%. Can we continue to reduce the price of domestic beef? I'm afraid the downward space is also limited. As we all know, South America is one of the most developed regions in the world for live cattle breeding. Its breeding cost is one of the lowest regions in the world because of its scale and centralization. However, since this year, the price in most regions of China has been within the range of 9.5-10 yuan per kilogram. Even for some live cattle with good quality, the price has only hovered between 11-12 yuan per kilogram. This price is already at the lowest level in the world. The price has been leveled, but the breeding cost of our farmers is far higher than that of overseas farmers. Take South America as an example. The large area of natural pastures, abundant forage, large scale breeding of beef cattle, high level of science and technology, and cheaper crop prices than China have greatly reduced the cost of imported beef breeding. For example, in Brazil, the land area is 8.5 million square kilometers, and grassland accounts for more than half. The largest grassland in Brazil Plateau is also the largest grassland in Brazil, with a total area of more than 5 million square kilometers; The same is true in Argentina, where about 130800 farms are dedicated to cattle raising. The total area of permanent pastures exceeds 140 million hectares, more than 51% of the total land area; Uruguay covers an area of about 176000 square kilometers, and more than 80% of its territory is covered with pastures. It is also a standard grazing country. The cattle in China are mostly fed by feed, and the cost remains high. In addition to various factors such as logistics and transportation, there is really little room for competition with foreign beef prices. Therefore, in order to let more people realize the freedom of beef in the future, we probably need to work harder on imported beef. The domestic beef, which is obviously not superior in price, in this field that does not involve market security and is easy to be replaced, rather than suffering in the price war, it is better to hand over the low-end market to imported beef, and cut into high-end and segmented markets. Compared with the price war that can't be won at all, this is a way out.
