Beef markets and trade in China and Southeast Asia have undergone major change in ways that could not have been envisioned only a decade ago. Unprecedented economic growth and urbanisation has increased beef consumption in parts of the region. For example, between 2000 and 2013, average annual beef consumption increased by 5.3% in Vietnam and around 4% in China, while beef prices increased by 8% and 11% respectively.
The increases in consumption have not, however, seen a parallel response in cattle numbers. Over the same period, the cattle herd in China and Southeast Asia decreased (especially in China which makes up 69% of cattle numbers) for several reasons including increasing opportunity costs of labour in countries that experienced broad-based growth (that has reached rural areas); large-scale farm mechanisation that have reduced the need for draught cattle; and farmers selling cattle to take advantage of high prices. In a regional cattle industry dominated by small-holders, the supply response to rising prices has been muted – especially for cow-calf production – compared to other more commercialised livestock industries (pigs and chickens).
These supply–demand settings have forged significant industry changes. While cattle numbers have stagnated (-0.3%), turnoff numbers have increased (1.9%) as has beef production (2.5%) indicating higher turnoff rates and increased carcass weights (FAOStat, 2014), which indicates gradual increases in industry productivity. While regional beef industries are dominated by small-holders and individual household actors, there are several “hotspots” of industry growth – especially in the feedlot sector and other downstream sectors.
Perhaps most importantly there has been a major increase in the trade of cattle and beef. The volume of beef officially imported into China, Vietnam and Indonesia increased from approximately 100,000 tonnes in 2008 to 430,000 tonnes in 2013 (UNComtrade, 2014). About another one million tonnes entered China through informal channels in 2014 (from India, Brasil and the US). These countries formally imported more than 900,000 cattle, while hundreds of thousands more – mainly from Myanmar – crossed into China and traversed Thailand, Laos, Cambodia and into Vietnam through a myriad of established and opportunistic trade routes.
These evolving market and trade settings have major implications for:
• Disease and bio-security risks associated with livestock trading
• Food price inflation and consumer access to red meat protein
• Rural development. Beef industries in China and Southeast are dominated by individual household actors, are highly labour-intensive, contributing to the livelihoods of perhaps 15 million people. Increasing trade and price integration provides opportunities for small-holder cattle producers and other chain actors (traders, transport operators, processors) to access more distant markets, but also exposes other actors to increased competition, and price effects.
• The Australian beef industry. Regional market and trade development patterns have a direct, but largely unknown or unquantified effect on markets for Australian cattle and/or beef, including Indonesia, Vietnam and China.
ACIAR (LPS, AHR, AGB and ASEM) has developed a strong research program on cattle production and marketing systems in individual Southeast Asian countries or areas. There is also a growing body of research on trans-boundary livestock trade, especially in the Mekong, and especially to reduce disease and bio-security risks from livestock trading (e.g. Adams et al., 2012).
However, what is missing is systematic analysis and tools to assess the demand and supply side drivers of regional industry change and trade flows into the future. Such a tool would quantify how rapid and fundamental change in the region – including the growth in incomes and beef consumption in particular urban centres, the growth in rural wages and farm mechanisation, increased competition for resources, improved infrastructure and freer trade – impact on beef industries throughout the region. A robust modelling tool would also be able to assess ex-ante how particular scenarios – for example changes in cattle slaughter and export policy in Myanmar, the Indonesian live cattle import quota, the ESCAS system; economic integration under the ASEAN Economic Community, or increased quarantine controls resulting from disease outbreaks – might affect cattle and beef prices and trade in the broader region. Incorporation of new information relating to the factors that drive complex flows of cattle and beef would assist policy-makers throughout the region to improve strategies for beef industry development.
ACIAR has sought to fill this gap initially through a SRA in 2014-15 (AGB-2012-048) that was successfully completed and the subject of a separate final report. While “SRA1” built the collaborative structures and descriptive data about the regional industry, “SRA2” in 2015-16 (AGB/2015/024) provided the scope and additional resources to conduct a range of expanded activities, including adding further project participants, a larger workshop, further analysis on “cross-cutting themes” (development, trade, other) and a more refined modelling approach, reported here.
The project was conducted from April 2015 to June 2016 with a budget of $248,574. The project was conducted by The University of Queensland, HELVETAS Swiss Intercooperation Vietnam and partners in eight countries (China, Vietnam, Laos, Indonesia, Timor Leste, Cambodia, Myanmar, Australia). Concept notes to progress the research into the modelling stages were approved by ACIAR in May 2016 with a further SRA to be conducted (2016-2017) followed by a full project (2017-2021).
The three main objectives of AGB-2012-048 that were expanded in AGB/2015/024 were to:
• Review and collate data on cattle and beef industries in the region
• Review and investigate selected trans-boundary cattle and beef trade flows
• Design a project to conduct detailed market trade modelling
Expanded analysis conducted for AGB/2015/024 aimed to:
• Investigate and report on regional and comparative trends, implications and lessons for inclusive industry, policy and rural development at national and regional levels
These objectives were to be met through five activities:
• Identify and engage project partners (in China, Vietnam, Laos, Indonesia, Timor Leste, Cambodia, Thailand, Myanmar, Australia)
• Desktop review of available data
• Fieldwork on specific trade flows
• Conduct focussed workshop on regional beef markets and trade
Planned objectives of the SRA have been largely achieved, due to the successful completion of project activities including: the establishment of a unique network of beef researchers and officials in eight countries with ongoing collaboration; reports on the beef industries of partner countries containing analysis not available elsewhere; detailed critical analysis of statistics and primary data on trade flows; and the conduct of a regional workshop that included a large range of project and external partners to identify and verify key research themes that are under analysis and writing up.
Analyses that are under development but remain to be completed include: research on the livestock revolution in a contemporary Asian context; on price integration in the region; on the Australian industry; and particular development issues (gender, PPPs, transport). It is expected that these will be completed in Q3 2016.