Investment Report on China Beef Industry

With beef production above 7 million tons, China is the 3rd largest beef producer in the world; but backyard farms and manual slaughter units are main players of the industry. Large cattle farms with annual cattle crop higher than 100 heads only gain a market share of 11%, 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 keep declining from 2008. China beef production will only recover in 2012.
In 2007, there were about 1000 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 suffers with capacity utilization rate only 20%. Small companies will soon suspend production or exit the industry, which make 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 government will restrict small slaughterhouses and punish illegal slaughtering; in 2007 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 is not so effective, it’s still a good start toward more subsidies and we predit more areas will follow. These support policies will help recover breeder cow inventory.
In this report, BOABC comprehensively analyzes China beef consumption & Supply from 2000 to 2017. By combining value chain of beef industry and comparison with beef industry of US and Brazil, especially Brazil JBS group which became global largest beef processing company through frequent multinational acquisition, investment opportunities and investment value in China beef industry are concluded.

Table of Contents

1 Policy Environment and Outlook of China Beef Industry 1
1.1 Grain Production Policy 1
1.2 Environmental Protection Policy on Animal Farming 2
1.3 Quality Control over Cattle Farming and Beef Cirlulation 2
1.4 Livestock Industry Development Pilicy 3
1.5 Government Support Policy for Cattle Farming 3
1.6 Feed Industry Development Policy 4
1.7 Beef Cattle Slaughter Policy 5
1.8 Beef Trade Policy 5
1.9 Evaluation of China Beef Industry 6
2 China Beef Industry Profile 7
2.1 Current Profile 7
2.2 Beef Cattle Breeds 7
2.3 Beef Cattle Inventory 8
2.4 Beef Consumption 9
2.5 Beef Products 10
2.6 Cattle Slaughterhouses 11
2.7 Beef Trade 11
3 China Beef Consumption 13
3.1 Structure & Trends of Meat Consumption 13
3.2 Structure & Trends of Beef Consumption 14
3.3 Prospects of Household Beef Consumption 16
3.3.1 Structure & Trends of Household Food Consumption 16
3.3.2 Influences of Income Increase 18
3.3.3 Influences of Population Growth 19
3.3.4 Influences of Urbanization 20
3.3.5 Prospects of Household Beef Consumption 21
3.4 Prospects of Outdoor Beef Consumption 22
3.4.1 Influences of Income Increase 22
3.4.2 Influences of Population Growth 24
3.4.3 Influences of Urbanization 24
3.4.4 Prospects of Outdoor Beef Consumption 25
3.5 Prospects of Beef Processing Industry 25
3.5.1 Share of Processed Beef in Processed Meat Products 25
3.5.2 Main Products and Output 27
3.5.3 Processing Capacity 27
3.5.4 Prospects of Beef Processing Industry 28
3.6 Consumption of Top-grade Beef & Beef Products 30
3.6.1 Consumption of Top-grade Beef 30
3.6.2 Consumption of Top-grade Beef Products 30
3.6.3 Import of Top-grade Beef 31
3.7 Prospects of Beef Export 33
3.7.1 Main Players of Global Beef Trade 33
3.7.2 Destinations of China Beef Export 35
3.7.3 Main Competitors and Market Size of China Beef Export 35
3.7.4 Impacts of Cost for China Beef Export 37
3.7.5 Impacts of Trade Policy for China Beef Export 37
3.7.6 Prospects of China Beef Export 37
3.8 Impacts of Substitues and Prices 38
3.9 Impacts of Cattle Diseases and Other Uncertainties 39
3.10 Prospects of Beef Consumption 41
4 China Beef Supply 42
4.1 Cattle Inventory & Crop 42
4.1.1 Breeder Cows Inventory 42
4.1.2 Inventory & Crop Volume 43
4.1.3 Inventory & Crop Structure 45
4.1.4 Beef Cattle Crop by Farm Size 47
4.2 Beef Supply by Farming & Grazing Areas 48
4.2.1 Farming Areas 48
4.2.2 Grazing Areas 50
4.2.3 Supply Prospects of Farming & Grazing Areas 50
4.3 Beef Supply by Beef Belts 51
4.3.1 Northeast China 51
4.3.2 Central China 52
4.3.3 Northwest China 53
4.3.4 Southern China 54
4.3.5 Supply Prospects of All Beef Zones 54
4.4 Beef Production 55
4.4.1 Total Production and Species 55
4.4.2 Production of Fresh, Chilled and Frozen Beef 57
4.4.3 Production of Low-end, Middle-end and High-end Beef 58
4.5 Impacts of Feedstuff Supply 59
4.6 Impacts of Beef Trade 60
4.7 Prospects of Beef Supply 60
5 China Beef Demand & Supply Balance 61
5.1 Beef Price 61
5.2 Possibility of Large-amount-Beef-Import 62
5.3 Beef Export 62
5.4 Potencial & Real Beef Consumption 63
5.4.1 Household Consumption 63
5.4.2 Outdoor Consumption 64
5.4.3 Beef Processing 65
5.5 Demand & Supply Balance 66
6 Value Chain of China Beef Cattle Industry 67
6.1 Cost & Profit 67
6.1.1 Cattle Feed Production 68
6.1.2 Breeder Cow Rearing 69
6.1.3 Beef Cattle Rearing 70
6.1.3.1 Different Regions 71
6.1.3.2 Dofferent-Sized Farms 71
6.1.4 Slaughtering 72
6.1.4.1 Mannual & Illegal Slaughter Units 72
6.1.4.2 Modern Slaughterhouses 72
6.1.5 Beef Processing 73
6.2 Value Chain Structure 74
6.2.1 Production Value 72
6.2.2 Production Profit 73
6.3 Proifit Allocation and Reasonability 75
6.4 Impacts of Reasonability of Profit Allocation 75
7 Global Beef Cattle Rearing & Production Cost 76
7.1 China and It’s Share 76
7.2 Cattle Cost & Beef Price in Uinted States 77
7.2.1 Per Capita Meat Consumption Structure 77
7.2.2 Beef Cattle Farm Size 78
7.2.3 Beef Cattle Production Cost 78
7.2.4 Fresh Beef Wholesale Price 79
7.3 Cattle Cost & Beef Price in Brazil 79
7.3.1 Per Capita Meat Consumption Structure 79
7.3.2 Beef Cattle Farm Size 79
7.3.3 Beef Cattle Production Cost 80
7.3.4 Fresh Beef Wholesale Price 80
7.4 Cattle Cost & Beef Price in Australia 81
7.4.1 Per Capita Meat Consumption Structure 81
7.4.2 Beef Cattle Farm Size 81
7.4.3 Beef Cattle Production Cost 82
7.4.4 Fresh Beef Wholesale Price 83
7.5 Cattle Cost & Beef Price in Canada 83
7.5.1 Per Capita Meat Consumption Structure 83
7.5.2 Beef Cattle Farm Size 84
7.5.3 Beef Cattle Production Cost 84
7.5.4 Fresh Beef Wholesale Price 85
7.6 China’s Relative Cost & Price 85
8 China Beef Cattle Slaughter & Processing Industry 86
8.1 Industry Profile 86
8.1.1 Size 86
8.1.2 Profitablity 86
8.1.3 Enterprise 88
8.1.4 Capacity & Layout 88
8.1.5 Technology & Products 89
8.1.6 Marketing 89
8.2 Large Companies 89
8.2.1 Live Cattle Procurement 89
8.2.2 Product Fabrication 90
8.2.3 Marketing 91
8.2.4 Competition 92
8.3 Fucheng 94
8.3.1 Live Cattle Procurement 94
8.3.2 Product Fabrication 95
8.3.3 Marketing 96
8.3.4 Finance Indice 97
8.4 Beef Industry Evaluation 97
8.4.1 Driving Forces 97
8.4.2 Risks 98
8.5 Industry Prospects 99
9 Investments Analysis on China Cattle Slaughter & Processing Industry 100
9.1 Possibility of Building Large Beef Groups 100
9.2 Investment Opportunities 103
9.3 Investment Value 106
9.3 Investment Strategies 110
10 Beef Industry in United States 110
10.1 Industry Profile 110
10.2 Tyson Foods 111
10.2.1 Live Cattle Procurement 111
10.2.2 Beef Products 112
10.2.3 Sales Revenue 113
10.2.4 Sales Profit 114
10.2.5 Brand Strategy 115
10.3 Smithfileld Foods 116
10.3.1 Live Cattle Procurement 116
10.3.2 Beef Products 117
10.3.3 Sales Revenue 118
10.3.4 Sales Profit 119
10.3.5 Brand Strategy 120
11 Beef Industry in Brazil 122
11.1 Industry Profile 122
11.2 Grupo JBS-Friboi 123
11.2.1 Acquisition History 123
11.2.2 Live Cattle Procurement 125
11.2.3 Beef Products 125
11.2.4 Sales Revenue 126
11.2.5 Sales Profit 127
11.2.6 Brand Strategy 128