Dr. Jackie Xiong
Summary:
- China beef cattle raising is a scattered industry;
- Quick beef consumption mainly fueled the import;
- Some big beef cattle company at a glance;
- Rapid Industry consolidation is still far;
China beef cattle raising modes
China beef cattle raising has 3 chief modes, as shown below:
| Mode | Typical Regions | Characteristic | Trend |
| Small scale raising in agricultural area | Central and East China | Cattle mainly consists of working cattle and retired dairy cow, low tech, small scale, low quality. | Diminishing with modernization. |
| Medium scale raising in pasture area | West & North China, where pastures are abundant, such as Inner Mongolia, Xinjiang etc. | Raised on pastures, mainly grazing freely. But over-grazing became China Government concern and some measures are taken to limit this mode. | Diminishing with modernization. |
| Concentrated raising | Implemented by big conglomerates | Sophisticated breed choice, modern raise methods and large scale. | Increasing rapidly |
China beef cattle raising is super scattered, small scale cattle farms (mode 1) dominates the supply structure as shown below.
China beef consumption saw rapid growth, and mainly met by import
China staple animal protein resource is pork, accounting for nearly 90% of total meat consumption. Meanwhile, beef is becoming more popular, in 2020, China’s beef market has an annual market value of $110 billion, consumption estimated at 8.8 million metric tons (representing CAGR of 7.87% from 2017 to 2020). Rapid growing demand brought surging import, import proportion increased from less than 10% in 2017 to 24% in 2020.
Data Source: National Bureau of Statistics
The booming market is driven by improved living standards, beef offers alternative to port as a high protein low fat food, this trend was further fueled by African Swine Fever outbreak in summer 2018, which led to drastically downturn of pork production and skyrocketing pork price.
Looking forward, we expect the beef consumption keep growing over next 5 years, but pace will slow down, annual growth rate is estimated at 5-5.5%.
As expected, Australia and New Zealand, as well as some SA countries dominate the import market, it is notable that the United States also catch up quickly exporting beef to China.
Data Source: China Customs Statistics
China leading beef cattle companies at a glance
Despite highly scattered supplying structure, we list some biggest beef suppliers in China for reference.
| Company | Domicile | Business | Registered Capital (USD’m) |
Yearly Slaughted Beef Cattle Heads (thousand) |
| Kerchin Group | Inner Mongolia | Feedlot operating, slaughter | 25.25 | 300 |
| Haoyue Group | Jilin | Feedlot operating, slaughter | 15.63 | 1000 |
| Kingbull Group | Shaanxi | Feedlot operating, slaughter | 11.72 | 200 |
| Yisai Group | Henan | Cattle raising, slaughter | 125.00 | 200 |
| Foresun Group | Heilongjiang | Cattle and hog raising, slaughter | 15.63 | 400 |
| Ausaia | Beijing | Cattle raising in Australia, beef and calf import to China | 149 | NA |
Rapid industry consolidation is still far
We do not expected transition from scattered mode to concentration is a fast process due to following reason:
- The dairy sector saw rapid CAPEX growth over last 2 years, which crowded out financial resource of beef cattle raising.
New construction in China requires engineering planning permit from China Government, China Government disclosed incremental farm construction plan accommodation 2.5m dairy cows, with total investment at RMB4.5b. The investors include dairy processor and dedicated cattle raising group. Large scale CAPEX in dairy sector limit CAPEX level of beef raising, we didn’t perceive large beef producers plan for large scale investment.
- Pork production regain momentum along with relief from African Swine Fever, pork price downturn will limit beef raiser’s profitability as a substitute staple meat.
African swine fever outbreak in 2018 swiftly reduce China’s hog production by about 40%, the price correspondingly skyrocketing to unprecedented high level, which in turn stimulate beef price and raising profitability. However, China has fully recovered from the epidemic and pork price plummet notably since then. The drop in beef raiser’s probability may hinge the concentration trend.
