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Women in China fight over last piece of discounted pork

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BEIJING: China's economy shrank in the March quarter for the first time since current records began almost three decades ago, as the coronavirus shut down factories and shopping malls and put millions out of work.

Gross domestic product (GDP) fell 6.8 per cent in January-March year-on-year, official data showed on Friday, a slightly larger decline than the 6.5 per cent forecast by analysts and reversing a 6 per cent expansion in the fourth quarter of 2019.

READ: Fearful of COVID-19 return, Beijing turns into virtual fortress

It was the first contraction in the world's second-largest economy since at least 1992 when official quarterly GDP records started.

Providing a silver lining was a much smaller-than-expected fall in factory production in March, suggesting tax and credit relief for virus-hit firms was helping restart parts of the economy shut down since February.

However, analysts say Beijing faces an uphill battle to revive growth and stop massive job losses as the global spread of the virus devastates demand from major trading partners and as local consumption slumps.

"First-quarter GDP data is still largely within expectations, reflecting the toll from the economic standstill when the whole society was on lockdown," said Lu Zhengwei, Shanghai-based chief economist at Industrial Bank.

"Over the next phase, the lack of overall demand is of concern. Domestic demand has not fully recovered as consumption related to social gatherings is still banned while external demand is likely to be hammered as pandemic spreads."

On a quarter-on-quarter basis, GDP fell 9.8 per cent in the first three months of the year, the National Bureau of Statistics said, just off expectations for a 9.9 per cent contraction, and compared with 1.5 per cent growth in the previous quarter.

Statistics bureau spokesman Mao Shengyong told a press briefing after the data that China's economic performance in the second-quarter is expected to be much better than in the first.

However, weaker domestic consumption, which has been the biggest growth driver, remains a concern, as incomes slow and the rest of the world falls into recession.

Per capita disposable income, after adjusting for inflation, fell 3.9% from a year earlier in the first quarter, the data showed.

"We are hesitant to think that this is just a one quarter event, Q2 will also likely be lower than expectation," said Ben Luk, senior multi asset strategist at State Street Global Markets in Hong Kong. "To offset weakness in external demand, we will see some policy support later this month or early May."
PANDEMIC IMPACT
Industrial output fell by a less-than-expected 1.1 per cent in March from a year earlier. Highlighting the challenges in consumption, however, was a 15.8 per cent fall in retail sales, which was larger than expected.

Economists' forecasts for first-quarter GDP ranged widely given the many uncertainties around the pandemic's economic and social impact in China.

The virus has infected more than 2 million globally and killed more than 140,000. China, where the virus first emerged, has reported more than 3,000 deaths although new infections have dropped significantly from their peak.

Of major concern for policymakers is social stability among its 1.4 billion citizens, millions of whom migrate from rural areas to cities to find work each year.

The urban jobless rate fell to 5.9 per cent in March from 6.2 per cent in February, suggesting the pain in the labour market is yet to be reflected in official numbers.
RESCUE PACKAGE
However, analysts warn of nearly 30 million job losses this year due to stuttering work resumptions and plunging global demand, outpacing the more than 20 million layoffs seen during the 2008-09 financial crisis.

China's stability-obsessed leaders have pledged more steps to combat the slump but are mindful of the lessons learned in 2008-09 when massive stimulus saddled the economy with mountains of debt.

Last month, the ruling Communist Party's Politburo said it was considering measures such as more local government special bonds and special treasury bonds.

"We expect Beijing to deliver a large stimulus package soon to combat the worst recession in decades, with most of the financing to be provided by the PBOC (People's Bank of China)," Ting Lu, chief China economist at Nomura, said in a note.

The PBOC has already loosened monetary policy to help free up credit to the economy, but its easing so far has been less aggressive than during the global financial crisis.

The government will also lean on fiscal stimulus to spur infrastructure investment and consumption, which could push the 2020 budget deficit to a record high.
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For 2020, China's economic growth is expected to stumble to 2.5 per cent, its slowest annual pace in nearly half a century, a Reuters poll showed this week.

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China's Q1 GDP posts first decline on record as COVID-19 shuts down economy

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(Updated: ) Share this content BEIJING: China's economy shrank in the March quarter for the first time since current records began almost three decades ago, as the coronavirus shut down factories and shopping malls and put millions out of work.

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GDP

Might want to reorder your points in your report. Start off with the general picture of China’s GDP before zooming into the poultry sector.

A few expenditure components of the GDP were mentioned, team may want to use the equation to explain how some of these components impacted the GDP collectively.

International trade could be given some focus.

Nice support found!

Unemployment

Similarly, start with the general findings on unemployment, might want to comment which sector hardest hit, then zoom into the poultry industry

Identify the type of unemployment that is prevalent in the current situation

Do include the extra info in your report too!

Might want to examine the accuracy of the reported figure as well.

Inflation

Same comment as above

Identify the cause of inflation. Cost-push or demand-pull inflation or both?

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For establish max price and ration ↓ (extra info for report)

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For establish max price and ration ↓ (extra info for report)

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- 1/4 of the world's domestic pigs, and 1/2 of all pigs in China have either died or killed to prevent the spread of the virus.
- As the shortage of pork meat has led to a sharp increase of pork prices, the government has intervened by setting maximum prices below the free market price.
- Rationing pork purchases is implemented on consumers. For example, from the Nanning Evening News, it stated that only 1 kg of pork can be purchased per customer.
- Both intervention by the Chinese government are essential for the recovery of the pork production.

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Coronavirus: is China prepared to handle an unemployment crisis?

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Coronavirus: is China prepared to handle an unemployment crisis?

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'Nobody will pay': China's jobless problem worse than before

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The coronavirus has sent unemployment soaring in China, placing pressure on its state-run benefit system, which is seen as being ill-equipped to deal with the current crisis.

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                              Key Info Sources for Government Intervention [4]                                                                                                                           

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                              Key Info Sources for Government Intervention [4]                                                                                                                           

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Unemployment ticks higher in China as coronavirus shock to economy persists

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Unemployment ticks higher in China as coronavirus shock to economy persists

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BEIJING - The unemployment rate in China remained near historic highs in April, highlighting the challenges the world's second-largest economy still faces in recovering fully from the economic shock of the coronavirus.

China's official, but highly doubted, urban unemployment rate rose to 6.0% in April, from 5.9% in March, according to figures released Friday by the National Bureau of Statistics.

"The pressure on employment is rather large," bureau spokeswoman Liu Aihua told reporters at least three times during Friday's press conference. That's according to a CNBC translation of her Mandarin-language remarks.

Although monthly figures for the overall economy show some recovery, challenges remain, such as resuming work and the impact of the virus overseas, Liu said. "Right now, the trajectory of economic development still requires observation, but ... based on the results of policies for resuming work and production, we have the confidence, ability and basis for extending the momentum of recovery and improvement."

Liu noted that the bureau's survey found that at the end of April, the number of migrant workers who had returned to their jobs in the cities was about 90% of what it was a year ago. In early March, official figures showed the return to work for migrant workers from the poorest households in the country was about half of what it was a year ago.

More than half of China extended the Lunar New Year holiday by at least a week in an effort to control the Covid-19 disease, which first emerged late last year in the Chinese city of Wuhan. By early March, the virus outbreak had stalled domestically while accelerating its spread overseas. Covid-19 has now killed more than 302,000 people worldwide, including over 4,600 in China.

Similar lockdowns on economic activity in the U.S. sent the unemployment rate soaring to 14.7% in April, the highest since World War II and up from months of historic lows near 4% or less.

In February, the peak of the coronavirus outbreak in China, the unemployment rate jumped to a record high of 6.2%. For the 25 to 59-year-old group, the rate has hovered near 5.5% for the last three months.

The average work-hours a week per employee also fell in April by 30 minutes to 44.3 hours, the data showed.

China's unemployment data have been highly doubted, even after the country changed its methodology from worker claims to a survey in 2018 in an effort to capture more of the job losses. The urban unemployment rate has hovered near 4% to 5% for the last 20 years.

"We think that pressure on employment will continue," Bruce Pang, head of macro and strategy research at China Renaissance, said Friday. He pointed to factors such as fewer new jobs due to slower economic growth, sluggish demand for Chinese exports and a record-high number of university graduates this year.

The continued struggles of small and medium-sized enterprises, which contribute to the majority of jobs and growth in China, adds further pressure to employment. Pang pointed to third-party business registration data that showed 460,000 companies closed in the first quarter, while the establishment of 3.2 million new Chinese companies during that time still marked a nearly 29% decrease from a year ago.

As the coronavirus has limited the ability of people to travel and gather, businesses and job seekers are quickly finding ways to adjust to shifts in consumer behavior.

Alibaba's logistics affiliate Cainiao said last week it has received more than 1 million job applications for managers at 30,000 new package pick-up stations across 100 cities in the country. These mini-distribution centers operate within communities such as schools and apartment complexes. Cainiao announced plans for expanding the number of stations in March and intends to increase the kinds of services they offer.

During March and April, more than half of the managers who joined were individual entrepreneurs, including household businesses and college students, according to Cainiao. The other half transitioned from traditional courier businesses, convenience stores and other small grocery shops, the company said.

For millions of other people, making such job transitions may not be that easy. But the Chinese government is intent on doing its best to ensure employment, which is critical for political stability.

Officials have made it clear that employment will remain a priority for discussions on supporting growth at China's key annual parliamentary meeting, which kicks off this year on May 22, after a delay of more than two months due to the coronavirus.

So while authorities have so far resisted a large-scale economic support plan, "the pressure from unemployment could be the main reason for stimulus escalation later this year," Larry Hu, chief China economist at Macquarie, said in a note Friday.

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Unemployment ticks higher in China as coronavirus shock to economy persists

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BEIJING - The unemployment rate in China remained near historic highs in April, highlighting the challenges the world's second-largest economy still faces in recovering fully from the economic shock of the coronavirus. China's official, but highly doubted, urban unemployment rate rose to 6.0% in April, from 5.9% in March, according to figures released Friday by the National Bureau of Statistics.

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Chinese government rations pork and sets maximum prices

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Chinese government rations pork and sets maximum prices

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Much cheaper & more effective than TES or the Guardian. Reach the audience you really want to apply for your teaching vacancy by posting directly to our website and related social media audiences.
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Chinese government rations pork and sets maximum prices | Economics | tutor2u

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Much cheaper & more effective than TES or the Guardian. Reach the audience you really want to apply for your teaching vacancy by posting directly to our website and related social media audiences. Find our more ›

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The tariff fight has added to Chinese shoppers' grocery bills. How is the government coping? By tapping its gigantic stockpile of emergency meat.

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On the outskirts of Beijing, workers unloaded carcasses at a warehouse that is part of China's national pork reserve. Credit Credit Gilles Sabrié for The New York Times

BEIJING - When supplies of China's favorite meat run low, Beijing calls upon its strategic pork reserve, a name that brings to mind vast piles of sausages, bacon and spareribs housed in secret underground vaults across the country.

That's not quite how it works. But China's pork reserve is real, and it is basically a carnivore's version of the Strategic Petroleum Reserve, which keeps the United States flush with oil during emergencies. Pork prices in China today are skyrocketing, the result of an epidemic that is ravaging the country's hogs, and the government has been drawing upon its reserves to lift supplies for shoppers.

The trade war with the United States hasn't helped - China's retaliatory tariffs have made imports of American food and agriculture products more expensive. As the two countries' negotiators meet this week in Washington for another round of trade talks, ballooning grocery bills are adding to the pressure on Beijing to reach a deal.

Last month, 30,000 metric tons of pork from the national reserve was sold into the market ahead of Oct. 1, the 70th anniversary of modern China's founding. A batch of 9,600 tons was released in January, shortly before Chinese New Year. Local governments have also tapped their stores.

China is hardly alone in stockpiling food at gigantic scale. The Canadian province of Quebec, famously, has a maple syrup reserve. Until not that long ago, the United States had a national raisin reserve.

But yes, the idea of a strategic pork reserve raises some questions. Let's take them in turn.

The system was created in the late 1970s, just as the nation began emerging from economic ruin. Mao's government had kept emergency stockpiles of grain, salt and sugar since the '50s as part of the planned economy. As the country introduced market reforms, reserves became a tool for controlling price swings, not just for pork, but for beef, chicken and lamb, too.

In addition to the latest pork deployments, 2,400 tons of beef and 1,900 tons of lamb were put on the market in early September.

The exact numbers are a state secret. No, seriously.

Officials have, however, given some hints. Part of the point of a reserve is psychological. If there's too much secrecy, the reserve loses its power to reassure people that supplies are ample.

In a 1996 essay, an official with China Foods Limited, a government-affiliated company that managed the national pork reserve, wrote that the official stockpile had grown to 200,000 tons from around 20,000 tons at inception. The number dipped in the early 2000s, researchers say. But it seemed to have recovered by 2011, when, amid a bout of infectious disease that brought pork prices to new highs, China's commerce ministry said the national reserve held around 200,000 tons.

The big question, of course, is whether the reserves could ever be large enough to have a meaningful effect on prices. China consumes over 50 million tons of pork a year, or nearly half of the pork that is eaten annually by all of humankind. Pretty much all of that comes from pigs raised within the country.

But analysts estimate that China's herd is already 40 percent smaller this year than last, as hogs die from African swine fever, are culled to control the disease's spread or are never born in the first place. Analysts at Jefferies, the investment bank, predict that the nation will produce 30 percent less pork this year compared with last year, a drop of 16 million tons.

Against those numbers, even 200,000 tons of emergency meat can seem like a drop in the ocean.

China's central government has more than a dozen storehouses around the country, each of which can hold around 10,000 tons of frozen raw pork. There are also private and state-owned companies that work with the authorities to manage national and local reserves.

These companies mostly keep their pork in unmarked suburban warehouses, where the meat stays at the state-mandated temperature of minus-18 degrees Celsius, or just under zero degrees Fahrenheit. In 2013, a reporter in the eastern province of Shandong got a peek inside one such facility, where 1,500 tons of pork was sitting behind a double-locked door. The guard at the warehouse was wearing eight layers of clothing.

Technically, though, China's pork reserves don't contain only meat. Since the '90s, the government has stockpiled live pigs, too.

In 2007, when reporters in Shandong visited a farm that bred pigs for the provincial reserve, they found tens of thousands of hogs running around in what sounded like pretty idyllic conditions: "The area is lush with vegetation and shaded by trees. The hog house is tall and spacious. There is heating in the winter and ventilator fans in the summer."

And then there is Yunnan, a southwestern province famous for its ham. The local government there said last year that it held 3,000 tons of ham in addition to 132,000 live pigs and 400 tons of frozen meat.

Just fine, apparently.

The government mandates that pork in the reserves be swapped out three times a year, which means no piece of meat is supposed to stay for more than four months.

Recently on Weibo, the Chinese social media platform, a user wrote a post titled "Today I Bought Government Reserve Pork."

The pork in question was found at the local supermarket, the user, @lbtgs, wrote. It was labeled "No. 4 meat," which is government code for pork leg. It was cheaper than the "non-reserve pork" he found at the same meat counter, he said, so he gave it a shot.

"The quality isn't bad, and it doesn't smell weird," he reported. "It is totally edible meat."

Raymond Zhong is a technology reporter. Before joining The Times in 2017, he covered India's fast-moving economy from New Delhi for The Wall Street Journal. @zhonggg

A version of this article appears in print on , Section B, Page 1 of the New York edition with the headline: Stockpiling Hogs for a Rainy Day. Order Reprints | Today's Paper | Subscribe

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Swine Fever? Trade War? China Turns to Strategic Pork Reserve

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The tariff fight has added to Chinese shoppers' grocery bills. How is the government coping? By tapping its gigantic stockpile of emergency meat. BEIJING - When supplies of China's favorite meat run low, Beijing calls upon its strategic pork reserve, a name that brings to mind vast piles of sausages, bacon and spareribs housed in secret underground vaults across the country.

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                                                 Key Info Sources for Unemployment [2]                                                                                                                           

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                                                 Key Info Sources for GDP [1]                                                                                                                                    

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                                                 Key Info Sources for GDP [1]                                                                                                                                    

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                                       Key Info Sources for Inflation [3]                                                                                                                                           

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MACROECONOMIC ANALYSIS

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China's agricultural sector is supported by a number of policies that are collectively designed to achieve a food self-sufficiency objective. The objective stems from the Chinese Government's view that China's food security is best maintained by meeting its domestic food demand with domestically produced food and minimising its reliance on international markets.

While food imports have increased significantly over the past decade, in general they remain only a small proportion of domestic consumption in China. This box provides an overview of some policies implemented in China that support food self-sufficiency. It analyses recent growth in imports of food to highlight how changes in trade might affect the self-sufficiency objective.

Under the food self-sufficiency objective the Chinese Government has a self-sufficiency target for a number of crops. The target aims to satisfy a minimum of 95 per cent of domestic consumption of rice, wheat, coarse grains, soybeans and potatoes through domestic production. While the target explicitly focuses only on these crops, production of other foods is generally supported by a range of other policies (Simon et al. 2014).

The 95 per cent self-sufficiency target on the specified crops, with the exception of soybeans, has largely been achieved since its establishment in 1996. China's soybean imports grew significantly between 1996 and 2013 and in 2013 supplied 80 per cent of total domestic consumption. As a result, it appears that the Chinese Government deleted soybeans from its self-sufficiency target in late 2013, allowing the aggregate 95 per cent target to be attained for the remaining crops (Pumin 2013).

China's self-sufficiency objective is especially important for international trade of staple foods, such as rice and pig meat. The international markets for these commodities are relatively thin and any significant change in Chinese import demand can create strong volatility in world prices. For example, China's pig meat imports were close to eight per cent of global trade in pig meat in 2012, but this was less than one per cent of its domestic consumption (OECD-FAO 2013).

Since 2009 China's imports of many food commodities (including targeted crops such as wheat and corn) have increased. This has fuelled speculation that the self-sufficiency objective may be relaxed for some commodities or even abolished in the future (China Economic Review 2014). Coupled with this speculation are concerns about China's ability to maintain self-sufficiency given production constraints facing its agricultural sector and the pace at which domestic demand for food is increasing. For example, land and water quality have become progressively degraded, challenging the agricultural sector to provide for a growing and increasingly affluent population.

For cereal crops, such as wheat and rice, ABARES projects that demand growth between 2009 and 2050 will outpace production growth. The real value of Chinese cereals consumption is projected to increase by 52 per cent over that period, while the real value of domestic production of cereals is projected to rise by only 29 per cent (Hamshere et al. 2014).

China's Policies on Food

The self-sufficiency objective is one of the main reasons the Chinese Government intervenes in agricultural markets. Self-sufficiency is supported by domestic policies that encourage increased agricultural production, such as market price support, agricultural subsidies and rural land reforms. China's trade policies also allow the government to maintain control over the import and export of important food products, such as rice and wheat.

China's self-sufficiency policies tend to focus on grains, oilseeds and potatoes because of their direct or indirect importance to Chinese consumers. While wheat, rice and potatoes are directly consumed as food, corn and soybeans are mostly used as feed for the intensive livestock industries. The inclusion of corn and soybeans in the self-sufficiency target relates to their role as inputs to pig and poultry meat production, because of the importance of these meats to Chinese diets. Although soybeans are also consumed as food, their use as food constitutes only around 12 per cent of total soybean consumption in China.

Market price support

The primary tool used to encourage production of the targeted crops is a minimum purchase price in major producing regions. This policy has applied to rice and wheat since 2006 and was widened to include soybeans, canola and corn in 2008 (Gale 2013). Under this policy, producers are guaranteed a minimum price for their product. The price is set by the Chinese Government and maintained through purchases by state trading enterprises (STEs). The minimum prices have been increased each year since 2009 to protect producers from rising input costs and the appreciation of the yuan (OECD 2013).

China also operates a grain reserve system, where non-producing provinces are required to stockpile a minimum amount of wheat and rice as a means of controlling price volatility and ensuring supply. This programme was initially designed for rice and wheat but is also used for storage of corn and canola; until 2014 it was also used for soybeans. These reserves are released through an auction system as the availability of grains and oilseeds in the domestic market declines following harvest (Gale 2013).

Since provincial reserves reportedly account for up to six months of consumption, the grain reserve programme allows the government to cover a shortfall or disruption to domestic production in the short term (OECD 2013). The programme reduces the need for imports.

A pig meat reserve programme in place since 2009 manages price volatility in the domestic pig meat market by controlling supply. Under this policy, government interventions in the pig meat market are based on movements in the pig meat-to-corn price ratio. The Chinese Government subsidises pig meat processors to stockpile frozen pig meat if its price is less than five times the price of corn. These stocks are released into the market only when the price of pig meat rises above nine times that of corn (Rabobank 2012). By managing the supply of pig meat on the domestic market, the Chinese Government constrains price fluctuations and is able to maintain incentives for pig meat production in spite of rising feed costs.

Agricultural modernisation and rural reform

The Chinese Government's stated modernisation policies aim to improve uptake of modern agricultural practices and commercial farming. These policies support the self-sufficiency objective by targeting both increased domestic food production and reduced production variability. Given that arable land in China is limited, and use of fertilisers and other inputs is high, productivity gains are necessary to increase production and meet future expected higher demand for food (Hamshere et al. 2014).

Modern production systems, including increased mechanisation in grain production and larger farms, are considered the main sources of future agricultural productivity growth in China (World Bank 2014).

Many of China's modernisation policies are based on subsidies for the purchase of inputs, such as tractors and improved seed varieties, and for encouraging modern practices such as improved livestock breeding (OECD 2013). The subsidies are designed to provide farmers with incentives to replace traditional labour-intensive and low-productivity methods of farming with modern production systems, which will increase production, decrease labour requirements and reduce production variability. Other subsidies, known as awards, are paid directly to county governments in areas that have high grain or pig meat production. These subsidies are aimed at encouraging public investment in both infrastructure and research to support production (Gale 2013).

Since 2004 the Chinese Government has implemented rural land reforms to, among other objectives, encourage the development of larger farms. These aim to improve the productivity of extensive cropping operations for the targeted crops, thereby supporting the self-sufficiency target. The average farm size in China is around 0.6 hectares, so productivity can be improved through economies of scale (FAO 2012).

Because many producers work on land rented from village collectives, access to credit is limited. Producers' ability to invest in expanded operations and modern equipment is constrained as a result. Changes to the land reform agenda announced in January 2014 are expected to strengthen the contractual rights of producers over rented farmland, allowing producers to use land to secure loans and simplifying land transfers to create larger enterprises (China Daily 2014).

Agricultural trade policy

China's trade policy allows the government to maintain some control over the trade of agricultural products through the market operations of STEs and trade restrictions. Imports of agricultural products are restricted through either tariff rate quotas (TRQs) or import tariffs. Overall, China's most-favoured nation applied tariffs on agricultural products average 14.8 per cent, compared with 8.6 per cent for non-agricultural products (WTO 2014). For target grains, such as wheat, rice and corn, imports are subject to a TRQ with an applied in-quota rate of just one per cent and quotas equivalent to between two and eight per cent of 2012 domestic production.

A prohibitive out-of-quota tariff of 65 per cent is applied to imports of each of these grains. This effectively limits imports at the quota levels, thereby supporting the self-sufficiency target for these grains. Tariff reductions for target grains have not been included in any of China's recently negotiated free trade agreements, including those with Australia, Pakistan and New Zealand.

China maintains state trading to ensure stable supply and prices of important agricultural products and to safeguard its food security (WTO 2014). STEs have exclusive access under the TRQs to import wheat, rice and corn. The share of the imported volume allocated to the state traders is as high as 90 per cent for wheat.

The STEs may allow imports to make up for a domestic shortfall or to build up public stockpiles. They can also restrict low-priced imports of products that threaten to put downward pressure on domestic producer prices. If low-priced imports enter the domestic market, they would have to make minimum price purchases of domestic product to support the domestic producer price, with those purchases going into stocks. STEs can also restrict exports through export quotas to ensure domestic availability.

Recent Trends in Chinese Agrifood Imports

Since 2004 China's imports of agrifood products (all agricultural output that can be used for food) have grown significantly. The real value of China's imports of agrifood products increased by 275 per cent between 2004 and 2013, to US$99 billion (in 2013 US dollars). The fastest growing categories were dairy products (up by 847 per cent), fruit and vegetables (427 per cent), oils and oilseeds (254 per cent), meat and seafood (209 per cent) and cereals (84 per cent).

The most rapid import growth occurred between 2009 and 2013, when the real value of China's agrifood imports doubled. Changing diets and increasing incomes of Chinese consumers have led to an increase in not only the quantity but also the quality and diversity of food demanded (Hamshere et al. 2014). With consumption growth exceeding production growth for a range of commodities over this period, domestic prices have risen. Increased openness to trade by the Chinese Government through free trade agreements has allowed imported products to satisfy demand. As a result, imports of fruit, vegetables, meat, dairy products and seafood have increased significantly.

Demand for imported feed grains and oilseeds has also increased as domestic livestock production has expanded in response to stronger demand for meat.

While the self-sufficiency ratio for the targeted crops has remained above 95 per cent since 2009 (with the exception of soybeans), continued high domestic prices could challenge Chinese self-sufficiency in these crops in the future.

Cereals and oilseeds

China's imports of wheat, rice and corn have all increased over the past five years despite record domestic production. While China had imported these grains sporadically in the past, it was a net exporter of all three before 2007. By 2012 it was a net importer of all three grains.

Soybeans are the main oilseed imported into China. Since 2004 imports of soybeans have grown significantly, while domestic production has declined. In 2013 imports of soybeans totalled US$38 billion, or around 42 per cent of total agrifood imports by value.

Rice is a staple food in the Chinese diet. Although rice imports account for a small proportion of domestic consumption (around 2 per cent a year), China imported 3.4 million tonnes of rice in 2013. Vietnam was the largest supplier to China in that year, accounting for 59 per cent of rice imports, followed by Thailand (22 per cent).

Over the past five years, the United States has supplied a significant share of China's imports of corn, wheat and soybeans. In 2013 the United States supplied 90 per cent of China's corn imports, 68 per cent of wheat imports and 35 per cent of soybean imports. However, in October 2013 China prohibited imports of MIR162 corn, a genetically-modified variety that is widely used in the United States. As a result, between January and August 2014, exports of US corn to China were around 86 per cent lower than for the same period in 2013. China made up for the shortfall through domestic production and increased imports from Ukraine.

Grain imports have risen since 2009 because of rising domestic demand and the resulting increase in domestic prices. Domestic prices have also risen in response to increases in support prices (Gale 2013). For those crops that undergo additional processing or are used as feed (such as rice, corn and soybeans), imported product is often the lowest cost option. As inputs to further processing, lower-priced imports allow processors to retain their margins.

For rice and wheat, the recent growth in imports is unlikely to be maintained over the long term given the role of state trading in these commodities. Wheat imported over the past two years has principally been a high-quality product for blending with domestic grain for milling (Price 2014). In 2011 domestic prices for wheat were higher than the support price, so the STEs made no domestic wheat purchases at the support price. This may have contributed to the rise in imported wheat in 2012 and 2013 to support the reserve system (USDA-FAS 2014). This is comparable to 2004, when China imported a significant volume of wheat to replenish its domestic stockpiles, but this did not lead to a long-term increase in wheat imports.

For corn and soybeans, import growth is likely to continue as long as domestic feed prices remain high. Increased demand for meat and livestock products, combined with rising support prices, have put upward pressure on domestic feed grain prices despite record corn production. Because land remains limited, any further rise in production of corn and soybeans remains unlikely without either a reduction in the area planted to wheat and rice (grains for which relative returns exceed those of corn and soybeans because of higher support prices) or substantial productivity gains.

Despite the increase in grain and oilseed imports, the volume of imports relative to domestic consumption remains small for rice, wheat and corn. In 2013-14 China's self-sufficiency ratios were around 99 per cent for corn, 98 per cent for rice and 97 per cent for wheat. In contrast, the self-sufficiency ratio for soybeans was around 26 per cent.

Meat and dairy products

The value of China's imports of meat and dairy products increased almost 10-fold between 2004 and 2013 (in 2013 US dollars). This was driven by large increases in China's imports of beef, sheep meat and dairy products. Production during this period grew slightly but was well below the rate of consumption.

In 2013 Australia supplied most of China's beef imports by value (57 per cent), and it was the second-largest supplier of sheep meat (39 per cent). New Zealand supplied most of China's imports of sheep meat (57 per cent) and dairy products (63 per cent). The major suppliers of pig meat were the United States (21 per cent) and Germany (19 per cent). Poultry imports were sourced mainly from Brazil (48 per cent) and the United States (42 per cent).

Meat and livestock products are not supported to the same extent as grains and oilseeds, and different factors have contributed to import growth. While the traditional source of protein in China is pig meat, income growth and urbanisation have contributed to increased demand for meat and dairy products. Food safety concerns, such as those highlighted by the melamine in baby formula scandal, have also contributed to increased consumer preference for imports.

Another important factor influencing the rise in meat imports is high domestic production costs. As the support prices of soybeans and corn have been increased, livestock producers have faced higher feed costs. Dairy supply has been affected by consumer concerns over food safety, which led to additional regulations being imposed on dairy producers and forced many small producers to exit the industry. Resulting higher prices for meat and dairy products have driven demand for imported products.

China's meat imports remain small relative to domestic consumption and it has maintained a high level of self-sufficiency in these products. However, self-sufficiency rates for beef and dairy products have been trending downwards over the past two years, as imports have increased significantly. Without considerable productivity growth in these industries, imports are likely to continue to grow.

Future of China's self-sufficiency

China's self-sufficiency objective is likely to be challenged in the future. Increasing demand for a wider variety of food products will put pressure on the land and water resources required for agricultural production. The policy response to these factors will determine whether China is able to maintain self-sufficiency in the long term.

China's comparative advantage in agricultural production is in labour-intensive products, such as horticulture and intensive livestock production, rather than extensive cropping. This is because of relatively low rural labour costs and land constraints stemming from the ongoing conversion of arable land to urban development. The result is that products China views as most important, such as rice and wheat, are not those that it can produce most efficiently. Returns to producers for these products are, in the absence of support prices, relatively low.

As China becomes increasingly urbanised, demand for meat is projected to increase while demand for staple grains (such as rice) is projected to decrease (Hamshere et al. 2014). Higher meat demand will necessitate more imports of either meat for consumption or feed grains to support intensive livestock production. Because of the importance of pig meat to the Chinese diet, and a consumer preference for fresh over frozen product, it is unlikely that China would prioritise imports of pig meat (Rabobank 2012).

Recent policy changes have attempted to reduce both food inflation and imports. Support prices for corn and wheat were not increased in 2014-15, after having been increased each year since 2008-09. A pilot target price mechanism was also proposed in early 2014 to replace minimum price purchases for soybeans in key provinces.

To maintain producer support, the government will instead pay subsidies to producers if the domestic price falls below the set target, which will allow the domestic price to align with the world price. For soybeans, this policy is likely to reduce the domestic price. This will make domestic supplies more appealing to processors and reduce incentive to import.

It is unlikely China will be able to maintain self-sufficiency on all major agrifood commodities. Recent experience has shown that productivity growth in the target crops has not raised production enough to satisfy demand growth. Rice, wheat and pig meat are likely to remain the focus of China's self-sufficiency policy but resource constraints will challenge its ability to maintain self-sufficiency - especially for products like beef, sheep meat, soybeans and feed grains. Therefore, rising import trends are likely to continue.

References

China Daily. 2014. Back up rural land reform. China Daily, 23 January.

China Economic Review. 2014. Has China really ditched its grain self-sufficiency policy? China Economic Review, 19 February.

FAO. 2012. Agriculture and trade policy background note: People's Republic of China. Food and Agriculture Organization of the United Nations, Rome.

Gale, F. 2013. Growth and evolution in China's agricultural support policies. United States Department of Agriculture Economic Research Service, Washington DC.

Hamshere, P., Sheng, Y., Moir, B., Syed, F. and Gunning-Trant, C. 2014. What China wants: analysis of China's food demand to 2050. Paper presented at 44th ABARES Outlook conference, Canberra, 4-5 March (pdf 1.2mb).

OECD. 2013. China. In 'Agricultural policy monitoring and evaluation 2013'. Organisation for Economic Co-operation and Development, Paris.

OECD-FAO. 2013. Feeding China: prospects and challenges in the next decade. In OECD-FAO 'Agricultural outlook 2013'. Organisation for Economic Co-operation and Development and Food and Agriculture Organization of the United Nations, Paris.

Price, C. 2014. Wheat. In 'Agricultural commodities: June quarter 2014'. Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra.

Pumin, Y. 2013. Feeding the future: new challenges in ensuring food security require new solutions. Beijing Review. 2 January.

Rabobank. 2012. Industrialisation of China's pork supply chain., Rabobank. Netherlands, September. (pdf 503kb).

Simon, K., O'Conor, G., Christopher M. and Brown, M. 2014. Facing grain shortfalls, China asserts self-sufficiency policy. China Brief, vol.14, no.7.

USDA-FAS. 2014., China, Peoples Republic of - grain and feed annual. GAIN Report, no.14016, 2 April, Foreign Agricultural Service, United States Department of Agriculture, Washington DC. (pdf 869kb).

World Bank. 2014. China economic update. June, Beijing, available at worldbank.org/en/country/china/publication/china-economic-update-june-2014.

WTO. 2014. Trade policy review: China. World Trade Organization, Geneva.

December 2014

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China's agricultural sector is supported by a number of policies that are collectively designed to achieve a food self-sufficiency objective. The objective stems from the Chinese Government's view that China's food security is best maintained by meeting its domestic food demand with domestically produced food and minimising its reliance on international markets.

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As the world's most populous country, China consumes a lot of food. As an emerging economic powerhouse, even despite recent financial woes, China consumes a lot of food in greater quantities than it did three or four decades ago-meat, in particular. And with a growing population and a growing middle class, the demand for meat in China is expected to continue to rise. As a new report from PricewaterhouseCoopers posits, it "will place enormous burdens on an already challenged domestic food system and have significant ramification on international trade in agriculture."

The report, released Monday, is mainly concerned with the economic effects of China's changing diet, but the rise of meat consumption-and increasing dependence on imported animal feed required to meet that demand-are tied up in global land use, resources, and climate change too. While estimates vary, the U.N. Food and Agriculture Organization attributes 14.5 percent of global emissions to the world's livestock farms. As the report notes, China feeds 20 percent of the world's population but only has 8 percent of the world's arable land, which means that when the Chinese diet changes, the echoes will be felt beyond the country's borders.

Much has been made of the rise in that nation of meat consumption, which went from representing just 125 calories of the daily diet in 1971 to representing 691 in 2011. Between 2003 and 2013, consumption jumped by nearly 25 percent, and raising more hogs, far and away the livestock of choice in China, means buying more feed-both activities have a significant carbon footprint. But the PWC report points out something important in the broader conversation about meat consumption and its environmental woes: Even with the rapidly increasing appetite for meat, the average Chinese person still eats less meat than the average American. In 2015, Chinese residents will eat about 130 pounds of meat annually, while people in the U.S. will eat more than 230 pounds per person per year.

"It could be justifiably argued," the report reads, "that the American number reflects excessive levels of consumption and that China is unlikely to ever reach those peaks." Instead, the authors expect China to peak at 165 pounds per person per year, which is the amount eaten in Taiwan. If it were to hit that level of consumption immediately, "almost the entire expected corn output of Brazil and Argentina in 2014" would be required to feed the animals.

Already, China is irrigating more of its own farmland, trying to buy up arable land elsewhere in the world, and becoming an outsize player in the global commodity crop market-all of this from a country that has a long-standing policy of being agriculturally self-sufficient.

While it is far from the worst offender when it comes to having an unsustainable diet-again, Americans can claim that honor-the sheer scale of its population makes China's changing diet a global concern.

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China Continues to Eat More and More Meat-and That Matters for Everyone

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As the world's most populous country, China consumes a lot of food. As an emerging economic powerhouse, even despite recent financial woes, China consumes a lot of food in greater quantities than it did three or four decades ago-meat, in particular.

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China's dinner tables will be getting meatier over the next decade, which will have a significant impact on the international agriculture trade, according to an outlook report published by Organization for Economic Cooperation and Development and the U.N.'s Food and Agriculture Organization.

In 2026, an average Chinese citizen is expected to consume 55 kilograms (121 pounds) of meat per year, up 10% from 2017. Pork will remain Chinese people's favorite meat in the years to come, making up about 60% of all meat consumption, followed by poultry, beef and veal, and mutton and lamb, according to the report.

The country's insatiable appetite for pork has made it heavily dependent on imports of soybeans, a key feed for China's swine. The oilseed, also used to make cooking oil and products like tofu and soy sauce, has found itself on the front line of the escalating trade dispute between the world's two largest economies as it is one of the few areas where the U.S. runs a trade surplus - China accounted for 60% of its total soybean exports in the 2016-17 crop year, according to the U.S. Department of Agriculture.

China's Feed Industry Association has been considering the establishment of minimum levels of proteins for animal feeds. The draft guidelines (link in Chinese) came amid rising concerns that China might not be able to counter a decline in U.S. exports from alternative import sources.

After Beijing hit American soybean producers with a 25% import levy on July as part of the tit-for-tat tariff, China has mostly been turning to Brazil for additional imports. But as Brazil approaches the end of its season and Argentina's crop has been devastated by drought, analysts are pessimistic that they will be able to boost shipments.

Contact reporter Charlotte Yang (yutingyang@caixin.com)

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Charts of the Day: China's Growing Meat Consumption

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China's dinner tables will be getting meatier over the next decade, which will have a significant impact on the international agriculture trade, according to an outlook report published by Organization for Economic Cooperation and Development and the U.N.'s Food and Agriculture Organization.

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80 million Chinese may already be out of work. 9 million more will soon be competing for jobs, too

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80 million Chinese may already be out of work. 9 million more will soon be competing for jobs, too

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80 million may already be out of work. 9 million more will soon be competing for jobs

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80 million Chinese may already be out of work. 9 million more will soon be competing for jobs, too

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The pandemic all but shut down China for several weeks this year, wreaking havoc on the world's second largest economy and forcing millions of people out of work. The full scale of how many people have lost their jobs in the country is hard to capture, but even the official tally has started to register a spike.

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1.  Roughly 5 million people in China lost their jobs in the first 2 months of 2020
[For unemployment and GDP] UNemployment
https://www.cnbc.com/2020/03/16/china-economy-millions-lose-their-jobs-as-unemployment-spikes.html

GDP
1.https://www.reuters.com/article/us-swinefever-china-epidemic-specialrepo/special-report-before-coronavirus-china-bungled-swine-epidemic-with-secrecy-idUSKBN20S189 Swine epidemic.

2.https://ourworldindata.org/grapher/meat-consumption-vs-gdp-per-capita comparison for meat consumption and GDP

3.https://www.straitstimes.com/asia/east-asia/chinas-exports-dip-172-in-jan-and-feb-imports-down-4 china fall in net exports

4.Poultry market https://www.dccchina.org/2018/12/poultry-consumption-imports-china-market-opportunities/

Unemployment
1.https://www.theguardian.com/environment/2020/mar/11/african-swine-fever-destroying-small-pig-farms-as-factory-farming-booms-report

Government intervention
1. https://www.bloomberg.com/news/articles/2019-09-02/chinese-city-goes-back-to-rationing-to-curb-rampant-pork-prices

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In late-April, Shanghai held a plant-based meat festival with both foreign and domestic companies displaying their products. The festival sparked a range of commentary, with some claiming that a "meatless revolution" was beginning to take place.

China has, without question, a long history of consuming tofu as a central part of its diet. And, Chinese companies have been producing plant-based meats for decades.

Even before plant-based meats were commercialized, Chinese Buddhists had devised vegetable-based versions of classic Chinese dishes with the growth of vegetarianism in the 6th century AD.

However, the Chinese Buddhist laity are not required to practice vegetarianism. Entrenched in Chinese culture is the idea that the basic elements of any meal includes both meat and vegetable dishes - two parts that are not considered to be able to compensate for each other.

Only 50 million people - around 3.6 percent - of the Chinese population are estimated to be vegetarian. By contrast, 11 percent of Australians and 40 percent of Indians claim to practice vegetarian diets.

So is a modern day "meatless meat" revolution really underway in China?

China's plant-based meat market

According to an industry report by The Good Food Institute, a non-profit in the United States, the Chinese plant-based meat market has grown at an annual rate of 14.3 percent since 2014. Although the base of China's GDP is much larger, this is around twice the size of the national annual GDP growth rate for the same period.

In 2018, the country's plant-based meat market was valued at RMB 6.12 billion (US$910 million), 33 percent bigger than the market in the US (US$684 million). Still, the US market did exhibit a 23 percent growth rate against a backdrop of 2.2 percent GDP growth. On a per capita basis, the US also consumes just over three times what China does.

The market in China is growing quickly but given the low rates of vegetarianism it is not immediately clear what is driving the growth of China's plant-based meat market.

Changing consumer trends - away from pork and poultry

Chinese eating habits are changing. In 2016, the Chinese released new dietary guidelines recommending that personal meat consumption be reduced with the aim of producing an overall reduction of 50 percent by 2030.

In a 2018 survey conducted by the New Zealand Institute of Plant and Food Research, 2,000 respondents, mainly from tier-one Chinese cities, reported that they were eating less pork and poultry. On a net basis, 13.8 percent reported eating less pork and 6.4 percent were eating less poultry.

Soy products (including plant-based meats) did replace this to some extent, rising a net 12.5 percent. However, fish and seafood were the protein source that rose the most - 25.6 percent.

Health concerns are the central growth driver

The major reasons given for reducing meat intake were perceived health benefits (63.5 percent of respondents), managing personal weight (56.7 percent), and environmental concerns (40 percent). Only 17.4 percent claimed they reduced their meat intake due to concerns for animal welfare.

The survey also found that consumers view pork, red meat, and poultry as the three unhealthiest food groups of the 13 surveyed. The three largest factors consumers noted would be important in choosing a meat substitute product were "low in fat", "additive free", and "high in protein".

Wealth also seems to play an important part in driving growth too. Currently, 43.6 percent of all plant-based meat consumption is in the tier-one cities - Beijing, Shanghai, Guangzhou, and Shenzhen. These four cities make up a mere four percent of China's population and have a per capita consumption of plant-based meat that is over twice as high as in the US.

Individual health outcomes and their respective income levels have been linked in countless studies. As more Chinese cities experience the concentration of wealth and expand their middle-class population, the market for plant-based meat will likely out-grow the US' on a per capita basis.

Lobster vs. soybean - competition in the Chinese market

Currently, the plant-based meat market is extremely fragmented in China. No brand has a market share of more than three percent. The most well-known Chinese providers are Whole Perfect Food (齐善素食) and Godly (功德林).

The problem for current plant-based meat brands is that Chinese consumers seem to be replacing pork and poultry with seafood more often than with meat substitutes.

Both seafood and meat substitutes are considered to have a similar nutritional composition, but the taste of seafood appears to be more attractive to Chinese consumers.

Because of this, plant-based meat products need to compete with seafood in two respects: their nutritional value needs to be marketed effectively, and they must be able to replicate the taste of the meat they intend to replace.

The American firm, Omnipork seems to have realized this. Omnipork boasts of a product that tastes like pork and has zero cholesterol. Their entry into the Chinese market also coincides with an outbreak of African swine fever - expected to kill 130 million pigs in China and is already pushing up the price of pork.

Nevertheless, meat exporters should not be worried about losing market share in China.

Meat will remain extremely popular and is forecast to grow at around 11.9 percent between 2017 and 2027, according to the United Nations. Although plant-based products are growing in popularity quickly, a large-scale revolution that significantly steers China away from meat has yet to sweep the nation.
About Us China Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Dalian, Beijing, Shanghai, Guangzhou, Shenzhen, and Hong Kong. Readers may write china@dezshira.com for more support on doing business in China.

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Is a "Meatless Meat" Revolution Really Underway in China?

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In late-April, Shanghai held a plant-based meat festival with both foreign and domestic companies displaying their products. The festival sparked a range of commentary, with some claiming that a "meatless revolution" was beginning to take place. China has, without question, a long history of consuming tofu as a central part of its diet.

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                                                Macroeconomics Prelim Analysis [Based on 4 key sources of Information]

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                                                Macroeconomics Prelim Analysis [Based on 4 key sources of Information]

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1.  GDP

By managing the supply of pig meat on the domestic market, the Chinese Government constrains price fluctuations and is able to maintain incentives for pig meat production in spite of rising feed costs. GDP
-Meat consumption is past years have increased in China, may be due to the increasing GDP, in 2015, the Per capita is 48.3 kilograms in 2015, whereas in 2011 it was below 48.3 kg, around 45 kilograms. (https://www.caixinglobal.com/2018-10-12/charts-of-the-day-chinas-growing-meat-consumption-101334433.html)
-GDP per capita has increased from 4550.5 USD to 7755 USD in 2018, this rise in GDP per capita would mean that families have a higher amount of disposable income and are able to spend more of this on meat. (https://tradingeconomics.com/china/gdp-per-capita)
-Meat has become a bigger portion of their daily caloric intake , also seen in the meat consumption per capita, from "just 125 calories of the daily diet in 1971 to representing 691 in 2011. Between 2003 and 2013, consumption jumped by nearly 25 percent", this could be due to the increase in disposable income, which is then due to the increase in gdp per capita.
China has also experienced massive GDP growth, in 2010, it was at 6087.16 USD Billion and in 2018, it is 13608.16 billion USD.
(http://www.takepart.com/article/2015/10/13/china-meat-consumption)

-The consumption of poultry products is increasing year by year in China. The specific record statistic and forecast indicates the per capita consumption of poultry meat products in China. In 2011, Chinese consumed in average 8.9 kilogram poultry meat per person. In 2018, Chinese consumed in average 10.7 kilogram poultry meat per person, and a forecast up to 11.4 kilogram poultry meat per person by 2020.
(https://www.dccchina.org/2018/12/poultry-consumption-imports-china-market-opportunities/)

-The GDP of China has recently decreased due to the current 2020 pandemic,decreasing by up to 6.8 percent drop currently.(https://www.channelnewsasia.com/news/business/china-gdp-covid-19-economy-decline-coronavirus-12651092)

- Shanghai-based chief economist, Lu Zhengwei mentioned that domestic demand is still reviving as consumption linked with social gatherings is still prohibited while external demand is still hampered due to coronavirus situation.(https://www.channelnewsasia.com/news/business/china-gdp-covid-19-economy-decline-coronavirus-12651092)

- Per capita disposable income dropped by 3.9 percent in first quarter of 2020(https://www.channelnewsasia.com/news/business/china-gdp-covid-19-economy-decline-coronavirus-12651092)

- Fall in domestic consumption due to worldwide economic downturn, lower income rate, decreasing GDP throught the income approach. ( inference)

- Net exports decreased drastically by 17.2 per cent in dollar terms in first 2 months(https://www.straitstimes.com/asia/east-asia/chinas-exports-dip-172-in-jan-and-feb-imports-down-4)

- Imports from US increased 2.5 percent annually but exports to US decreased up to 28 percent, causing net exports to decrease and therefore decrease GDP through the expenditure approach.(https://www.straitstimes.com/asia/east-asia/chinas-exports-dip-172-in-jan-and-feb-imports-down-4)

- The pork sector, which supplies 10–15% of gross agricultural value, contributes to the reduction of China's GDP by around 1%.

2. Increasing unemployment due to Covid-19
- Unemployment occurs when a person is unable to find a job but is actively searching for employment.
- Fluctuation in the economy has caused real GDP and production and consumption decline, demand for labour resource decreases. Resulting in the rise of the cost of unemployment.(Cyclical unemployment)
- China's unemployment rate surged from 5.3 per cent in January to 6.2 per cent in February (https://www.scmp.com/economy/china-economy/article/3083823/coronavirus-china-prepared-handle-unemployment-crisis)
- Several employers under-employ workers by employing them temporarily or understate their wages
- Approximately 205 million Chinese employees have been spending time switching or searching for jobs to re-enter the labor force(Frictional Unemployment)
(https://www.scmp.com/economy/china-economy/article/3083823/coronavirus-china-prepared-handle-unemployment-crisis)
- swine fever has hit China's small-scale pig farmers the hardest
- Rising unemployment could led to poverty due to loss of income which thus reduced the citizens' purchasing power to buy meat(https://www.straitstimes.com/asia/east-asia/coronavirus-rising-unemployment-from-virus-fight-threatens-chinas-poverty-targets)

3. Inflation
- China has hit its highest level of inflation its ever seen in 8 years, as of January 2020.

- The Coronavirus has driven up demand for consumer goods and has hindered business activity in various parts of the country.

-  In October 2019, the country experienced a huge jump in pork prices.

- The consumer price index** rose 3.8% year-on-year in October, the highest level since January 2012.
(http://www.globaltimes.cn/content/1169449.shtml#:~:text=Most%20notably%2C%20pork%20prices%20were,to%20the%20October%20CPI%20rise.)

- China, the world’s largest consumer of pork, has encountered a massive shortfall in supply due to the African Swine Flu Crisis which is predicted to wipe out half of China’s pig population by the end of this year

- The country has ramped up its imports of pork and its substitutes such as beef and poultry.

The country's imports of pork substitutes, beef, and poultry included, will also reach 2.7 million tons this year.
(https://www.dw.com/en/pork-shortage-drives-up-inflation-in-china/av-51611081)
-China has worked to restart domestic production by increasing subsidies and loans to help hog breeding. But it may take time to pull down costs
- Along with the increase in the price of pork, the cost has fallen for fresh vegetables, fresh fruit, and eggs.

“The rise in CPI will complicate the Chinese central bank's monetary policy as any fresh cuts in the benchmark interest rates to fire up the slowing economy is made more difficult” Market watchers state.

** (Consumer Price Index measures the average change in prices over time that consumers pay for a basket of goods and services.)

4. Government Intervention
- Meat consumption had to be reduced due to a new dietary guideline released in 2016 with the goal of reducing 50% in producing meat by 2030.
- It was reported that 13.8% were eating less pork and 6.4% were eating less poultry because of the increase in the Chinese plant-based meat market as it has grown at an annual rate of 14.3 since 2014 (rewrite)

- Although the base of China’s GDP is much larger, this is around twice the size of the national annual GDP growth rate for the same period.
- Chinese government intervened by rapidly increasing and ration pork purchases by buyers.
- The Chinese Government is also finding ways to increase supply by liberating frozen pork from pork reserves
(https://www.tutor2u.net/economics/blog/chinese-government-rations-pork-and-sets-maximum-prices)
-A pig meat reserve programme in place since 2009 manages price volatility in the domestic pig meat market by controlling supply. Under this policy, government interventions in the pig meat market are based on movements in the pig meat-to-corn price ratio. The Chinese Government subsidises pig meat processors to stockpile frozen pig meat if its price is less than five times the price of corn.
(https://thepoultrysite.com/articles/chinas-food-selfsufficiency-policy)
-By managing the supply of pig meat on the domestic market, the Chinese Government constrains price fluctuations and is able to maintain incentives for pig meat production in spite of rising feed costs.
(https://thepoultrysite.com/articles/chinas-food-selfsufficiency-policy)
- China’s retaliatory tariffs have made imports of American meat more expensive.
(https://www.nytimes.com/2019/10/07/business/china-strategic-pork-reserve.html)
- Rice, wheat and pig meat are likely to remain the focus of China’s self-sufficiency policy but resource constraints will challenge its ability to maintain self-sufficiency in beef, sheep meat, soybeans and feed grains.

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China's meat inflation - Highest in 7 years

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China's meat inflation - Highest in 7 years

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Photo: Li Hao/GT

China's consumer inflation hit a fresh high in more than seven years in October amid skyrocketing pork prices, official data showed on Saturday.

The consumer price index (CPI), a main gauge of inflation, rose 3.8 percent year-on-year in October, the highest level since January 2012, or a fresh high in the past 93 months, the National Bureau of Statistics (NBS) said. The index edged up 0.9 percent on a monthly basis.

Most notably, pork prices were up 101.3 percent year-on-year last month, pushing up the consumer inflation by 2.43 percentage points. Livestock meat prices as a whole surged 66.8 percent year-on-year, contributing 2.92 percentage points to the October CPI rise.

The rise in CPI will complicate Chinese central bank's monetary policy as any fresh cuts in the benchmark interest rates to fire up the slowing economy is made more difficult, market watchers say.

Pork prices-fueled consumer inflation accounts for nearly two-thirds of October's CPI growth year-on-year, Shen Yun, a senior statistician at the NBS, explained in a statement posted on the bureau's website on Saturday. As measured monthly, the rise was more striking - pork prices soared 20.1 percent in October over September, contributing nearly 90 percent of the index's gain over the past month, Shen said.

The producer price index went up 0.1 percent in October from September, but on a yearly basis, the producer inflation contracted 1.6 percent last month.

Pork inflation has made headlines throughout the year as China continues to fight African Swine Fever (ASF).

As part of the effort to fill the supply gap and arrest the runaway prices, the country has ramped up imports of pork and its substitutes such as beef and poultry.

Chinese imports of pork and related products are forecast to exceed 3 million tons in 2019 and are set to continue to rise in 2020, Wang Bin, deputy chief for market operations at the Ministry of Commerce, said in Shanghai on Thursday at a meat conference, Chinese news site 21jingji.com reported.

The country's imports of pork substitutes, beef, and poultry included, will also reach 2.7 million tons this year.

In the first three quarters of the year, domestic pork production shrank 17.2 percent year-on-year to 31.81 million tons, Wang said, adding that domestic consumption of pork fell 20 to 30 percent due to soaring prices.

The upward spiral in consumer inflation seems to have strengthened the case for monetary tightening moves in theoretical terms, but a slowing economy which expanded by 6.0 percent in the third quarter, the weakest pace in nearly three decades, and the US Federal Reserve's continuing rate cut moves, have seemingly indicated a different approach, analyst said.

The People's Bank of China (PBC), the central bank, on Tuesday, lowered the interest rate on its one-year medium-term lending facility loans by 5 basis points to 3.25 percent.

The loan rate cut move, the first since 2016, is believed to pave the way for a cut in the new benchmark Loan Prime Rate which is announced on the 20th of every month.

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China's consumer inflation surges to 7-year high as meat prices soar

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Photo: Li Hao/GT China's consumer inflation hit a fresh high in more than seven years in October amid skyrocketing pork prices, official data showed on Saturday. The consumer price index (CPI), a main gauge of inflation, rose 3.8 percent year-on-year in October, the highest level since January 2012, or a fresh high in the past 93 months, the National Bureau of Statistics (NBS) said.

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Consumer Price Index CPI in China increased to 103.20 points in April from 103.10 points in March of 2025. This page provides - China Consumer Price Index (CPI) - actual values, historical data, forecast, chart, statistics, economic calendar and news.

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Business

China is the world's largest producer and consumer of pork, but the African swine fever epidemic has decimated stocks. The price of pork has more than doubled as a result, driving up the overall rate of inflation in November to the highest in nearly eight years.

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Pork shortage drives up inflation in China | DW | 10.12.2019

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China is the world's largest producer and consumer of pork, but the African swine fever epidemic has decimated stocks. The price of pork has more than doubled as a result, driving up the overall rate of inflation in November to the highest in nearly eight years.

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Unemployment of small scale pig farmers (extra info for report)

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Unemployment of small scale pig farmers (extra info for report)

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- swine fever has hit the country’s nearly 40 million small-scale pig farmers hardest
- MARA survey of 1,500 Chinese pig farms in mid-2019, 55% said they had abandoned plans to raise pigs after culling due to future risk of disease, while 22% were waiting to see if the situation cleared up. Only 18% had definite plans to continue pig farming.

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Main

African swine fever (ASF) is a virulent disease of pigs that originated in Africa and has been reported in other continents from the 1950s1. It has recently spread into Eastern Asia and was recorded for the first time in China in August 2018. At the time of revising the paper (February 2020), the disease has spread to all mainland provinces and several million pigs have been culled in an effort to halt its spread2,3. Industry estimates suggest 150-200 million pigs (30% of the Chinese population) have been infected by mid-20193, while some press reports indicate that once under-recording is considered the figure may be as high as 50-70% (refs. 4,5).

ASF is a notifiable haemorrhagic disease caused by an Iridovirus ( Asfarviridae)6. Its natural hosts in Africa are wild members of the pig family where it is transmitted by soft ticks and does not cause clinical disease7,8,9. Different strains of the virus strike farmed and feral pigs and their European wild boar relatives, with the strain present in China being particularly virulent and causing nearly 100% mortality10. Disease control consists of culling infected herds and imposing strict quarantine procedures; there is no current vaccine or treatment11,12,13. The disease is spread by contaminated products and by the animals themselves. The presence of wild boar populations or free-roaming feral pigs, as found in many areas of China, and the common practice in China of feeding untreated swill to pigs are particular risk factors8. There is no direct biological risk to humans from ASF.

It is important to explore the potential consequences of a major epidemic in China and to consider potential ramifications as it spreads. The repercussions could potentially affect not only pork consumption and the incomes of pork producers, but also feed markets, the demand for pork alternatives or substitutes5,14 and the diets of consumers in areas directly and indirectly affected by the disease.

This study uses economic modelling of the global food system to examine some of the potential consequences of a major disruption of pig production in China. The modelling approach first considers the direct and a number of indirect consequences of the disruption of the supply of pork on the prices of pork and other food types. Second, the model is used to explore the sensitivity of the results to different assumptions about supply and demand responses. Five scenarios, where pig production in China remains constant ( S ⁰) or is reduced by 20, 40, 60 or 80% ( S ²⁰ and so on), are explored.

When we conceived this project, these scenarios spanned the possible range of epidemic severities. At the time of revising this paper (February 2020), it appears the last two scenarios best match the unfolding outbreak, but we present results from the full range of scenarios because these provide information about the effects of possible future less serious epidemics.

Results

Effects on pork prices, demand, production and trade

China currently (2018) produces about 55 million metric tons (Mt) of pork per year, from more than 700 million slaughtered pigs15. Our simulations assume a reduction of pigs that leads to a decline in pork production in China of between 10 and 40 Mt in the four scenarios representing increasingly severe ASF epidemics (Fig. 1a). This represents cuts of 9-34% in global production (120 Mt in 2018) compared to a reference scenario without an ASF epidemic (Fig. 1a and Supplementary Table 1). This decline in production would lead to increases in world pork prices of 17-85% (Fig. 1b). For S ⁶⁰ and S ⁸⁰, pork prices rise above beef prices, a major inversion of past price trends for the two commodities last observed in 199616, when bovine spongiform encephalopathy was linked to Creutzfeldt-Jacob disease and led to a sharp decline in beef demand17,18.

a- c, Changes in pork production in China and selected regions ( a), world pork prices ( b) and average per capita food demand in China and selected regions ( c).

Higher pork prices drive down pork demand in all regions, with average global per capita demand declining by 0.7-2.4 kg yr −1 (4-16%) (Fig. 1c and Supplementary Table 2). In China, the percentage reduction is slightly smaller than the global average (3-13%) although the actual drop in demand (1.4-5.3 kg yr −1) is above the global average. Much of the global decline (60%) happens outside China with the greatest effects (for S ⁸⁰) observed in Europe (7.9 kg yr −1), with notable drops in North America (4.5 kg yr −1), Latin America (2.4 kg yr −1) and the rest of East Asia and Pacific (2.2 kg yr −1).

Higher pork prices spur more production (5-22 Mt) in regions outside China. This response makes up for about half of the losses in China so that overall global production falls by only 5-18 Mt (4-16%). Europe, the rest of East Asia and Pacific, North America and Latin America are the regions that contribute the most in this global response with increases in pork production of 6.6, 4.4, 4.2 and 3.1 Mt, respectively.

The reference scenario assumes own-price elasticities based on historical trends and which vary from country to country. To explore uncertainty in how sensitive consumers would be to changes in pork prices, we implemented all scenarios under elasticities half and double the reference assumption. Global pork production and pork prices are negatively correlated with this elasticity (Supplementary Figs. 1 and 2), effects that would be stronger if the changes were applied globally, not just in China.

China is the world's largest pork importer and has seen steady growth in imports over the past decade19. Currently, China imports account for about 5% of domestic demand15, as China has tended to encourage feed imports to achieve greater self-sufficiency of meat production19,20. The changes described in Fig. 1 suggest that trade will play an important buffering role in reducing the shock to Chinese consumers, albeit at the expense of pork consumers elsewhere. Pork imports into China increase by 8-32 Mt. The regions highlighted in Fig. 1 that see the largest increases in production as well as declines in per capita demand are the primary sources of China's additional imports, as pork in these markets gets reallocated to respond to the shock in China.

Knock-on effects on other commodities

Higher pork prices will not only impact consumers and producers of pork. They will also have secondary effects as consumers substitute pork with relatively cheaper alternative food types (for example, other meats and plant-based alternatives). Changes in food prices also spur the reallocation of resources in the agricultural sector in response to changing demand patterns. Key inputs to the pork sector in China are reallocated to other uses, whereas the pork sector in other regions takes a larger share of feed inputs as they expand to respond to increased demand for imports into China. This could impact the historical preference in China for grain imports over meat imports19,20, at least in the short run until livestock value chains adjust and recover.

As consumers shift to pork substitutes, global production increases to meet this demand (Fig. 2a). However, their prices are projected to rise, which reflects limitations in animal value chains to quickly increase production. Note that these price changes are considerably smaller than those observed for pork (Fig. 1), with beef and poultry seeing price rises of 1.5-6.0% and 1.6-6.7%, respectively; global production increases by up to 0.1 Mt for beef and 0.4 Mt or poultry (mostly in North and South America) in the case of the most severe epidemic. The ASF epidemic in China causes major disruption to livestock value chains in China and abroad, forcing feed markets to adjust. Figure 2b,c summarizes these spillover effects for key pork substitutes and feed inputs to the livestock sector in China and globally. Changes in feed inputs may negatively or positively affect animal productivity, but we do not model these indirect effects here.

a- c, Changes in world prices for selected commodities ( a), household food demand ( b) and animal feed demand ( c).

Larger disruptions are seen in feed markets than are observed in global food demand (Fig. 2a) as lower pork production in China reduces the demand for feed crops used in the pig meat industry. Globally, this reduction is partially offset by increased pork production in other regions and increased beef and poultry production both in China and abroad. Nevertheless, the price declines observed for key feed inputs (maize, soybean meal and sweet potatoes) are similar in size to the increases for meat substitutes. In the worst scenario ( S ⁸⁰), maize and soybean meal prices decline by 5% and 2%, respectively. Sweet potatoes, another important feed input into the pork sector21, see the largest price declines of nearly 15% in S ⁸⁰, due to limited domestic and global capacity to use additional sweet potatoes. These price rises may be ameliorated if other uses for sweet potato such as bioethanol production emerge in China. The increase in production of livestock products outside China leads to a substantial reallocation of feed globally. Demand for maize for feed in China declines by as much as 47 Mt compared to the reference scenario. Globally for the same scenario, maize feed demand declines by only 11 Mt, with the majority of maize previously destined for the Chinese livestock sector being reallocated to livestock production in other countries. Soybean meal sees a similar trend, whereas the deficit in sweet potato demand is not as readily absorbed by increased livestock production in other regions, explaining the much larger price declines. Price rises for other globally important feeds (wheat and barley) are also observed. These price rises are driven by increased demand for both throughout the world, but particularly in Europe where wheat and barley are disproportionately used in the livestock sector.

The changes in demand for different feedstocks are reflected in shifts in agricultural trade patterns. The most dramatic is a marked decrease in exports of maize from North America. This maize is redirected to support livestock sectors in North America, although there is also an increase in maize exports to Africa (and of sweet potato from China), which affects food security and welfare as discussed below.

Effects on food and nutrition security

We estimate the sum of the spillover effects on different components of people's diets and their effects on calorie consumption. Higher prices for meat and those cereals that serve as animal feeds (for example, wheat) lead to declines in calorie availability in most regions (Fig. 3a). The projected changes in food prices increase food expenditure in China (as a share of average income in the reference scenario) by as much as 9% in the most severe scenario. This increase leads to the average per capita calorie availability in China declining by more than 50 kcal per day or 1.6% of the reference scenario. Aside from China, we see many countries in East and Southeast Asia as well as Europe with declines in calorie availability of more than 1%. In high-income countries where baseline calorie availability is already high, such declines will tend not to have negative health impacts. However, in middle-income countries in Southern and Eastern Europe (for example, Poland and Romania), rising food prices may be of greater concern (Fig. 3b). In East and Southeast Asia, a similar pattern can be seen with higher-income East Asian countries able to absorb the reduction in calories, while the effects in lower-income countries such as Vietnam and the Philippines are of greater concern. The largest absolute change in hunger is found in India (more than 2 million additional people at risk of hunger) and is driven primarily by the secondary price impacts, particularly the increase in the price of wheat, which is an important food staple.

a, Percentage change from the reference scenario in average calorie availability in S ⁸⁰. b, Changes in the population at risk of hunger in absolute (bar length) and relative (colour scale) terms by region (left) and selected countries (right) in S ⁸⁰ compared to the reference. DRC, Democratic Republic of the Congo.

Several countries, particularly in Eastern and Southern Africa and Central America, see an increase in calorie availability. In these countries, maize is a dietary staple and they benefit from the lower prices caused by reduced demand for maize as an animal feed. However, this picture is complicated by the preference of consumers in these countries for white rather than yellow maize, which while not uniform across the whole region can be observed by price premiums for white maize22,23. Internationally and domestically, white and yellow maize prices tend to track each other; nevertheless, there is evidence that local and global markets are not well integrated, and that transmission of world prices locally is muted and often with a time lag24,25. Eastern and Southern Africa also consume a considerable amount of sweet potatoes and obtain a further benefit from the large price declines in this crop. As for maize price transmissions, there is reason to be skeptical of these gains, given shallow international sweet potato markets. Nevertheless, both China and Africa are net exporters to Europe15, and increased availability of sweet potatoes for export could displace some African exports, increasing domestic supply in the region. Overall, the number of people at risk of hunger in sub-Saharan Africa may decline by more than 1 million people in the most severe ASF scenario. However, while countries such as the Democratic Republic of the Congo and Tanzania are beneficiaries, those such as Mozambique and Ethiopia would see increases in the population at risk of hunger (Fig. 3b). These projections of varying effects on different countries should be treated as indicative-further analysis considering the national dietary and cultural context, as well as integration between local, regional and international markets, is warranted.

The ASF epidemic may also affect dietary diversity and nutrient intake, particularly in China, with negative health implications (Table 1). Further details are given in the Supplementary Notes but, in particular, the model projects possible reductions in the B vitamins and zinc. Among macronutrients, the projections show a relatively large reduction in total and saturated fat consumption, which may in some people affect their intake of critical fat-soluble vitamins.

Table 1 Changes in selected macronutrients and micronutrients in China

Demand for food is relatively inelastic, so the production shock in Chinese pig production tends to increase global food expenditures. In the absence of any countervailing intervention by governments, consumers will be relatively worse off, especially in countries and regions where pork is a major part of the diet. As the International Model for Policy Analysis of Agricultural Commodities and Trade (IMPACT) is a partial equilibrium model, it cannot be used to explore the effect of changes in prices and production on overall household income. To begin to investigate the effect on household incomes and changes in welfare, we use the output from IMPACT as input to the GLOBE computable general equilibrium model (described above). We found that household welfare in China declined by between 0.12 and 0.78% for S ²⁰ to S ⁸⁰, with household income declining by 0.3 to 1.8%, respectively (see also Supplementary Table 3). For the worst-case ASF scenario, this is a socio-economically important and perhaps politically relevant decline.

Outside China, we find that only a few regions benefit from increased commodity prices (Fig. 4). These are major meat-exporting regions, with the largest gains 0.01-0.09% observed in high-income countries in Oceania (Australia and New Zealand). Most other regions see small declines in welfare. In all cases, these shifts are many orders smaller than those observed in China.

The heat chart uses two colour schemes reflecting the fact that the impacts in China are ten times higher than in other regions. Changes in China are in red and range from 0 (white) to −1% (red). A different scale is used for other regions where blue reflects welfare improvements (up to 0.1%) and orange reflects welfare reductions (up to −0.1%).

Discussion

Approximately half of global pig production occurs in China. The presence of a disease as deadly as ASF in East Asia will have major ramifications for the global food system and food security6. Our projections of the effects of a major production shock in the Chinese pig industry using a global partial equilibrium economic model of the food sector provide an indication of the capacity of the national and global food system to absorb the perturbation without large effects on prices and consumption. This resilience comes about through international trade and consumers switching to non-pork foods. The effects of an ASF outbreak in China are not limited to China, but are experienced in other countries and affect other food types. While we modelled a shock and a response that occurred within a year, delays in restocking and an epidemic that lasts for a greater period of time are likely to lead to more severe effects.

Recent data on pork prices in China show increases of the order of 50% during 2019 (Fig. 5), which may have contributed to inflation in China recently exceeding government targets. These are consistent with our projections, although we think it is too early to do a formal comparison and validation of the model. There is still considerable uncertainty about the extent of the epidemic, and some of the economic data are still preliminary.

The data are from the Professional Pig Community ( https://www.pig333.com/).

It is important to explore whether this conclusion is a consequence of model assumptions that may not reflect real-world food systems accurately. Models such as IMPACT assume that markets regularly equilibrate. If there are frictions or disruptions, so that markets clear more slowly or trading flows adjust less rapidly, then the initial effects of the outbreak may be larger and more spatially contained. IMPACT also tends to overestimate the degree to which domestic markets in low-income countries are tied to world markets and hence some of the effects of the ASF outbreaks on sub-Saharan countries may be less than projected24,25,26. In addition, IMPACT uses data from the Food and Agriculture Organization and these are based on national statistics, which have been found in some studies to be inconsistent, particularly with respect to pork27.

Several aspects of real-world food systems may influence the effects of an ASF outbreak. First, the release of frozen meat in 2019 is thought to have tempered pork price rises in China5, and this approach could be taken again. Such policy decisions would probably be captured by a simple reduction in the size of the production shock in proportion to the amount of stocks released. Pork production and consumption vary across the country28. Per capita consumption is lowest in the north and east and highest in the south and west: the region with least consumption is the western province of Xinjiang (3.8 kg yr −1), with its large Muslim population, and highest in the southern provinces of Sichuan and Chongqing (>30 kg yr⁻¹). Since the outbreak began, the Chinese authorities have introduced and sometimes relaxed different regulations about inter-province pig trade that will have affected price transmission and local prices, but these are not modelled here.

Second, it is possible that the presence of ASF affects not only supply but also demand. In previous outbreaks of livestock diseases, demand of affected commodities was reduced in part due to a loss in trust in the quality and safety of the commodities29,30. There is evidence of this already occurring in China5. This impact can linger beyond the initial outbreak and can take some time (a decade or more) before consumers fully return to previous levels.

Third, governments often respond to production shocks by imposing tariffs or export restrictions. These policies are typically motivated by a wish to protect local producers or consumers (or a political imperative to be seen to be doing something), with their effectiveness depending on trading partners. Import restrictions on live animals or animal products are likely to be introduced as quarantine measures. In general, trade restrictions will tend to reduce the capacity of the global food system to buffer production shocks, although genuine quarantine measures can help contain the disease.

Finally, the current ASF outbreak is occurring at a time of tension in global trading relationships, especially between China and a major source of pork imports, the United States. Tariffs on US pork imports into China have recently increased from 12% to 62%, although this has not disincentivized some major purchases31. In July 2019, net tariffs were at 81%, although the politics are fluid, which adds an additional layer of geopolitical uncertainty to the way the global food system will be affected by the disease outbreak. The outbreak of the coronavirus (COVID-19) that is developing as we revise the paper (February 2020), and which affects humans (and conceivably pigs), adds another level of uncertainty that is as yet impossible to assess, although possibly it may have reversed a small decline in pork prices at the end of 2019 (Fig. 5).

Since the beginning of the project, the outbreak has expanded rapidly to other countries. ASF has now been recorded in 2019 from Mongolia (January), Vietnam (February), Cambodia (April), North Korea (May), Laos (June), Philippines (July), Myanmar (August), Timor-Leste (September) and South Korea (November) and may be in Indonesia (November). Further modelling of a broader epidemic in Asia would be informative, as well as in Europe, which has suffered a number of smaller-scale outbreaks. In Europe, the pig industry is more intensive and more vertically integrated32, in part due to challenges from other diseases, and containment should be easier compared to Asia with its large smallholder sector33. Nevertheless, the disease is causing major concern in Europe, with Denmark building a fence along its southern border to prevent wild boar entering from Germany. A serious ASF outbreak in Europe could undermine the Common Agricultural Policy and "dramatically shake European identity and cohesion"34.

An ASF outbreak will have both macroeconomic and welfare economic consequences. Agriculture currently makes up 7-8% of Chinese gross domestic product (GDP)35 with the pork sector contributing 10-15% of gross agricultural value added15. The pork sector is probably worth more than US$100 billion and the worst outbreaks we simulated would reduce Chinese GDP by approximately 1%. For context, this reduction is a little less than the effect of the 2008 Sichuan earthquake, but of the order of 20 times greater than recent avian flu outbreaks or the SARS (severe acute respiratory syndrome) outbreak centred on southern China in 2002-2003. In the same regions, the early 2000s avian flu outbreak depressed Vietnam GDP by 0.3-1.5% (US$0.1-0.6 billion)36. Further analysis of the costs of the epidemic, in particular of mass culling, and of alternative mitigation strategies would be welcome.

Although analysis with the GLOBE model suggests that average household incomes will decline by less than 2% in the worst case, predominantly smallholder farmers in the lower deciles of the income distribution will be affected by ASF37. Some farmers will be insured against epidemic risk, but the majority will have no or inadequate insurance. Thus, it is likely that the government would need to provide income support. Furthermore, the impacts on the mental health of farmers and their families are likely to be substantial.

China will probably import more pork and less pig feed with consequences for trading partners. Pork producers in exporting countries will benefit, although consumers will experience higher prices in domestic markets. Feed producers will look for new markets, resulting in increased exports of commodities such as maize and sweet potato to emerging economies in sub-Saharan Africa and elsewhere. In this case, there is a risk that local agriculture may be undermined, especially if exports are supported by direct and indirect subsidies and other market distortions.

In the longer term, the current ASF outbreak will spur investment in research and innovation with the possibility of vaccine development13. A less optimistic possibility is that the disease becomes endemic with periodic resurgences buffeting the food system. This possibility would reduce the attractiveness of pig production for investment and tend to increase food prices. Consumers could respond by switching to meat substitutes, chicken or ruminant meats. Given the different consequences for human health and the environment of the production and consumption of these different food types, there are possibilities for both positive and negative indirect effects of continuing ASF outbreaks.

Methods

Model

We studied the effect of ASF in China on food system dynamics using two linked global models: IMPACT developed by the International Food Policy Research Institute38,39, and a dynamic version of GLOBE40. These two models were used to assess the potential effects on the broader global economy and average incomes across regions and countries that are linked to China through international trade. The IMPACT model has been used to explore other supply shock scenarios (for example, the effects of a major disease of rice in Southeast Asia41 and extreme weather events affecting particular regions42 or the global food system43).

Briefly (see Supplementary Information for a fuller explanation), IMPACT is a partial equilibrium economic model that represents the production and consumption of 62 agricultural commodities in 158 political units (which are composed of 1 or more sub-regions where political units encompass several water basins). Consumer diets are determined by income and food prices summarized by functions (with constant price elasticities) describing how they affect demand; while producer behaviour is determined analogously by commodity prices and input costs. Population and income are treated as exogenous, with crop yield growth rates having both exogenous and endogenous components. IMPACT is linked to crop and hydrological models (that can themselves be driven by global climate models) to determine changing yield patterns. Different countries are linked by international trade and IMPACT simulates the operation of the global economy, finding world prices for all included commodities that clear international markets. IMPACT does not directly project future diets, but dietary patterns and calorie intake can be estimated under different scenarios and compared with WHO (World Health Organization) guidelines for a healthy diet (assumed to be ~2,500 kcal for men and ~2,000 kcal for women) as was done in Springmann et al.44.

The IMPACT model includes only agricultural goods and markets and does not incorporate links between agriculture and the rest of the economy. To capture these links, we use a separate global model (GLOBE) that operates at the level of national economies, incorporating production and demand for all commodities, and trade between countries. This model simulates the operation of commodity and factor markets in all countries and finds equilibrium commodity prices and wages of factors of production that clear both domestic and world markets together. This dynamic computable general equilibrium (CGE) model is calibrated with a global dataset maintained by the Global Trade Analysis Project at Purdue University45.

In our analysis, the IMPACT model is used to determine the effects of a shock on the agricultural sectors. The results are then 'soft linked' to the GLOBE CGE model46, which is used to analyse the effects of the changes in agriculture on the rest of the economy, tracing the direct and indirect links between the agricultural and non-agricultural sectors. The CGE model captures links between commodity markets and factor markets, showing how a shock in agriculture affects incomes, supply, demand and prices across the economy.

Scenarios

Our main analysis is a comparison of a reference scenario with a series of alternative scenarios in which we assume that the number of pigs in China is reduced by 20, 40, 60 and 80% in a single year. In the face of great uncertainty (at the time the project was conceived) about the possible severity of an epidemic, we choose these five alternatives to span a full range of possibilities. The reduction includes pigs killed by the disease and those slaughtered (but not consumed) to prevent the spread of the epidemic. Pork prices in China cycle with a period of approximately four years47, which seems to be associated with inaccurate expectations about future profits. We think it likely that the appearance of the epidemic reset profit expectations and we make no attempt to model the cycle. There has been a reduction in China's pig herd (although less, only 2%, in pigs slaughtered) since about 2013 due to tightening environmental regulations, but this has been relatively gradual and very different from the dramatic declines beginning in 2018.

The assumed income elasticity is 0.18, which is broadly consistent with income elasticities estimated by the US Department of Agriculture48 (0.24 for urban and 0.13 for rural households). IMPACT's default own-price elasticity of demand for pork is −0.23. This is within the range of price elasticities reviewed by Chen et al.49 although on the inelastic side as IMPACT elasticities are calibrated for long-run as opposed to short-run behaviour. This elasticity represents an average Chinese consumer and is a simplification of the diversity of demand outcomes (preferences, incomes, available food budgets and prices) within the country. This simplification allows us to estimate average changes but will not allow us to capture some of the potential distributional and compositional effects that might occur from production and price shocks that would impact different consumers to varying extents. We explore the sensitivity of the results to the value of the own-price elasticity for pork by halving or doubling the assumed value, which we expect to include the likely range of uncertainty about that parameter.

Reporting Summary

Further information on research design is available in the Nature Research Reporting Summary linked to this article.

Data availability

Full documentation for IMPACT and GLOBE is available at http://ebrary.ifpri.org/cdm/ref/collection/p15738coll2/id/129825 and http://ebrary.ifpri.org/cdm/ref/collection/p15738coll2/id/132757, respectively. Model output from this study can be found in the Mendeley Data repository at https://doi.org/10.17632/zgrngg5hp5. Source data are provided with this paper.

References

1. 1.
Cwynar, P., Stojkov, J. & Wlazlak, K. African swine fever status in Europe. Viruses 11, 310 (2019).

2. 44.
Springmann, M., Godfray, H. C. J., Rayner, M. & Scarborough, P. Analysis and valuation of the health and climate change cobenefits of dietary change. Proc. Natl Acad. Sci. USA 113, 4146-4151 (2016).

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Acknowledgements

H.C.J.G. and K.W. acknowledge support from the Wellcome Trust's Our Planet Our Health programme (205212/Z/16/Z); S.R., T.B.S. and K.W. from the CGIAR Research Program on Policies, Institutions, and Markets; and D.M.-D'C., J.R.B. and M.H. from the Australian Centre for International Agricultural Research (grant no. LS/2018/107, South East Asian Livestock Futures).

Author information

Affiliations

1. Commonwealth Scientific and Industrial Research Organisation (CSIRO), St Lucia, Queensland, Australia

Daniel Mason-D'Croz, Jessica R. Bogard & Mario Herrero

2. Environment and Production Technology Division, International Food Policy Research Institute (IFPRI), Washington DC, USA

Sherman Robinson, Timothy B. Sulser & Keith Wiebe

3. Institute of Development Studies at the University of Sussex, Brighton, UK

Dirk Willenbockel

4. Oxford Martin School & Department of Zoology, University of Oxford, Oxford, UK

H. Charles J. Godfray

Contributions

The project was conceived by H.C.J.G., S.R. and D.M.-D'C.; all authors contributed to its execution and write up with D.M.-D'C. leading on the IMPACT analysis, D.W. on the GLOBE analyses, J.R.B. on the nutrition aspects and H.C.J.G. and D.M.-D'C. on writing the paper.

Corresponding author

Correspondence to Daniel Mason-D'Croz.

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The authors declare no competing interests.

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Modelling the global economic consequences of a major African swine fever outbreak in China

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African swine fever (ASF) is diminishing pork production in East Asia, especially China, but the global economic costs of ASF are unclear. Mason-D'Croz et al. model the effect of Chinese ASF outbreak scenarios on the global pork market, predicting pork, beef and poultry price increases and a decline in per capita calorie intake in China.

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While China and countries around the world confront the human toll from the coronavirus outbreak, the effect on China's food industry is already coming into focus.

Travel restrictions and quarantines after the outbreak were apparent immediately. Restaurants sat empty, and home deliveries spiked as customers shunned eating out in favor of ordering in. Animal slaughtering and processing operations slowed considerably amid travel and workplace shutdowns and reduced demand.

More broadly, the coronavirus, which rapidly spread from an outdoor market selling live animals and fresh meat in the city of Wuhan, is poised to dramatically change those very markets, which many Chinese rely on for fresh meat. A look into the history of China's meat industry underscores the need for a transformation away from these open-air markets and toward a cold-chain model, similar to Europe and the United States, that keeps perishable items fresher for longer.

Lessons from past outbreaks

China is no stranger to epidemic-induced food chain disruptions. Bird flus such as H7N9 in 2017 affected chicken stocks, while the African swine fever in 2018-2019 led to a pork shortage that lingers today.

Perhaps most comparable to the COVID-19 epidemic is the 2002-2003 SARS outbreak, which can provide some lessons for how quickly the industry may recover once the outbreak abates (see Figure 1).

During SARS, restaurants took the largest hit, with year-over-year value growth rate plunging more than 30 percentage points during the peak of the outbreak, as the government canceled its Labor Day holiday and diners stayed home to avoid large crowds. However, restaurants quickly recovered, returning to preoutbreak levels almost immediately after the outbreak passed.

China's overall retail channel was less affected, but meat and egg sales spiked for about a month at the start of the epidemic as consumers stocked up on supplies.

Impact along China's food value chain

The coronavirus outbreak promises to have a much larger impact than SARS.

COVID-19 has prompted Chinese authorities to take sweeping quarantine measures to contain it. These efforts include the temporary shuttering of restaurants and fresh food markets, as well as travel restrictions that have affected meat transportation, slaughtering and processing operations (see Figure 2).

In retail, restaurants saw the sharpest declines: The segment was down more than 50% during Chinese New Year, a peak consumption period in the country, and into February as consumers stayed home.

Outdoor food markets known as "wet markets," similar to the one where the outbreak began, have also been hit hard, as most were temporarily shuttered amid the outbreak. While some markets outside of Wuhan are reopening, the impact promises to be long term, because we expect much stricter hygiene regulations and enforcement to reshape the segment, and smaller specialty shops give way to broader integration with larger food retailers.

Hypermarkets and supermarkets saw a short-term spike in sales, as more consumers opted to eat at home and stocked up on food supplies. Fresh food sales even doubled at some leading retailers during the Chinese New Year sales period.

Volume rose three times at leading e-commerce food delivery platforms in February, when many consumers opted to stay home. This is likely to accelerate a longer-term shift from offline to online sales in fresh food, which stood at only 3% before the COVID-19 outbreak.

Meat slaughtering, processing and logistics operations face short-term challenges due to declining demand during the outbreak, as well as transportation restrictions and the postponement of many workers returning to their jobs after the Chinese New Year. Some companies remain closed, but government initiatives to guarantee daily food supplies, such as granting priority to food trucks on highways and supporting enhanced safety measures at meat processors, are expected to help this segment quickly recover.

Breeding and raising operations will see a short-term increase in the stock of live animals, because retail sales have declined and culling is not needed. This has affected the prices of key animal products (see Figure 3).

The poultry and egg segments, which represent 20% to 30% of China's total protein consumption, have faced strong downward price pressure. Weeks into the outbreak, wholesale prices fell 5% to 10% for live poultry and more than 20% for eggs. This partly reflects the short life cycles of chickens and minimal shelf life of eggs, prompting producers to sell off their stocks at a time when demand was also down, as consumers stayed home while restaurants and markets were closed.

Pork, which makes up 40% to 50% of the country's protein consumption, saw wholesale prices rise around 10%. That hike comes on top of already high prices due to the 2018-2019 African swine fever outbreak, which led to the mass culling of pig stocks. Still, the Chinese government has mitigated more severe shortages during the coronavirus outbreak by releasing reserves of frozen pork into the market and allowing some pork producers to resume work after implementing protective measures against the spread of the coronavirus.

Prices for beef and lamb have been relatively unaffected, as they comprise just 5% to 15% of total protein consumption.

Demand for animal feed will change little, as live animal inventory remains high. Unlike previous outbreaks like the African swine fever, there are no plans for culling in the wake of COVID-19. However, sales and operations have been disrupted by travel restrictions and the delay of employees returning to work.

Key trends transforming China's food chain

The COVID-19 epidemic, coming on the heels of the bird flu and African swine fever outbreaks, will further accelerate the transformation of China's food supply chain, especially animal products. Here are four themes spurring this transformation.

Acceleration of cold-chain network development. The rise of e-commerce food channels and the desire for higher-quality food after COVID-19 have boosted the need for a more robust cold-chain network. As consumers become more willing to pay a premium for fresh, high-quality meat, improving the warehousing and last-mile delivery options will be paramount.

Industry consolidation and vertical integration. More attention on food safety will benefit larger players that can invest in modernizing production lines to standards common in the US and Europe, including more refrigeration (see Figure 4). Larger players will also further vertically integrate throughout the value chain to give them more control over raw material prices, quality and supplies. These factors will put smaller players with weak cash positions out of business.

Stricter food safety regulations and enforcement. Chinese authorities will shift toward food-safety standards more in line with European regulations, which cover the whole value chain and include more robust food tracing and a more mature alert system.

Quicker shift toward digitalization and automation. Until now, the prevalence of small farms in China's agriculture industry has slowed the adoption of digital and automated technologies. But with the increased attention to food safety after recent outbreaks, stricter regulations and industry consolidation will combine to hasten the adoption of these technologies.

How food and agricultural companies can respond

While the total impact of the outbreak on China's food sector is yet to be determined, companies can take steps in the short, medium and long term to respond to the challenges and opportunities ahead.

Take short-term steps to navigate through the crisis. To start, companies should implement strict protective measures to ensure the safety of their workers and prevent additional outbreaks. These efforts can improve team morale and reinforce a commitment to quality control.

Next, companies should look for opportunities to cut costs and manage cash. Companies can seek savings in selling, general and administrative expenses (SG&A) or in indirect procurement costs, such as short-term expansion, while profits are lower. Executives should plan for the worst and prepare a "Plan B" that includes things such as financing options or different supply chain solutions.

Identify medium-term opportunities for inorganic growth. Begin by setting a clear strategy based on the company's future ambition. Identify key capability gaps to reach that ambition, and allocate scarce resources to fill them-either by building the capabilities internally or looking at M&A options.

Then, identify key adjacencies for potential M&A, such as cold-chain logistics. Within each sector, some incumbents face short-term challenges, which may present an opportunity to buy. However, don't make an acquisition solely based on price. Make sure a target fits the company's strategy.

Invest in long-term initiatives to embrace the transformation. Double-down on technology that improves food safety and quality control. As regulations become stricter, stay ahead of the curve. Specifically, focus on investing in inspection protocols, devising quarantine procedures and building a robust tracing system.

It also pays in the long term to diversify and balance your product portfolio to increase resilience against future risks. For example, diversify the types of animals bred, or stagger raising periods. To avoid losing focus on your core, build out first from close adjacencies that may share key capabilities.

This is a challenging time for China's food producers. Companies that make the right moves now will be best positioned to thrive in a market with tougher regulations and changing customer expectations.
The authors would like to thank Yue Chen, Josh Zhu and Rock Zhang for their contributions. Thomas Luedi and Helen Liu are Bain & Company partners based in Shanghai.

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Coronavirus Accelerates the Transformation of China's Meat Supply Chain

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While China and countries around the world confront the human toll from the coronavirus outbreak, the effect on China's food industry is already coming into focus. Travel restrictions and quarantines after the outbreak were apparent immediately. Restaurants sat empty, and home deliveries spiked as customers shunned eating out in favor of ordering in.

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COVID-19 has put plant protein back on the menu for China

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Sales of plant-based foods have surged in China through the pandemic, as consumers have second thoughts about animal products, and particularly wild animal meat.

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Filled with terms like choice, select, certified, organic, grass-fed, and free-range, reading the labels on beef sold in U.S. grocery stores can be intimidating. Some of these words refer to grades, while others indicate specific breeds or how the animals were raised. Familiarizing yourself with these labels will guide your shopping experience and ensure you know exactly what type of steaks and other beef cuts you're buying.

Prime, Choice, Select, Standard, Commercial Grades

Beef is graded to indicate the amount, regularity, and quality of marbling or fat interlaced within the muscle or meat. The grading system is voluntary. When requested, it is performed by licensed federal graders to uniform United States Department of Agriculture (USDA) specifications.

Prime beef is the best, most abundantly marbled beef. It is rarely available at supermarkets because restaurants and artisan butcher shops buy most of it, especially steaks, at the wholesale level.

Choice beef is also excellent and commonly the best beef available at stores.

Select beef is still good and pretty tender, but it's much leaner and has less flavor and juiciness than choice beef.

Standard and commercial grade beef is even leaner. It is often sold without a specific grading label and typically includes store-brand beef.

Utility, cutter, and canner grades usually are not sold at grocery stores but instead used for commercially ground beef and processed foods.

Certified Beef

"Certified" isn't used on its own but rather to modify other label terms. It verifies that the USDA's Food Safety and Inspection Service and the Agriculture Marketing Service (AMS) evaluated the beef for class, grade, or other USDA-certifiable characteristics. It is legal for "certified" to be used in other circumstances, but it must clearly state the organization's name responsible for the certification process.

Organic Beef

USDA organic certification follows guidelines overseen by the National Organic Program (NOP). To be certified organic, beef cattle must be raised in an eco-friendly manner that complies with animal welfare standards. The cattle must eat only organically certified feed, and be given outdoor access year-round with minimal use of finishing feedlots that give the animals sufficient space. The regulations also forbid the use of growth hormones, antibiotics, genetically modified feed, or animal by-products.

No Antibiotics and No Hormones

Beef that does not meet all of the organic certification requirements may be labeled as antibiotic-free or hormone-free. To use these labels, beef producers must submit documentation to the USDA that the cattle were not administered any antibiotics or hormones. "Raised without antibiotics" is sometimes abbreviated RWA. It's important to note that there is no testing for these labels to ensure their validity, and they may not be third-party verified.

Grass-Fed Beef

Without human intervention, cattle would eat grass their whole lives. Most cattle-including those raised to qualify for the organic label-are brought to feedlots and fattened up on grain and other feed. Studies have shown that beef from cattle raised exclusively on grass has less saturated fat and more nutrients, including more omega-3 fatty acids, than grain-finished beef.

In a voluntary program, the USDA grass-fed beef cattle diet is limited to natural grass and hay, and they're given pasture access year-round. Labels that read "100 percent grass-fed" or "grass-finished" are verified by a third party, such as the American Grassfed Association.

Free-Range Beef

Similar to grass-fed beef, the label free-range refers to cattle that have a natural diet of grass. However, they are raised exclusively on a range, and allowed to roam and forage for their entire lives. Because the animals never see a feedlot, it is viewed as one of the most humane farming practices.

Humanely-Raised Beef

Farmers and ranchers can turn to different groups that have developed standards for the humane treatment of animals and label their beef products as humanely raised. The strictest and most transparent standards are the Certified Humane label from Humane Farm Animal Care (HFAC) and A Greener World's (AGW) Animal Welfare Approved (AWA) label. Other organizations certify that partnering food producers use humane methods, so look for American Humane Certified and Global Animal Partnership (GAP) Certified labels.

Natural Beef

The USDA defines "natural" and "all-natural" as beef that has been minimally processed and contains no preservatives or artificial ingredients. Since this is all true of all fresh meat, this label is relatively meaningless at the meat counter.

Locally Grown Beef

The term locally grown has no legal meaning but implies that the meat came from a relatively close source to where it's sold. Any store or market that uses the label on beef should be able to tell you which farm or ranch-raised the cattle.

Kosher Beef

Kosher beef is prepared under rabbinical supervision according to Jewish customs and laws. It comes only from the forequarters (or front) of the cow.

Dry-Aged and Wet-Aged Beef

Aging develops flavor and tenderizes the beef. Dry aging occurs in a chilled environment where moisture evaporates and concentrates the beef flavor. Wet aging involves vacuum-packing the meat, so it keeps all its sellable weight and is generally thought to result in less flavor.

Angus beef is from the Angus breed of cattle. Black Angus is more common the Red Angus, which is not recognized by the American Angus Association. One of the most popular beef cattle breeds in the U.S., Angus is prized for its intense marbling of fat that contributes to the flavor and texture of the meat.

Wagyu or Kobe Beef

Wagyu translates to "Japanese beef cattle" and includes four breeds. The meat has a more intense marbling than Angus, with a distinguished texture and flavor, and it's raised by some of the most exclusive ranches in the world. Kobe beef comes from a specific breed of cattle (Tajima, or Japanese Black) raised in Japan's Hyogo prefecture. Despite the legends, only some farmers feed Kobe beef cattle beer and massage them with sake, and neither practice is required.

American wagyu beef is also available due to crossbreeding Japanese wagyu breeds with Angus cattle. Retaining qualities of both in the processed beef, it tends to be more affordable than Japanese wagyu and Kobe beef.

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The labels on beef include grades and characteristics. Learn what organic, grass-fed, prime, choice and other terms mean for various cuts and grinds.

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                                                      Market Structure Research 

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                                                      Market Structure Research 

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Monopolistic firms:

1) Number of Providers
- China's meat market is the second biggest sector in the nation's retail food market with fresh produce being the first.

- China is currently the world's biggest meat producer, consumer and importer.
- As demand for meat continue to rise, China's meat import increase significantly. (e.g China imported 5.49 million meat products in 2019)

- Technological advancements in meat-slaughtering and processing entice more sellers to join the meat industry

- China's expansion of distribution networks has helped to enhance regional trade in fresh and preserved meat. These meat products are therefore able to be sold at new retail outlets such as supermarkets controlled by Hema Fresh (盒马生鲜) and Yonghui (永辉).

- Due to a low barrier to entry in the meat market such as Chinese government reducing tariffs on numerous goods including meat and poultry, it led to many meat industries operating their businesses in China. This in turn led to many meat sellers and industries in China. (e.g China has 4936 meat processing businesses such as WH Group Limited, Shandong Jinluo Enterprise Group and Yurun Group.)

To find out more for report writing:
- Statistics on China meat imports in comparison with other countries

2) Dominant providers

(millions USD)
WH Group Ltd
Revenue: 24,103.00
Net Income: 1,465.00
Profit Margin: 6.08%

(millions HKY)
China Yurun Food Group Ltd
Revenue: 15,224.98
(Net Loss): (3,940.48)
(Loss Margin): (-25.88%)

(millions CNY)
Tangrenshen Group Co Ltd
Revenue: 15,342.86
Net Income: 202.36
Profit Margin: 1.32%

AFTER CONVERSION

(millions USD)
China Yurun Food Group Ltd
Revenue: 1,964.15
(Net Loss): (508.35)
(Loss Margin): (-25.88%)

(millions USD)
Tangrenshen Group Co Ltd
Revenue: 2,169.77
Net Income: 28.62
Profit Margin: 1.32%

3) Product Uniformity
-Meats are all differentiated and have different types from different animals, venison,bear,rabbit, but more prominently, chicken, pork, fish and beef

-Even within beef itself there are different cuts that are sold, from different sellers, the round, short-loin,ribs, sirloin, flank,chuck and brisket....among other cuts

-The beef also have different types of beef, with different grades and different characteristics, Certified Beef, Grass-fed Beef, Organic Beef, locally-grown beef, Kosher beef,Natural beef, NO-anitbiotics and no hormones, hummanely-raised beef,

-Beef has different labels, the five in decreasing grade, "Prime", "Choice","Select","Standard and Commercial", and lastly, "Utility,Cutter and Canner"

-Beef can also be differentiated from where the beef was raised, some being, angus beef, wagyu beef, kobe beef, akita beef etc.

-All this proves that products are similar, but they are all differentiated, with different characteristics, which are signs of a monopolistic competitive market structure.

4) Barriers to entry
- With the low barriers to entry in monopolistic firms, China's meat processing industry consist of 4,936 businesses and a market size of $128 billion.
- China reduced tariffs on frozen-pork, from 12% to 8% in 2020. This increases the chance for more profit by entering into the meat industry.
https://www.dccchina.org/2020/01/china-cuts-pork-import-tariffs-in-2020-rates-lower-than-mfn-why/
-Beijing authorities have promised to study proposals to reform the live cattle supply to Hong Kong - including abolishing the Ng Fung Hong monopoly
-the ministry would agree to breaking the monopoly - blamed by Hong Kong traders for pushing up prices - once there was consensus between the Hong Kong government and industry players.
- A minister mentioned While the standards could not be lowered, "we hope that at least the price can be more reasonable, and will not fluctuate too much"

Between 2009 and 2013, the wholesale price of marbled beef in Hong Kong rose from HK$44.40 to HK$77.50 a kilogram, an increase of 75 per cent.
https://www.scmp.com/news/hong-kong/article/1255881/beijing-vows-break-beef-monopoly

a bit more on china's meat monopoly :
https://books.google.com.sg/books?id=lINH94RetNQC&pg=PA306&lpg=PA306&dq=meat+monopoly+china&source=bl&ots=jTM-NNBXSA&sig=ACfU3U3KR_A3i410fwGug-Deor8OhvTagw&hl=en&sa=X&ved=2ahUKEwi5l9qgpIHqAhVEWX0KHbwWAB4Q6AEwD3oECAcQAQ#v=onepage&q=meat%20monopoly%20china&f=false

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Beef Cuts and Recommended Cooking Methods

Figuring out the different cuts of beef on a cow and the best way to cook each is a daunting challenge for anyone. With so many different cuts and cooking styles, there are plenty of options for you to choose from.

Some cuts of beef can work fine on a grill, while others taste best when slow-cooked for hours. In this article, I go over the different cuts of beef and how to best cook each for maximum tenderness.

Different Types of Beef

The most commonly used types of beef are:

Chuck: Cut from the shoulder; tough but flavorful.

Shank: Cut from the leg; very tough and chewy.

Brisket: Cut from the breast; tough if not cooked properly.

Rib: Cut from the rib area; very tender and flavorful.

Short plate: Cut from the belly of the cow; chewy and quite tough.

Flank: Cut from the abdominal muscles of the cow; one of the toughest cuts.

Loin: Cut from the back of the cow above the ribs; one of the tenderest cuts.

Sirloin: Cut from the back of the cow just past the loin; pretty tender and flavorful.

The round: Cut from the back of the cow above the back legs; chewy and tough.

There are less common types that we won't be discussing here, but they are:

Many people find the less common types of meat to be less desirable when it comes to taste and texture. For example, many people do not like the texture or the taste of beef liver so they make sure to never buy it at the store despite its high level of vitamins and minerals.

Quick Guide: Beef Cut and Cook Type

Chuck

Description: The chuck, also known as the seven-bone steak (in reference to the shape of the bone), is located near the shoulder and neck area of the cow.

Types: The chuck cut yields some of the more economical cuts of beef, such as the chuck roast, chuck arm roast, and the flat iron steak.

How to cook: The chuck contains a significant amount of connective tissue, which contains collagen and can be a little tough, but provides great flavor. Chuck cuts of beef are best cooked slowly over time with a crock pot or by braising.

Shank

Description: The shank is the leg of the cow and is one of the toughest meats. This is because the leg muscle is constantly used, creating a tough, sinewy cut. Therefore, it is one of the less popular, but also one of the cheapest.

Types: The Shank doesn't yield very many cuts of meat, just the shank or the shank cross cut. It is also used in very low fat ratios of ground beef.

How to cook: The shank is best cooked over a long period and in liquid. It is best in soups, stews, or to make beef stock.

Brisket

Description: Brisket is cut from the breast or the lower portion of the cow. Like the shank, it has a lot of connective tissue and can be quite tough unless cooked properly.

Types: The brisket is known by two main cuts of meat: brisket flat cut and the brisket point cut.

How to cook: Brisket is a favorite of BBQ'ers everywhere and is best cooked smoked or braised.

Ribs

Description: The rib includes some of the finest cuts of the cow, and is the known for its juiciness, tenderness, superb marbling, and flavor. The rib cut refers to ribs 6 through 12 on the cow.

Types: The rib includes several of the finest cuts of the cow, including the prime rib, short rib, rib-eye steak, and rib-eye roasts.

How to cook: Rib cuts are best cooked over dry heat and for long periods of time. American BBQ'ers favor grilling or smoking these tender cuts.

Short Plate

Description: The short plate is located on the front belly of the cow below the ribs. It contains a lot of cartilage and is kind of fatty and tough.

Types: It contains a few different cuts including the short ribs, hangar steak, and the skirt steak. It is best known for being used to make carne asada.

How to cook: Best braised because of its toughness.

Flank

Description: The flank is a long flat cut from the abdominal muscles of the cow. It is one of the toughest cuts of meat.

Types: The flank is usually cut into flap steaks or flank steaks. It is typically used in Asian and Mexican cuisine as stir-fry or fajita beef. It can also be used in London broil.

How to cook: Due to its excessive toughness, flank cuts are best cooked with moist methods like braising.

Loin

Description: The loin is cut from the back of the cow, typically a portion of the hindquarter directly behind the ribs. It is one of the most tender and desirable cuts of beef.

Types: The loin is best known for producing filet mignon, porterhouse steak, and the T-bone steak. However, it also contains the KC strip, tenderloin roast, and the shell steak.

How to cook: Loin cuts are best cooked over dry heat such as on a grill.

Sirloin

Description: Sirloin is also cut from the back of the cow, just past the loin (a.k.a the short loin). Although, not as tender as the loin cuts, the sirloin is still a very popular cut of beef.

Types: The sirloin contains the top sirloin, bottom sirloin, and center cut sirloin steaks, as well as the tri-tip steak, filet of sirloin, and the ball tip roast.

How to cook: Sirloin is best cooked by grilling, but can also be broiled, sautéed, or pan-fried.

Round or Rump

Description: The round, also known as the rump, is a lean cut of meat with very little fat. It is located at the back of the cow near the rear leg. Like the Shank, the round is a tough cut due to the constant use of the cow's legs.

Types: Despite the round or rump's toughness, it produces quite a few different cuts of meat that are quite popular. Some of the more common cuts are: rump roast/steak, top round roast/steak, bottom round roast/steak, eye of round roast/steak, and the sirloin tip center roast/steak.

How to cook: Round cuts are best braised or roasted with low levels of moisture.

Leanest Cuts of Beef

Lean cuts of beef provide a great ratio of protein to fat, with many cuts having low levels of saturated fat. Lean meat can be just as flavorful as fattier cuts, but it is healthier due to its lack of saturated fat.

Here are some of the leanest cuts of beef with basic nutrition facts based on a serving size of 6 ounces.

Sirloin tip side steak: This cut comes from the sirloin tip or the top of the round. Despite its lack of fat, it's still quite flavorful. Calories 206; Fat 5.4g; Saturated Fat 2.06g; Protein 39g

Top round steak: Taken from the hip of the cow, this cut is considered more flavorful and more tender than round cuts. Calories 240; Fat 7.6g; Saturated Fat 3g; Protein 36.9g

Eye of round steak: Similar to the cuts taken from the round, but tougher and less juicy. Calories 276; Fat 7g; Saturated Fat 2.4g; Protein 49.8g

Bottom round steak: This cut is taken from the outer part of the round that is a well-exercised area of the cow. Due to this, the bottom round tends to be quite tough to chew, and this cut requires a slower cooking technique such as braising. Calories 300; Fat 11g; Saturated Fat 3.8; Protein 47.2g

Top sirloin: Another tough cut of meat that still has some flavor to it. This cut requires a slow cooking method to get it tender enough to eat. Calories 316; Fat 10.6g; Saturated Fat 4g; Protein 51.6g

Fattiest Cuts of Beef

Fatty cuts of beef have all of that delicious flavor and texture that sets it apart from other animal meat. These cuts have all of the tasty marbling that people come to expect with plenty of flavors as well. Keep in mind that these cuts tend to be more pricey and contain more saturated fat so they may not be the healthiest to eat all of the time.

Here are some of the fattiest cuts of beef with basic nutrition facts based on a serving size of 6 ounces.

Flap steak: This cut tends to be quite chewy and fibrous but still tasty. Calories 240; Fat 12g; Saturated Fat 3.8g; Protein 33g

Filet mignon (chateaubriand or tenderloin): The most tender cut of beef and the most expensive. It is prized for its tenderness and flavor. Calories 348; Fat 16g; Saturated Fat 6g; Protein 48g

Porterhouse steak: Another cut from the tenderloin, it is another delicious and pricey cut that is easy to chew. Calories 346; Fat 16.4g; Saturated Fat 6.6g; Protein 46.2g

Skirt steak: This cut, also known as a flank steak, is taken from the plate or chest of the cow. While it has great flavor, it tends to be quite chewy. Calories 348; Fat 17.2g; Saturated Fat 6.6g; Protein 45.4g

New York strip steak: A tougher cut of meat taken from the t-bone area of the cow. This classic cut of meat is still very flavorful, and if cooked correctly it can still be quite tender. Calories 360; Fat 18g; Saturated Fat 6g; Protein 46g

T-bone steak: This cut is from directly below the porterhouse, and it is known for its smooth texture and savory flavor. Calories 376; Fat 25.6g; Saturated Fat 10.6g; Protein 33g

Rib-eye steak (rib roast, prime rib): The ideal cut of beef when it comes to tenderness and texture. Its high fat content makes it one of the tastiest cuts. Calories 466; Fat 37.6g; Saturated Fat 15g; Protein 30g

Can You Cook Steak Without a Grill?

Most people assume that in order to cook a good cut of steak you need to have either a gas or charcoal grill to cook the meat on. While having a grill can certainly make the process easier, you can cook a tender piece of steak on your stovetop and in your oven with a technique known as the reverse sear method.

The reverse sear method involves searing the steak in a pan on a hot stovetop, then putting the steak into the oven and letting it cook until your desired rareness. By searing the meat, you lock in the flavor and juiciness.

Steaks Are Best in Cast Iron!
© 2012 Novel Treasure
hippoeeee on November 21, 2019:

thx for meals

cherry grace on August 31, 2019:

thanks for this I've got something to tackle in front of my classmates. God bless keep on sharing your knowledge.

samaNTHA on June 10, 2019:

HOW LONG SHOULD YOU PUT YOUR STEAK ON FOR

AKAKAKAKAKA on December 13, 2018:

thanks this helped me with my home work :D

Olapeju on April 16, 2018:

Very nice straight forward well and good diagram easy to understand

Thanks so much

Zahoor Ahmed on March 31, 2018:

Great job.thanks

johnathon hine on March 05, 2018:

thank you

Mia Khalifa on January 16, 2018:

Thnak you!

chibuzor kate Achinihu on December 17, 2017:

The infomation here is so motivating.

I'm Mercy Gifta on December 09, 2017:

The information here are very impacting. Thanks so much

brix on November 17, 2017:

thank you...

Abraham Sekoai on November 16, 2017:

It is very much helpful, i sound like a pro now

saravanan on December 29, 2016:

very useful..thankyou

tazeem ch on April 20, 2016:

mind blowing data ! superb

g-h on October 07, 2014:

thank you.

Phyllis Doyle Burns from High desert of Nevada. on December 19, 2013:

This is a very informative hub and well presented. Well done!

Up, Useful, Interesting

idigwebsites from United States on December 19, 2013:

Very informative hub. Now I know which cooking methods are best for every cuts of meat. :)

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What Are the Different Cuts of Beef and How to Cook Them

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What are the different cuts of beef? What are the different types of these cuts? How do I cook chuck roast? Read on to find the answers to these questions as well as how to cook a steak without using a grill.

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Thank you team, for sharing your padlet and bringing me into the world of meat and poultry! Team did a pretty comprehensive prelim research for the global meat and poultry industry. The next step is to identify a specific country to focus the remaining of your research on. Singapore, the U.S.A, China and Japan were the four key countries mentioned in your key resources, so team might want to discuss from there.

As you are aware, Stage 1 analysis comprised of also identifying the market structure of the product/industry (see highlighted portions in pic attached). As you continue to do your research, you will be able to identify the market structure eventually. Another thing that needs to be discussed among yourselves would be the scope of the industry that you are looking at? Will it remain broad i.e. meat and poultry? Or more specific? E.g. Chicken distributors in Singapore

Team might want to use the attached slide from “Non-competitive markets”

Basically, the key clues to infer market structure would be:

(1) Number of providers

(2) Any dominant provider(s)?  E.g. high market share/high revenue are areas where you can infer dominance

(3) Strategies adopted to differentiate goods from others?

(4) Barriers to entry (high/low?)

Please refer to my specific feedback below, for your prelim analysis (highlighted). Please continue to work on your points further, either finding more evidence to support it or new points to be added into your report.

Just a heads up, in Stage 2, you will move on to look at how the meat and poultry industry impacts the Singapore's economy and how Singapore help this industry to grow.

1. Trading
I could see how some of these could fit nicely as part of the global meat and poultry industry content.
There are two demand determinants mentioned here that could be expanded further and be incorporated under consumer/demand in your report. They could also be regarded as supply determinants if additional regulations affect the supply of meat.

2. Competition for meats has increased in recent years, due to the rise of plant-based substitute
Good! Team actually covered two demand determinants in this portion. Please specify them to show clear application of economic concepts. The info is with respect to the US market but I'm confident that team would be able to find similar info for the chosen country (if its not US).

3. Factors affecting worldwide demand for meats and poultry
Similar comments, how would this impact the chosen country amidst the covid-19 situation?

4. Price elasticity of demand for meat
A correction here, if meat price increase and that's taking a higher proportion of Japanese's income, price elasticity shouldn't be falling.
Q. Is meat relatively cheaper than wheat? What could have happened to allow consumers to find this more of a staple diet? And yes, find evidence. Again, if Japan is not the selected country, find similar info for the chosen one. This finding could still be used though as additional evidence on the falling price elasticity of demand.

5. Supply of meat increases due to advancements in technology
Good research! My only comment is to find out the value of cost savings, if this is available.

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Factors affecting worldwide demand in meat and poultry.

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                   Microeconomics Prelim Analysis [Based on 5 key sources of information]

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                   Microeconomics Prelim Analysis [Based on 5 key sources of information]

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-Market Structure for the poultry and meats market is MONOPOLISTIC Competition
- products are not entirely different but has some variations(Wagyu beef, australian beef,black chicken)
-Number of sellers are numerous
-Barriers of entry.

1. Trading
Support from key sources:
- In the production of poultry, it supplies from local or niche markets to large-scale industrialized enterprises. Most of the poultry meat available on the global market comes from large-scale, specialized commercial producers.
- The market prices vary significantly by seasonal patterns (e.g. higher prices during festivities), production costs, and competition from other products.
- Depending on the region, production costs can be volatile and vary significantly as well.
- As high-quality meat takes longer to produce, it costs higher.
- International trading for poultry increased in most countries.

- The evolution and dynamics of world poultry markets are mostly driven by animal disease outbreaks and trade policies.
- In recent decades, avian influenza and Newcastle disease have profoundly affected poultry meat trade and as a result, the sanitary of the production determines the international poultry trade.

-
Demand for imported meat in China remains incredibly strong as the protein deficit caused by African swine fever(ASF) continues to drive trade.
China continues to increase its share of the global market, accounting for over 43 percent of global pork imports and 29 percent of beef.

To find out more for report writing:
- Overview of how diseases and sanitary issues affect the market of poultry

2.  Competiton for meats has increased in recent years, due to the rise of plant-based substitute goods.
-There is an increase in people that consume plant-based alternatives to meats, such as vegetarians, vegans, etc.

-Younger people, GenZ prefer to have healthier alternatives to meat, due to trendier plant-based products.

-Demand for meat has dropped as consumers realise the environmental effect of meat production and switched over to plant-based alternatives, such as methane gas from cows affecting the

-Consumers also look out for signs like the non-GMO, gluten-free, kosher signs, making producers have to produce a higher quality of good since other producers are doing it.

- Meat producers have to up the quality of their products to compete with the rising quality of plant-based alternatives, with mouthfeel, taste, texture, looks, etc.

-The plant-based alternative industry has seen considerable growth which is a problem for the meat industry, In North America, meat alternatives sales have grown 37% from 2017 to 2019. This represents a growth in dollar sales from $584 M to $800M from April 2017 through April 2019

-The current big competitor china's meat industry faces is the of course the plant-based substitues as well, the industry being predicted to have a net woth of up to 11.9 billion in 2023.(https://www.reuters.com/article/us-china-agriculture-plant-based-focus/beyond-meat-vs-zhenmeat-the-battle-for-chinas-meatless-market-idUSKBN1XS2MG)

-Zhenmeat which is a chinese fake meat company, just launched 2 new products, fake crayfish and deep fried por tenderloin.

-Even in China, the biggest competitors are not domestic companies, Its biggest competitors right now are not domestic rivals. U.S-based Beyond Meat made its first steps into China in April through a partnership with Starbucks, while Hong Kong’s Green Common launched its meatless Ominpork product in the world’s second-largest economy.
(https://www.cnbc.com/2020/06/18/china-beyond-meat-rival-zhenmeat-launches-plant-based-pork-crayfish.html)

3. Factors affecting worldwide demand for meats and poultry ( COVID-19 and its effects on the meat industry )

-The demand for meat and its types depends majorly on a country’s cultural background and heritage, which has a strong impression on its food.
eg: consumption of camel and goat meat will increase much faster than other meat items in the United Arab Emirates.

- Due to the spread of the COVID-19 Virus, the demand for meat has decreased. Widespread closures of restaurants and foodservice outlets, as well as a reduction in tourism and travel, will shift the demand for protein among both types of meat as well as cuts. Shipping disruptions have already impacted global trade by clogging ports and reducing container availability.

-The global beef production forecast for 2020 is revised marginally lower from the prior forecast due to the virus. This is expected to cause consumers to switch to less expensive protein sources and adjust dining patterns. Depressed restaurant traffic is expected to negatively impact beef demand because a large proportion of global consumption takes place in the HRI sector (hotels, restaurants, and other institutions).

4. Price elasticity of demand for meat, especially beef, decreased in recent years
Support from key sources:
- Meat products have been increasingly popular over the years during the mid-1980s.
- The ratio of meat items to other food products is becoming relatively high
- Import quota for beef set by the Japanese government increased every year from April 1988 to April 1991. (Eg Allocations of beef imports were grown by 60 000 tonnes annually.)

- Meat products have been increasingly popular over the years
-Chinese disposable income increased 5.8% in 2019
-Economic boom up to 6.1 percent, narrowly achieving the country's target from 6 to 6.5 percent.
- Per capita disposable income reached 30,733 yuan (4,461.95 U.S. dollars) in 2019
(http://www.china.org.cn/business/2020-01/17/content_75623272.htm)

To find out more for report writing:
- Evidences to show the decrease in price elasticity of demand for meat

Price elasticity of demand for meat likely to increase due to a surge in meat prices
Support from key sources:
-Meat products have the highest price increase as compared to other food products in Australia. (Eg. Lamb and mutton had a 64% price jump, sugar commodities had only a 3.6 percent increase.)
-An increase in beef prices have little impact on Japanese consumers unless they maintain their high proportionate level of income.
- Price elasticities of beef and pork are 1.26 and 1.53 respectively.
- Lower income Aussies reluctant to pay for the price hike for meat products and would buy other meat alternatives

-Prices of meat in China are surging and economic growth is declining, thus slowing income growth
-Although pork meat is currently China's favorite, especially low-income groups and middle classes, high prices might reduce consumers' confidence to achieve economic growth and shift to other meat alternatives.
- Alternatives can be affordable meals
-Li's wholesale supplier has increased the pork price by five times between August and October, from 58 yuan (US$8.3) to 90 yuan (US$12.8) per kilogram intestines
- Price index increased to 3.8 per cent in October, greatest since January 2012
(https://www.scmp.com/economy/china-economy/article/3038717/chinas-rising-prices-driven-pork-crisis-leaving-bad-taste)

5. Supply of meat increases due to advancements in technology

Improved quality and food safety of meat:
-Decrease of foodborne illness in raw meat and poultry.
- Increases the shelf life of meat products. Examples, refrigeration improvements, improved sanitation, steam vacuums, hot water pasteurization.
-Increase of nutrients in meat products as demands of healthier meat increase.
Support from key sources:
Modern meat safety

Increasing the supply of meat with the same amount of input sources
1. With the use of complex high tech machinery to do farming/harvesting jobs for them, farmers can reduce much of their manual duties to engage in other work, such as automated feeders in barns.

2. Performance-enhancing technologies consisting of genetics/animal enzymes, growth-enhancing substances, artificial proteins are used to modify meat, which will increase the intensity of meat production

Cost savings in terms of water consumption
-Beef processing uses more water than any other form of food production, because of the head and tongue that carry high levels of bacteria.
-A new way to approach this method of washing is by using a beef processor, which could reduce water consumption from 14 gallons to 7 gallons for each head and tongue. The system also reduced wash time from 12 to 6 seconds.
-It has substantially help to reduce labour costs by up to $100,000 annually by removing the need for manual washing.
Support from key sources:

Birko Head and Tongue Wash system

High costs for cell-based meat
-China has been involved in this new method of meat consumption. For example, the Chinese government plans to cut meat consumption by 50%, to reduce negative climate change and health problems.
-In an example of China's cell-based meat , signed a 300-million-U.S.-dollar deal to import meat grown in Israeli labs in 2017.
(https://news.cgtn.com/news/2019-12-02/Petri-dish-pork-anyone-China-makes-first-foray-into-cell-based-meat-M69nV6CUbC/index.html)
-For instance, in 2019, the Nanjing Agricultural University had a team produced 5g of pork from muscle stem cells.
-As the demand for cultured meat increases because of its benefits, the costs producing such meat will generally decrease for the meat industries in the future years.

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[1] - "Countries that dominate the meat&Poultry industry"
https://www.wattagnet.com/articles/39387-countries-dominate-poultry-meat-production-to-2028

[2]- "5 ways technology has changed farming"
https://iowaagliteracy.wordpress.com/2018/06/02/5-ways-technology-has-changed-farming/

[3] - "Standard of living in Japan"
https://en.wikipedia.org/wiki/Standard_of_living_in_Japan

[4} - "Birko Head and Tongue Wash system"
https://www.foodsafetystrategies.com/articles/1144-birko-head-and-tongue-wash-system#:~:text=The%20results%20confirmed%20that%20water,12%20seconds%20to%20six%20seconds.

[5] -"The meat market in China-Pork making way for growth of beef"
https://daxueconsulting.com/meat-market-in-china/

[6]China fake meat market
-https://www.cnbc.com/2020/06/18/china-beyond-meat-rival-zhenmeat-launches-plant-based-pork-crayfish.html
-https://www.reuters.com/article/us-china-agriculture-plant-based-focus/beyond-meat-vs-zhenmeat-the-battle-for-chinas-meatless-market-idUSKBN1XS2MG

[7]Demand of meat 70% fall
https://www.forbes.com/sites/michaelpellmanrowland/2018/03/23/millennials-move-away-from-meat/#7e8e2555a4a4

[8]Demand of meat in China
https://www.motherjones.com/environment/2018/07/the-chinese-are-eating-more-meat-than-ever-before-and-the-planet-cant-keep-up/

[9]Decrease in prices of alternatives
https://www.forbes.com/sites/jennysplitter/2020/03/09/in-the-race-to-cut-prices-plant-based-companies-are-embracing-big-food/#1a105b8075a2

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MICROECONOMIC ANALYSIS

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The impact of technology in the beef industry

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Developments in technology provide every industry with improved methods, management processes and accuracy. The beef industry is no different. Advanced software options for cattle farmers help save time, improve record keeping and allow for more coordinated efforts across all stages of production. More specifically, technological advances in the beef industry have contributed to the integration of beef programs like nutrition and health management; better information analysis techniques, including genetic processing; and improved cattle management practices, like more accurate tracing.

New technologies allow young farmers to contribute fresh ideas and perspectives helping create better solutions and practices, which directly affect the future of the beef industry. Cattle management, genetics and production strategies are popular areas in which improved technology has impacted day-to-day responsibilities as well as executive-level decision making. As a new generation of cattle producers takes the lead, technology use will continue to impact the industry on all levels.

Jaclyn Wilson-Demel, a fifth generation rancher, uses computers, mobile apps and handheld devices for real-time input to help with day-to-day operations. "Technology is especially important for us because we run our ranch like a purebred operation in terms of record keeping," she said. "As calves are being born, we use handheld devices to record real time data as we work in the pasture for an accurate history of each animal. These files will be available to us and future generations for the decades to come. "

In addition to computers and mobile devices, some cattle farmers utilize tracing technologies for more accurate data recording. Software developers are even creating online systems in which farmers can trace cattle from birth to eventual death along with other details such as diet, grazing schedules, location transfer, breeding history and keeper profiles. Collecting as many details during the life of the cattle not only helps with disease control and traceability, but also provides source verification, which is important to beef consumers as well as cattle breeders.

With more detailed records, cattle farmers are able to practice improved cattle genomic testing processes. Desirable traits can be identified in carriers of recessive and dominant genes for more informed breeding decisions, resulting in better cattle quality and improved profitability. This helps in accurately measuring Expected Progency Differences (EPDs) for more economically attractive traits like disease resistance, animal growth and feed utilization.

Ben Neale, a YPC leader and first generation cattle farmer with a veterinary and business background, uses tracing technology to improve cattle genetics. "I tag my cattle to help record as many details about health, diet, location and performance for improved breeding practices. These are essential in building successful breeding techniques, which I've linked to a mix of trial and error, education, regulation, experience and intuition, because I want to produce the healthiest and most profitable cattle possible."

Some beef operation managers may find it difficult to choose which tech strategies are best suited for their unique situation. This gives young cattle producers an opportunity to step up and apply new technology in innovative ways providing a fresh outlook on old techniques. The key is to spend time analyzing current strategies for opportunities to integrate the right technology in the most appropriate areas. Implemented strategically, technology can be used to improve beef operations across the board for a more integrated approach that saves time, improves processes and leads to higher profitability.

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The Impact of Technology in the Beef Industry

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Developments in technology provide every industry with improved methods, management processes and accuracy. The beef industry is no different. Advanced software options for cattle farmers help save time, improve record keeping and allow for more coordinated efforts across all stages of production.

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Meat and poultry consumption and demand analysis

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Introduction

Meat and poultry consumption is becoming more important in the Japanese diet. Some studies report that Japanese diets have become increasingly Westernized: as per capita income increases, Japanese people consume more meats and poultry than grain products. As there is a limit to total calorie intake, the ratio of meat products to other foods is becoming larger than that of grain commodities. As reported in Chapter 4, fish and meat are moderate substitutes for each other (see Table 4.7). Furthermore, in June 1988, Japan signed the Beef Market Access Agreement (BMAA) with the United States. This agreement may have accelerated the increasing trend of Japanese beef consumption owing to the influx of cheaper beef from abroad. According to Persaud and Chern (1999), Japan's meat production began first to stagnate and then to fall, while meat imports rapidly increased after the agreement.

The main objectives of the following analysis of meat demand are to analyse meat consumption patterns and to conduct an econometric analysis of the meat demand structure in Japan. Cross-sectional household data from the 1997 FIES are used and estimations are based on a total of 94 200 observations. The meat items included are beef, pork, poultry, ground meat, ham, sausage and bacon. Fish is not included in this model because there are many heterogeneous groups of fish and, when the substitution patterns of the aggregate groups of meat and of fish were analysed (see Chapter 4), it was found that fresh meat and fresh fish were mild substitutes. A study by Eales and Wessells (1999) also found that meat and fish have not been weakly separable in recent years. The results of separability tests tend to be highly dependent on a particular database. Eales and Wessells used the time series data generated from the FIES for 1981 to 1995, and did not include high-value processed meats in their study. The results for testing separability may be different for the present report, which uses household-level data and includes other processed meats in the model. In any case, a weak separability between the seven meats and other foods - including fish - is assumed.

Much research has been conducted on the structural change of meat and poultry demand in Japan using time series data (Hayes, Wahl and Williams, 1990; Capps et al., 1994; Eales and Wessells, 1999). After a decade of trade liberalization, it is extremely important to have an accurate estimate of Japanese meat and poultry demand elasticities. This report offers another estimation with cross-sectional data, which (as already noted) yield more reliable estimates of expenditure and income elasticities than time series data do. In this report, own-price, cross-price and expenditure elasticities are estimated by various single equation models and the almost ideal demand system (AIDS), developed by Deaton and Muellbauer (1980a; 1980b), as discussed in Chapter 3. These elasticity estimates are utilized to analyse Japanese consumption patterns of meat and its products.

Review of exising information and literature

Meat and poultry consumption in Japan over the last three decades has two main characteristics: an increasing trend in meat and poultry consumption; and a rapid increase of meat imports.

Historically, increases in per capita income in Japan have accelerated meat consumption. Figure 5.1 illustrates annual per capita beef, pork and poultry consumption and shows how per capita consumption of meats and poultry has been steadily increasing since 1960. Pork consumption increased until the early 1980s, but its growth seems to have levelled off thereafter. Over the last 30 years, the average consumption of beef has not increased as rapidly as that of pork and poultry. However, the increase in beef consumption has accelerated since the mid-1980s, and in recent years beef has been increasing more rapidly than pork and poultry consumption. In 1960, per capita consumption of beef, pork and poultry was 1.1, 1.1 and 0.8 kg, respectively. Ten years later, beef consumption had nearly doubled, and pork and poultry consumption had increased fourfold. By 1980, beef consumption had tripled, and pork and poultry consumption had increased tenfold. By 1995, beef consumption was seven and a half times its 1960 level, and poultry consumption had increased by nearly 14 times.

The Japanese Government protected beef producers with import quotas. Before the 1988 BMAA, all beef imports, except a small portion under the private quota, were monopolized by the Livestock Industries Promotion Corporation (LIPC) (see Hayami, 1979; Alston et al., 1990). Under the BMAA, quotas were raised by 60 000 tonnes each year from April 1988 to April 1991 (Persaud and Chern, 1999). Thereafter, the quota restriction was replaced by an import tariff. This agreement significantly curtailed LIPC's intervention in the beef market. Consequently, the Japanese beef market became freer; the Japanese cattle industry had to adjust its supply and pricing to the market situation, and consumers enjoyed the benefits of increasing competition from foreign countries.

The increases in meat imports since the 1988 agreement have been remarkable.[8] Figure 5.2 illustrates the trends of beef, pork and poultry imports and shows how all meat imports increased rapidly after the mid-1980s, with beef imports surpassing pork imports during most of the 1990s. Poultry imports have been lower than those of beef and pork during the last three decades. As Figure 5.3 shows, domestic beef production has been stagnant since the mid-1980s, and beef imports have grown at an even faster rate than before. These figures clearly show that beef imports have exceeded domestic production since 1992. Given the historical restrictive beef quota and its trade liberalization in 1988, the relatively high growth rates of beef consumption were stimulated by increased imports in the late 1990s. Figure 5.3 also shows how the production of pork and poultry has decreased since the late 1980s. Figure 5.4 shows the yearly percentage change of nominal unit prices for beef, pork and poultry. Beef prices have been more volatile than those of pork and poultry. Since trade liberalization, beef prices have shown a downward trend, although the magnitude of this trend is not as large as might have been expected.

Food prices in Japan have generally been considered high, relative to other developed countries. Hayami (1979) reports the price differentials of food commodities based on 1977 data. Two decades ago, the retail price of beef in Tokyo was seven to nine times higher than in the capitals of other developed countries. In order to have an overview of the price differentials, MAFF regularly issues price comparisons for food items in major cities of the world. As shown on Table 5.1, which is based on 1996 data, beef is still more expensive in Tokyo than it is in other major cities, although the price differential ranges from twice to none. The pork price varies among major cities, and poultry is cheaper in Tokyo than in several other major cities. Combined with Hayami's survey, Table 5.1 shows that the price differentials among large cities in developed countries have decreased significantly over the last 20 years.

Estimation results on the own-price elasticities of meat demand in Japan, the United States and Canada vary considerably. Hayami (1979) investigated the consequences of Japanese beef trade liberalization and reported the results of own-price elasticities for beef from other studies: the results vary from -1.3 to -1.8. Applying the Rotterdam demand system, Sasaki (1995) estimated various meat demand elasticities in Japan. The own-price elasticities of beef, pork, poultry and meat products are -1.26, -1.53, -0.68 and -0.81, respectively. These results are consistent with Hayami's survey: beef and pork are highly price-elastic, while poultry is relatively inelastic.
Figure 5.1: Annual per capita beef, pork and poultry consumption, 1960-1999

Source: MAFF, 2001.

Figure 5.2: Japanese imports of beef, pork and poultry, 1960-1999

Source: MAFF, 2001.

Figure 5.3: Domestic production of beef, pork and poultry, 1960-1999

Source: MAFF, 2001.

Figure 5.4: Yearly percentage changes of beef, pork and poultry prices, 1970-1997

Source: FIES, various issues.

TABLE 5.1
International price comparison (November 1996)

Note: Price comparison with Tokyo (price in Tokyo = 100).
Source: MAFF, 1997.

There are many studies on United States and Canadian meat and poultry consumption. Eales and Unnevehr (1993) conducted a survey of meats and poultry demand elasticity studies in Canada. Table 5.2 shows excerpts from their results. In their survey, the estimates of own-price elasticity are considerably lower in absolute value than those from Hayami's study, particularly for beef and pork. Using the AIDS model estimated with United States data, Chen and Veeman (1991) reported own-price elasticities for beef, pork and poultry to be -0.77, -0.87 and -0.95, respectively. The Chen and Veeman study on United States meat demand yields estimates that are far closer to those obtained from Canadian data. The studies' comparisons between Western countries and Japan indicate that the own-price elasticities of meats and poultry are higher in Japan than in the United States and Canada.

TABLE 5.2
Canadian meat demand: own-price elasticity estimates (published in the 1990s)

Source: Eales and Unnevehr, 1993, Table 4.

Expenditure elasticity is one of the key determinants of future meat demand, and it is important to have an accurate estimate of expenditure elasticity in order to forecast the medium- to long-term demand for meat. Eales and Unnevehr (1993) surveyed the results of Canadian expenditure elasticity studies. Table 5.3 shows part of their survey results. Using United States data, Moschini and Meilke (1989) reported various expenditure elasticities on meat demand. The estimated expenditure elasticities of beef, pork and poultry were, respectively, 1.39, 0.85 and 0.21 in the post-structural change period of the fourth quarter of 1975 and in the 1967-1987 data set. There are only slight differences between the estimates made from Canadian and those made from United States data. In the Eales and Unnevehr study, expenditure elasticities for beef, pork and poultry are positive, but only the beef expenditure elasticity exceeds one in the Moschini and Meilke study.

TABLE 5.3
Canadian meat demand: expenditure elasticity estimates (published in the 1990s)

Source: Eales and Unnevehr, 1993, Table 4.

Sasaki (1995) reported the income elasticities of meats and poultry in Japan, and found elasticities for beef, pork, poultry and other meat products of 0.80, 1.29, 1.42 and 2.10, respectively. It is interesting to note that Sasaki's study shows beef to be a normal good, although pork, poultry and meat products are superior goods. These results are quite different from the findings of the Canadian and United States studies. Sasaki's estimates depend on the specification of the Rotterdam model and the use of time series data. In the present report, the AIDS model with cross-sectional data has been applied, which should yield more reliable estimates of expenditure elasticities.

Empirical results

The survey data used in this report consist of 94 200 observations for seven meat products. Price data are constructed for households with zero consumption (and thus zero budget share) according to their geographic location, the month of the survey and the household's income level, as described in Chapter 3. In order to have a consistent result, OLS, Heckman's two-step and Tobit estimators are compared. For system modelling, the LA/AIDS models with Stone and Laspeyres index is utilized, and the inverse Mills ratio is included to correct for the zero consumption problem. The full version of the AIDS model is also applied, and all results are compared. Both the LA/AIDS and the AIDS are estimated with homogeneity and symmetry conditions imposed.

Table 5.4 reports the comparison of estimated own-price elasticities: excluding sausage, beef has the most inelastic own-price elasticity among the seven meat commodities in the single equation models. These results indicate that Japanese consumers are insensitive to changes in the beef price. If beef were price-inelastic, the recent increases in beef consumption would not have been caused by price decreases, but either by per capita income increases or by substitution with other meat products. Table 5.5 reports the (Hicksian) compensated price elasticities obtained from the AIDS model with inverse Mills ratios for all seven variables. Most products are net substitutes. Only beef and ground meat show a negative Hicksian cross-price elasticity, which is caused by a net complementarity.

The estimates of expenditure elasticity are compared in Table 5.6. Among all meat products, only beef has an expenditure elasticity that exceeds one - those of other commodities are all less than one. This result is very similar to that found in the United States and Canadian studies reported by Eales and Unnevehr, and Moschini and Meilke. Sasaki's study, based on existing Japanese data, shows nearly the opposite results. From this study, it can be concluded that the Japanese meat consumption pattern has been Westernized in that expenditure elasticities have become similar to those estimated in North American countries. This preference change might have been caused by the increases in imported beef. The comparison of expenditure elasticities from various models reveals that results are robust. In addition, a high expenditure elasticity for beef indicates that beef consumption will not decrease dramatically as long as Japanese consumers maintain their high per capita income.

It is interesting to compare these estimates with those obtained by Eales and Wessells (1999) using the quarterly time series data for 1981 to 1995. Eales and Wessells tested the separability between meats and fish and estimated two models: one non-separable and one separable, including only meats (beef, pork and poultry). In fact, the estimated own-price and expenditure elasticities for beef, pork and poultry (Tables 5.4 to 5.6) estimated in this report are closer to the other estimates for the non-separable than for the separable model. For example, estimates of the own-price elasticities for beef range from -0.549 to -0.605, while Eales and Wessells obtained an estimate of -0.516 from their non-separable model and -0.166 from their separable model. There are other notable differences, including estimates of price elasticities in absolute value that are higher than those estimated by Eales and Wessells from their non-separable model, especially for pork and poultry. Expenditure elasticities are not strictly comparable because the models used by Eales and Wessells include other items in addition to beef, pork and poultry: the present report includes ground meat, ham, sausage and bacon, while Eales and Wessells include three categories of fish. Despite this difference, the estimates of expenditure elasticities are higher than those estimated by Eales and Wessells (1999).

Table 5.7 shows the estimation results of selected demographic variables obtained from the AIDS model. Considering the high expenditure elasticity for beef, it is reasonable to expect that the age of the household head and the number of wage earners in the household should have a positive impact on beef's budget share, while the expenditure on beef tends to decrease as the number of household members increases. The number of children shows negative impacts on the expenditure shares of beef, pork and poultry.

Concluding remarks

This report estimates the Japanese demand for beef, pork, poultry and processed meat products. The own-price, cross-price and expenditure elasticities of seven meat products are estimated, and some selected demographic variables are analysed. The results indicate that recent Japanese consumption behaviour is similar to that of United States and Canadian consumers, as measured by elasticity estimates.

This study is based on 1997 cross-sectional household survey data. A decade has passed since the beef trade was liberalized. Beef is inelastic to price, and the expenditure elasticity of beef exceeds one. As it is a cross-sectional analysis, this report does not make it clear whether a structural change has occurred. Estimation results from time series data will reveal further information about structural changes to consumer preferences. This report uses expenditure elasticity to show that beef is the only superior good among seven meat commodities. In this regard, as with other reported estimates, Japanese preference in the late 1990s had become closer to that of Western nations.
TABLE 5.4 - Comparison of own-price elasticities

Note: The numbers in parentheses underneeath the elasticity estimates are standard errors.

TABLE 5.5 - Hicksian compensated price elasticities of the AIDS model with inverse Mills ratio TABLE 5.6 - Comparison of expenditure elasticities for meat products

Note: The numbers in parentheses underneath the elasticity estimates are standard errors.

TABLE 5.7 - Coefficients of demographic variables from the AIDS model

Note: An asterisk denotes statistically significance at the 5 percent level.

[8] On the other hand, there are virtually no beef exports.

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Meat and poultry consumption is becoming more important in the Japanese diet. Some studies report that Japanese diets have become increasingly Westernized: as per capita income increases, Japanese people consume more meats and poultry than grain products. As there is a limit to total calorie intake, the ratio of meat products to other foods is becoming larger than that of grain commodities.

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Plant-based Meat Alternatives: Perspectives On Consumer Demands And Future Directions.

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Plant-Based Meat
Adobe stock

Consumer demands for plant-based products have increased in the past few years. According to reports published by the Plant Based Food Association (PBFA) sales from plant based food was higher than 3 billion in 2018. The high numbers reported shows a promising trend for plant-based meat companies. However the trend begs question are we in a meatless revolution? In this article, executives leading plant-based companies share insights on consumer demands over the past few years and future projections.

"Consumer demand for meat alternatives has grown over the past years as consumers have been on a journey of realization regarding how their lifestyle choices and purchases have an impact on our planet. An increased number of consumers are switching to plant-based diets for many reasons, including: protecting animals, preserving the environment, general health concerns or changing taste preferences. As more consumers seek these alternatives, the market for plant-based proteins is rapidly growing and extending beyond North America and to sources beyond soy and wheat protein. The global market for non-soy, gluten-free plant-based proteins is projected to be $1.5 billion by 2022. As a result, manufacturers are looking at plant-based proteins that offer functional, sustainable and nutritional attributes, inclusive of non-GMO and certified organic options. The combination of consumer concerns with an updated approach from the food industry to develop and deliver meat alternatives with excellent flavor, texture and mouthfeel properties has contributed to the large growth in the meat alternatives market. Meat alternatives from early to mid-1900's were developed to replace the center of plate meat products primarily targeting vegans and vegetarians; however, they were not necessarily designed to have an appearance, flavor, or texture matching meat products. Some of these early market products include: tofu, tempeh, seitan and vegetable/rice based burgers and patties. Over time more formats were launched into the marketplace: plant-based sausages, deli slices, crumbles, and chicken nugget formats to name a few. These products contain protein from plants, and were formulated to provide an option for non-meat consumers. As flexitarians, those actively working to reduce meat consumption in their diet, emerge as a larger consumer segment, there is a greater need to produce meat alternatives that closely match the eating experience of beef, chicken and other animal based products. In North America, meat alternatives sales have grown 37% from 2017 to 2019. This represents a growth in dollar sales from $584 M to $800M from April 2017 through April 2019 (per SPINS Natural and Specialty Channel Data, 52 week period ending April 2019). All market and consumer data, as well as technological and financial investments, indicates this market will continue to develop, grow, and improve with additional product formats, flavors through emerging brands. Additionally, the flavors, textures, mouthfeel and consumer experience will continue to become more sophisticated as ingredients, technologies and process innovation develops over the next 10 years. Consumers desire 'meat-identical', meat alternatives and the food industry is working hard to deliver top-notch options." - Julie Emsing Mann, Global Protein Strategy and Innovation, Plant Based Proteins at Ingredion

"We have seen that consumer demand has increased significantly in the past few years for both plant based dairy and meats although the alt-dairy section is much more mature and has higher penetration as can be evidenced just by walking into a grocery store. Younger millennials as well as GenZs are continuing to grow demand and are often driven by topics such as health, climate change and animal welfare. While still relatively small, plant based meats are rapidly growing. The issue I see currently is that there are many "first wave" brands whose products don't meet the needs of consumers (lacking taste and mostly based on proteins from known allergens) and newer products that are primarily focused on beef. There is such a large demand and opportunity for options that are not beef and not in the burger format. From our product voting initiative that we are currently conducting, we see clearly that the consumer do not only want beef. I project that there will be a plant-based meat aisle and deli case in grocery stores with a wide representation of products that are free from meat. I do not believe that the general population will stop eating meat that comes from animals since it's so deeply engrained into many food cultures. The shift away from meat will take generations, and I believe that companies that are able to make a diversity of products that prioritize taste, nutrition, and other consumer needs will lead the way. Given that women drive around 80% of purchasing decisions, it is very problematic that the current plant-based meat companies have such few women on their leadership teams. From my perspective, for products to meet the needs of consumers, they need to be made by the people who make the decisions for those in a household."- Kimberlie Le, Co-founder and CEO Prime Roots

"We observe that consumers outside of traditional vegetarians and vegans are seeking plant based meat alternatives for different reasons. The Good Food Institute reports that 11.9% of U.S. households currently purchase plant-based meat, up from 10.5% a year ago. Another ongoing trend is clean ingredient labels featuring whole vegetables and grains. It's becoming increasingly important for health-conscious shoppers to see recognizable ingredients on product labels. Consumers are also seeking out trusted third-party certifications on packages. Recognizable symbols that indicate Non-GMO, Gluten Free, Vegan, Kosher and others allow shoppers, especially those with special dietary needs, to feel confidence in what they're buying. We foresee that plant-based meat-alternatives that attempt to look and taste like meat will continue to receive attention from consumers, media and businesses. We expect this product category to continue to grow as more consumers and food service operators seek out these products. " -Larry Praeger, CEO Dr. Praeger's

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Plant-based Meat Alternatives: Perspectives On Consumer Demands And Future Directions.

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Consumer demands for plant-based products have increased in the past few years. According to reports published by the Plant Based Food Association (PBFA) sales from plant based food was higher than 3 billion in 2018. The high numbers reported shows a promising trend for plant-based meat companies.

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Gateway to poultry production and products

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Poultry production ranges from small family systems, supporting livelihoods and supplying local or niche markets, to large-scale industrialized enterprises. The latter generally feed into integrated value chains, while the former, often characterized by low output, sell their produce through informal trading networks.

Poultry market prices can vary significantly, influenced by seasonal patterns (e.g. higher prices during festivities), production costs and competition from other products. Production costs are very volatile and can vary significantly from one region to another. They are largely based on the characteristics of the final product (e.g. high-quality meat takes longer to produce, which means higher costs) as well as on feed prices (mainly grain), climatic conditions and the genetic lines used. Poultry tends to be cheaper than other meats because they are efficient feed converters.

In most countries, poultry production is mainly for domestic consumption, but international trade is increasing. Most of the poultry meat available on the global market comes from large-scale, specialized commercial producers. The main importers of poultry meat are developing countries, where cheap, low-quality cuts such as wings, lower legs, necks and giblets sold by the piece make chicken meat more accessible to the average consumer. In contrast, consumers in developed countries tend to buy chicken breasts and thigh meat and, to a lesser extent, drumsticks.

Poultry meat products are usually exported frozen. International trade in eggs is relatively small compared to poultry meat, mainly because it is impossible to freeze them for transport over long distances. The three categories of egg exports are: (i) in-shell table eggs; (ii) in-shell eggs for hatching; and (iii) egg products (in liquid, frozen or dried form).

The evolution and dynamics of world poultry markets are mostly driven by animal disease outbreaks and trade policies. In recent decades, avian influenza and Newcastle disease have profoundly affected poultry meat trade, as has the implementation of trade agreements. Sanitary requirements ultimately determine international poultry trade.

Between 1980 and 2017, the volume of total poultry meat exports increased by a factor of more than 12. Exports of eggs tripled.

The proportion of total poultry meat production traded on the international market doubled between 1993 and 2013.

Meat from indigenous breeds sells at a premium, often 50-100 percent more than broiler meat for whole birds.

In Africa, local chicken meat is often the main poultry product sold in markets. But in Asia and South America, eggs are generally the best-selling items.

Brazil is the major poultry meat exporter, followed by the United States and the Netherlands. The largest importers are China, Japan, Mexico and the United Kingdom.

Only around 3 percent of the global egg production is exported and imported.

Least developed countries are increasingly dependent on imports of poultry meat. Their level of imports increased from 3 percent in 1961 to around 30 percent in 2013.

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Poultry production ranges from small family systems, supporting livelihoods and supplying local or niche markets, to large-scale industrialized enterprises. The latter generally feed into integrated value chains, while the former, often characterized by low output, sell their produce through informal trading networks. Poultry market prices can vary significantly, influenced by seasonal patterns (e.g.