Great attention should be paid to building the mutton sheep industry chain
Generally speaking, as the weather turns colder, mutton sales will also usher in peak season. However, in the national market this winter, mutton prices in many places have continued to remain sluggish.
The continuous decline in mutton prices has left some sheep farmers complaining of losses. For consumers, although low prices are beneficial in the short term, some industry insiders also point out that farmers' enthusiasm has been dampened and industry development has become unstable, which in the long run is not a good thing for consumers either.
What is the reason for the continuous slump in mutton prices? Have mutton prices already fallen to the bottom? How can sheep farmers emerge from the price "winter"? Li Binglong, a scientist at the National Modern Mutton Sheep Industry Technology System and a professor at the College of Economics and Management of China Agricultural University, expressed his views.
Why mutton prices are falling
Looking back at mutton price trends, 2013 to 2014 was undoubtedly a period when mutton prices kept hitting new highs, but starting in 2014, mutton prices began to fall. This downward trend has continued to this day.
According to a set of online data: on November 13, 2013, the mutton price in Yuegezhuang, Beijing was 52 yuan/kg, the mutton price in Xicheng, Chifeng, Inner Mongolia was 56 yuan/kg, and the **Urho mutton price was 65 yuan/kg.
According to the price quotations for November 20 this year shown on the National Agricultural Products Business Information Public Service Platform, the mutton price at the Beijing Xinfadi Agricultural Products Wholesale Market was 33.3 yuan/kg, and the mutton price in Xicheng, Chifeng, Inner Mongolia was 44 yuan/kg; on November 18 this year, the **Urho mutton price was 42 yuan/kg.
These two sets of data may be the most intuitive explanation.
The industry generally believes that the peste des petits ruminants outbreak in the first half of 2014 was the trigger for the fall in mutton prices in 2014. In order to control and eliminate the epidemic, relevant departments strengthened supervision over the transport of live sheep and strictly prohibited the transport of live sheep from high-risk areas to low-risk areas, causing live sheep in major production areas to be held back from the market. After the epidemic was eliminated, the held-back sheep were concentrated on the market, and the mutton supply surged in a short period, causing prices to fall.
However, the epidemic was only the triggering factor for the decline in mutton prices. "The most fundamental reason for the decline in mutton prices still lies in oversupply," Li Binglong said.
In fact, before the price decline in 2014, mutton prices had already been rising continuously for more than ten years, and the number of mutton sheep raised had also continued to increase. According to statistics, China's mutton output in 2014 was 4.28 million tons. At the same time, the volume of imported mutton was also increasing rapidly. Relevant data show that China's mutton imports in 2009 were about 66,000 tons, and in 2012 this figure doubled to about 120,000 tons; in 2013, mutton imports rose to about 250,000 tons. Li Binglong said that because imported mutton is mostly sheep meat, compared with southern production areas, imported mutton has a greater impact on China's major northern production areas, but in terms of volume, imported mutton has not brought too great a shock to domestic mutton.
While supply reached periodic saturation and exceeded demand, affected by the macroeconomic environment and the decline in purchasing power of the high-end catering industry, demand for mutton also decreased somewhat. Supply continued to increase while demand decreased somewhat, and therefore mutton prices fell.
To reverse the situation, efforts should start with the industry chain
The sluggish mutton market in recent years has made it not only difficult for sheep farmers to make money, but many of them have even lost money.
For example, in recent years, mutton prices in Inner Mongolia, a major mutton production area in China, have continued to decline. From 2014 to August 2016, the retail price of mutton in Inner Mongolia fell from 63.68 yuan/kg to 53.4 yuan/kg, a cumulative decline of 16.14%; the purchase price of live sheep fell from 31.24 yuan/kg to 16.38 yuan/kg, a cumulative decline of 47.57%.
Judging from the current market conditions, an 8-month-old lamb sells for more than 500 yuan. Due to this year's drought, sheep need additional forage in addition to grazing, and forage prices have also continued to rise in recent years. For many sheep farmers, raising sheep means losing money, and raising more means losing more.
Will prices fall further? Perhaps this is the issue sheep farmers are most concerned about right now. In Li Binglong's view, the bottom may already have been reached. "Mutton prices have been falling continuously for nearly three years. Personally, I think mutton prices have already reached the bottom, and prices will rebound somewhat afterward, but they cannot return to a very high price within the next one or two years," he said.
Regarding the situation in recent years in which low prices have caused many sheep farmers to suffer losses, industry insiders analyze that China's mutton sheep breeding is still mainly based on small-scale household farming, with extensive farming methods, so once prices fluctuate, sheep farmers are prone to losing money.
"Although mutton prices are sluggish, many slaughtering and processing enterprises are still making profits. Why is it only small-scale households that are losing money? Mainly because they have not formed an industrial organization with closely linked interests with slaughtering and processing enterprises," Li Binglong analyzed.
To change the current development situation of the sheep industry, the whole industry chain may be the key to solving the problem. In fact, many enterprises in the industry are already actively laying out the whole industry chain, extending a traditional single business to build a whole industry chain covering breeding, slaughtering, processing, and sales, and improving market competitiveness and risk resistance. Li Binglong also emphasized that if breeders want to change the current loss-making situation, they should also start with the industry chain. "Further measures should be taken in the construction of the industry chain."