Beef Prices Plummet as China Moves to Stabilise Dairy Industry Amid Economic Downturn

Government Measures to Address Falling Beef Prices

In light of falling beef prices, the Chinese government has issued a comprehensive notice designed to aid its struggling dairy industry, which is valued at approximately 500 billion yuan (US$71 billion). The unprecedented measures aim to revive the sector following substantial losses incurred by farmers due to ongoing supply-and-demand imbalances.

Key Points from the Government Notice

• Support for family dairy farms and new business entities.
• Allocation of grain to control feed costs.
• Stabilise raw milk purchases and sales orders.
• Subsidies for impoverished cow-breeding households.
• Loan renewals and extensions for farmers facing hardships.

Despite these efforts, challenges remain. Wang Zhangai, a cattle farm owner, highlights the contradiction of weak domestic demand while the government continues to import large quantities of beef and milk.

Economic Implications and Future Outlook

The dairy sector’s stability is crucial as it contributes significantly to the overall economy. Analysts estimate a % compound annual growth rate of 4.8% in dairy retail sales from 2022 to 2026, but will these stabilisation measures be sufficient?

With President Xi Jinping emphasising the need to support the private sector, these initiatives are part of broader economic stimulus efforts aimed at bolstering not just dairy farmers but also the entire agricultural landscape.

Overall, the situation remains precarious, and while the government’s action represents a step towards recovery, farmers remain cautious about the outcomes.