Smuggled meat frequently appears on the market, and the shrinkage of China's domestic beef cattle industry is worsening
"Smuggled Brazilian beef" has gradually spread across Jiangsu Province. After Lianyungang, Xuzhou, Suqian and other places, Nanjing recently seized 570 jin of uninspected and unquarantined smuggled Brazilian beef, causing a huge uproar.
The frequent recurrence of similar storms exposes a deep-seated crisis in China's beef cattle industry. Industry insiders point out that along with the shrinkage of China's beef cattle industry in recent years, domestic beef prices have risen sharply, allowing low-priced smuggled beef to slip in and further aggravate the crisis.
However, the intensifying crisis also highlights investment opportunities. A China Securities Journal reporter noted that listed companies such as Tianshan Animal Husbandry and Western Animal Husbandry have begun to "fatten up" one after another to fill the domestic beef cattle breeding gap.
Brazilian smuggled beef scandals play out frequently
On the afternoon of December 9, the Tiandun vegetable market on Yaojia Road in Qixia District, Nanjing, was unusually restless. In this vegetable market with only eighty or ninety stalls, vendors were talking about it one after another. A vendor pointed to a beef stall in the distance and told the China Securities Journal reporter: "Yesterday afternoon, people from the Yaohua Industrial and Commercial Office and the Food and Drug Administration seized 570 jin of uninspected and unquarantined smuggled Brazilian beef from there. Many people gathered to watch, and the commotion was huge."
Li Chuanwei, director of the Yaohua Industrial and Commercial Office, also confirmed to the China Securities Journal reporter, "This matter has been filed for investigation, and the beef stall involved has also been ordered to close. We are now trying to contact the stall owner. At the same time, the industrial and commercial office today also stepped up inspections of other vegetable markets." The beef stall that was originally doing booming business now has only a bare chopping board left, while the stall owner surnamed Liu is nowhere to be found. The China Securities Journal reporter could not get through when calling his mobile phone.
Although only 570 jin of beef was seized this time, this "storm in a teacup" still caused a huge uproar locally. It is understood that after Brazil became a mad cow disease epidemic area at the end of 2012, China explicitly stipulated that beef and related by-products from Brazil's mad cow disease epidemic area must not be sold. Although in July 2014 China began considering lifting the import ban on Brazilian beef, the ban had still not been lifted as of December this year. "Our test results are not out yet, so we cannot confirm that this is 'mad cow disease beef.' But in any case, uninspected and unquarantined beef carries risks," a relevant person in charge of the Nanjing Qixia District Food and Drug Administration told the China Securities Journal reporter.
This "smuggled Brazilian beef" scandal is also an aftershock of this year's closely watched Lianyungang "1·18" smuggled Brazilian beef case. At the beginning of this year, after the Lianyungang "1·18" case occurred, police during the investigation separately discovered 4 Xuzhou Brazilian beef suppliers and 4 Guangzhou Brazilian beef suppliers. These 8 suppliers sold banned beef to Jiangsu and several other provinces, with huge sales amounts, and the Lianyungang area alone sold more than 100 million yuan worth. At present, nearly 300 tons of problematic beef have been seized and detained.
However, the aftershocks of this case are still not over. On December 3, the industrial and commercial and public security departments of Sucheng District, Suqian City, joined forces and destroyed 4 illegal smuggling Brazilian beef processing hideouts in one action, seizing nearly 30 tons of beef, all of which was uninspected and unquarantined. Nanjing has become another affected city.
The crisis in China's domestic beef cattle industry is intensifying
"This year's 'smuggled Brazilian beef scandal' in Jiangsu actually reflects a deep-seated crisis in the domestic beef cattle industry. In recent years, the domestic beef cattle industry has continued to shrink, and beef prices have risen sharply, thus giving low-priced smuggled beef an opportunity to exploit," Wang Jimin, deputy director of the Institute of Agricultural Economics and Development of the Chinese Academy of Agricultural Sciences, pointed out to the China Securities Journal reporter.
Xie Maizhi, a vendor running a beef business in the beef and mutton hall of Beijing's Xinfadi market, told the China Securities Journal reporter, "Before 2008, beef prices were only twelve or thirteen yuan, but now they have risen to 24 yuan per jin, doubling. But business is far worse than before. Selling beef earns only five mao per jin, mainly relying on volume. Previously we could sell three or four thousand jin a day, but now beef is so expensive that no one buys it, and we can only sell seven or eight hundred jin a day."
Why have domestic beef prices risen so wildly? Cao Binghai, a professor at China Agricultural University [Weibo] and chief expert of the national beef cattle industry, explained to the China Securities Journal reporter, "Rare things are precious; the main reason is the sharp decline in beef cattle inventories in recent years." He introduced that from 2008 to 2012, China's beef cattle inventory decreased from 89 million head to 65 million head, a reduction of 24 million head in just four years. The beef cattle inventories of Shandong, Hebei, Anhui and Henan, the four provinces traditionally regarded as major beef cattle industry provinces, have shown an accelerating downward trend over the past decade, and the "Central Plains beef cattle industry belt" formed by the four provinces exists in name only.
The beef cattle breeding business of Fucheng Wufeng, the "first stock in the beef cattle industry," has also shrunk sharply. Song Baoxian, the company's board secretary, told the China Securities Journal reporter, "Although the company is involved in the breeding, slaughtering and processing, and food processing links of the beef cattle industry, its breeding starts from purchasing feeder cattle for fattening, and does not involve the most upstream cow and calf breeding links. Beef prices are rising, and feeder cattle prices are also rising accordingly. The company has not gained much from the rise in beef prices. On the contrary, with the decline in domestic beef cattle inventories, the company even faces, to a certain extent, a situation of 'no cattle to raise' and 'no cattle to slaughter.'"
"It must be said that under sharp shrinkage, China's beef cattle industry has fallen into an unprecedented crisis," Cao Binghai said.
At the same time, imported beef, especially smuggled beef, began to slip in. It is understood that currently domestic smuggled beef mainly comes from Brazil and India. Converted into RMB, the beef price is only equivalent to about 22 yuan/kg, far below the domestic beef price of about 50 yuan/kg, so it sells widely.
"Domestic smuggled beef is about 500,000 to 1 million tons each year. Smuggled beef does not go through customs inspection and quarantine, and is very likely to bring epidemics such as foot-and-mouth disease and mad cow disease into the country, which is a major hidden danger for the domestic beef cattle industry. At the same time, the large influx of smuggled beef will also deal a strong blow to the domestic beef cattle industry," Wang Jimin said.