Thursday, January 6, 2022

No Growth in China's Livestock 5 Year Plan

 The 5-year plan for China's livestock dials down expectations for the country's meat production prospects. While the plan acknowledges that China's consumers are demanding more and higher quality meat, the plan sets modest production goals. It focuses on scaling-up farms, becoming self-sufficient in producing breeding stock, stabilizing supply, disease prevention, reducing the industry's environmental footprint, filling a shortfall in fodder for ruminants, and creating farm-industry links. 

The plan released by China's agriculture ministry in December 2021 set an 89-million-metric-ton target for meat production in 2025. That's an increase from the 76.4 mmt reported in 2020, but it's only fractionally higher than China's peak meat output in 2014. The 2020-25 increase represents mainly a recovery of swine production from its disease-impacted dip in 2019-20. IF these numbers are correct, China will have had basically no net growth in meat output for a decade if it hits the 2025 target.

Data from China National Bureau of Statistics and 2021-15 five-year plan target. 

The plan's preamble cites difficulty increasing production by relying on domestic resources, and frets about big uncertainty created by reliance on imports to fill domestic shortfalls in the meat industry. The plan worries about supplies of corn and other feed grains; reliance on imports for soybeans and alfalfa; and difficulties maintaining hog, cattle and sheep inventories at a high level due to pressure from covid-19, African swine fever and other animal diseases. The plan's authors raise concerns about lackadaisical attitudes toward ensuring livestock supplies in "some regions", "seriously weak" grass roots disease prevention, insufficient biosecurity, rising beef and mutton prices, tighter resource and environmental constraints, shortages of land for building farms and pasture, insufficient utilization of manure, and market risks from cyclical fluctuations and reliance on constant infusions of breeding stock from abroad. 

The plan calls for reliance on innovation, market forces, improvement in disease prevention, and "green" development as drivers. The featured objectives are increases in the proportion of output from scaled-up farms (from 67.5% to 78% during 2021-25), increased mechanization, manure utilization, and greater self-sufficiency in core breeding resources. Targets for output are only marginally higher than their 2020 values. The plan reiterates self-sufficiency rates set by the State Council in 2020: pork 95%; beef and mutton 85%; milk 70%; poultry and eggs 100%. 

China's agriculture ministry has pared back its expectations for livestock production as problems multiplied. Back in 2015 China's pork production was on the upswing, and the ministry's first set of future projections issued that year had pork output rising to over 65 mmt by 2024. Actual production went down in 2015 and 2016. A hog industry 5-year plan for 2016-2020 set a more modest target of 57.6 mmt for 2020. Then pork output plunged to 41 mmt in 2020 due to the African swine fever epidemic. Projections released in April 2021 anticipated that pork output will recover to 54 mmt in 2022 and eventually reach 60 mmt in 2030. The new 5-year plan ratchets down the target to achieve "stable" pork production of 55 mmt.

Projections by China Ministry of Agriculture and Rural Affairs and 5-year plans issued in 2016 and 2021.

Beef output has also severely underperformed compared with projections. China's 2015 projections extrapolated the rising trend in beef output shown in official data at the time, with beef projected to reach 8.3 mmt in 2024. A couple years later the Statistics Bureau decided that the beef output data were wrong. The Bureau revised its cattle numbers down after its agricultural census in 2016 discovered 20% fewer cattle than official data reported. Statisticians retroactively revised cattle data downward for 2007-16--and the rising trend in beef output evaporated. The ministry's latest projections show basically the same trend as six years earlier, but starting from a lower base. In 2021 the ministry expected that beef output would reach 8 mmt by 2030. The new plan's target for beef output is 6.8 mmt by 2025. 

Projections by China Ministry of Agriculture and Rural Affairs and 5-year plan issued in 2021.

Correspondingly, China has had to ratchet up its expectations for meat imports. China customs data show that 8.7 mmt of meat was imported in the first 11 months of 2021. That was down from 8.9 mmt during the same period of 2020, but still an unimaginably large number just a few years ago.

In 2015, China's ag ministry thought pork imports would grow to 1 mmt by 2024, but it only took a year for imports to hit that level, and they spiked to 2 mmt in 2016. When African swine fever hit, the ministry anticipated a modest spike in imports to 2.8 mmt in 2020, then gradually falling back to 1 mmt by 2029. Imports actually rose to 4.4 mmt in 2020. Last year the ministry projected a decline in pork imports to 1 mmt by 2030. The 95% self-sufficiency rate for production target of 55 mmt in the new plan implies a ceiling on pork imports of 2.75 mmt.

Projections by China Ministry of Agriculture and Rural Affairs and 5-year plan issued in 2021.

Beef imports have completely outstripped China's projections. In 2015, the ag ministry projected a gradual rise in beef imports to 500,000 metric tons by 2024. Actual imports surpassed that volume the next year. In 2020 a slightly faster rise in beef imports to 2 mmt by 2029 was projected, then another modest rise at a higher level was projected last year. Actual beef imports reached 2.8 mmt in 2021. The 85% self-sufficiency rate for the 6.8-mmt beef production target implies imports of just over 1 mmt, another number that seems unrealistically low.

Projections by China Ministry of Agriculture and Rural Affairs .

Beef cattle and sheep were singled out for attention in a 5-year action plan ordered up by last year's "number one document." The plan included support for scaled-up farms and breeders, links between farmers and companies, plans to increase production of corn silage, alfalfa, oats, ryegrass, and leaves from hybrid mulberry trees, and initiatives to graze cattle on mountainsides in southern China and transform production methods in grassland regions. 

China's five-year plan has most of the "right" things, but most of them are ideas from past plans that didn't work. 

  • A huge "straw for beef" campaign in the 1990s tried to raise cattle on crop stalks. The latest plan calls for stockpiling 55 million tons of corn stalks for silage to feed cattle.
  • Forty years ago Chairman Mao ordered communes to raise more pigs by feeding them mulberry leaves. 
  • The directive to improve veterinary services is not new; 10 years ago there was a push to force provinces to budget money for veterinarians and force them to pass exams. 
  • The African swine fever epidemic was not unexpected; the plan for the hog industry issued in 2016 warned about the threat of ASF yet the industry was woefully unprepared when the disease showed up two years later. 
  • The new plan says the "market basket system" for supplying meat, vegetables, etc. to cities is not being implemented adequately, yet it has been in place for 40-plus years. 
  • The 2006-10 plan set up an elaborate system to stabilize the hog market using frozen pork buffer stock interventions triggered by the hog-corn price ratio, a dozen "early warning" indicators, and sow subsidies; all of that is forgotten and the new plan again resolves to stabilize the industry. 
  • The 2006 plan called for controlling pollution from animal manure and a huge campaign to shut polluting livestock farms; now the new plan is all about "green" development. 
  • China has had demonstration programs to collect manure and generate methane gas since the 1970s, but agricultural officials are still moaning about failure to utilize manure. 

The best thing about the plan is that officials seem to have come to grips with the reality that China cannot keep expanding livestock production forever in a country that is short of land and clean water. 

1 comment:

Anonymous said...

Thank you for this very interesting article. It really shows that meat output in China will not grow indefinitely, even in the minds of CHinese leaders.

When you write "mmt", do you think it is cwe or tons of meat products?