Required Report - public distribution

**Date:** 9/14/2005

**GAIN Report Number:** HK5026

HK0000

**Hong Kong**

**Livestock and Products**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Lloyd Harbert

U.S. Consulate General, Hong Kong

**Prepared by:**

Caroline Yuen

**Report Highlights:**

It is estimated that Hong Kong's ban on U.S. beef for the past 20 months
has resulted in \$136 million loss in U.S. export sales. Subsequent to
the lifting of the ban in November last year, Canadian beef exports to
Hong Kong have soared in the first half -year of 2005 with market share
expanding to 21 percent. The market however still has a strong
preference for quality U.S. beef. Canadian and Australian beef merely
took up about 60 to 70 percent of the market demand. Beef imports are
forecast to experience a modest rise of 5 percent in 2006 once U.S. beef
is allowed entry again.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

Hong Kong \[HK1\]

\[HK\]

Table of Contents

[**Situation and Outlook 3**](#situation-and-outlook)

[Statistical Tables -- Meat, Beef and Veal
4](#statistical-tables-meat-beef-and-veal)

[PS & D Table 4](#ps-d-table)

[Table 1: Supply and Consumption of Live Cattle 9 (head)
4](#table-1-supply-and-consumption-of-live-cattle-head)

[Table 2: Average Retail Prices of Beef Relative to Pork and Poultry
(Freshly Slaughtered)
5](#table-2-average-retail-prices-of-beef-relative-to-pork-and-poultry-freshly-slaughtered)

[Table 3: Average Retail Prices of Beef Relative to Pork and Chicken
(Frozen)
5](#table-3-average-retail-prices-of-beef-relative-to-pork-and-chicken-frozen)

[Table 4: Average Wholesale Prices of Live Cattle
5](#table-4-average-wholesale-prices-of-live-cattle)

[Table 5: Hong Kong Beef Imports in Value by Suppliers, Jan -- Jun
6](#table-5-hong-kong-beef-imports-in-value-by-suppliers-jan-jun)

[Table 6: Hong Kong Beef Imports in Quantity by Suppliers, Jan -- Jun
6](#table-6-hong-kong-beef-imports-in-quantity-by-suppliers-jan-jun)

[Table 7 : Hong Kong Beef Re-exports
6](#table-7-hong-kong-beef-re-exports)

[Table 8: Average Import Prices & Market Share, Jan -- Jun
7](#table-8-average-import-prices-market-share-jan-jun)

[Table 9: Hong Kong Beef Imports by Categories, , Jan -- June
7](#table-9-hong-kong-beef-imports-by-categories-jan-june)

[Table 10 : Hong Kong Beef Re-exports by Categories, , Jan -- Jun
7](#table-10-hong-kong-beef-re-exports-by-categories-jan-jun)

[Table 11: Hong Kong Retained Imports of Beef by Categories, , Jan --
Jun
7](#table-11-hong-kong-retained-imports-of-beef-by-categories-jan-jun)

[Table 12 : Hong Kong's Beef Offal Imports by Major Suppliers, Jan --
June
8](#table-12-hong-kongs-beef-offal-imports-by-major-suppliers-jan-june)

[Table 13: Hong Kong's Beef Offal Re-exports, Jan -- June
8](#table-13-hong-kongs-beef-offal-re-exports-jan-june)

[Statistical Table -- Meat, Swine 9](#statistical-table-meat-swine)

[PS&D Table 9](#psd-table)

[Table 14: Supply and Consumption of Live Pigs (head)
10](#table-14-supply-and-consumption-of-live-pigs-head)

[Table 15: Average Wholesale Prices of Live Pigs (head)
10](#table-15-average-wholesale-prices-of-live-pigs-head)

[Table 16: Hong Kong Pork Imports in Value by Suppliers, Jan - June
10](#table-16-hong-kong-pork-imports-in-value-by-suppliers-jan---june)

[Table 17: Hong Kong Pork Imports in Quantity by Suppliers, Jan -- June
10](#table-17-hong-kong-pork-imports-in-quantity-by-suppliers-jan-june)

[Table 18: Hong Kong Pork Re-exports by Destination, Jan -- June
11](#table-18-hong-kong-pork-re-exports-by-destination-jan-june)

[Table 19: Average Pork Prices 11](#table-19-average-pork-prices)

[Table 20 : Hong Kong Pork Imports by Categories, Jan -- June
11](#table-20-hong-kong-pork-imports-by-categories-jan-june)

[Table 21 : Hong Kong Pork Re-exports by Categories, Jan -- June
11](#table-21-hong-kong-pork-re-exports-by-categories-jan-june)

[Table 22 : Hong Kong Pork Offal Imports by Major Suppliers, Jan -- June
12](#table-22-hong-kong-pork-offal-imports-by-major-suppliers-jan-june)

[Table 23: Hong Kong Pork Offal Re-exports by Major Destinations, Jan --
June
12](#table-23-hong-kong-pork-offal-re-exports-by-major-destinations-jan-june)

[Table 24: U.S. Pork Exports to Hong Kong, Jan -- June
12](#table-24-u.s.-pork-exports-to-hong-kong-jan-june)

[Narrative on Supply and Demand, Policy & Marketing
13](#narrative-on-supply-and-demand-policy-marketing)

[Production 13](#production)

[Consumption 14](#consumption)

[Trade 16](#trade)

# Situation and Outlook 

Hong Kong has a domestic market of \$149 million of beef products and
\$14.5 million of live cattle. If re-exports (\$13 million) and offal
trade are included, the entire market is about \$304 million. (Hong
Kong's total offal imports in 2004 amounted to \$127 million, \$64
million of which were re-exported).

The U.S. used to be the largest supplier of beef products, occupying a
market share of 44 percent in 2003. Hong Kong's ban on U.S. beef since
December 2003 was estimated to have resulted in \$136 million loss in
U.S. beef exports. The U.S. Department of Agriculture through
Agricultural Trade Office in Hong Kong has been working very closely
with the Hong Kong government trying to re-open the market for U.S.
beef. The Hong Kong government had conducted a technical visit to the
U.S. in June 2005 to review the U.S. BSE monitoring and surveillance
programs, but the report has not yet be released.

Given the affluence of the Hong Kong economy and the abundance of
upscale restaurants, there is always a demand for quality beef. Hong
Kong's beef imports for 2006 are forecast to increase by 5 percent based
on the assumption that U.S. beef will return to Hong Kong.

Canadian beef imports to Hong Kong were resumed in November 2004.
Canadian beef supplies have soared since then. Its market share jumped
from 2 percent in 2002 before it was banned in Hong Kong to 21 percent
in the first half of 2005. Canada now become the second largest supplier
of beef in terms of value. Canadian beef has taken up the largest
portion of the U.S. share of the market. Australian beef, though being a
popular substitute for U.S. beef, is not sufficiently abundant.

Hong Kong has a domestic market of \$353 million for pork products in
addition to \$288 million market for live pigs. If pork re-exports (\$54
million) and offal imports (\$158 million) are included, the entire pork
market in Hong Kong is estimated at \$853 million. (Of the \$158 million
worth offals imported to Hong Kong in 2004, \$135 million were
exported.)

U.S. exported \$6.4 million and \$3.9 million of pork products and
offals to Hong Kong respectively in the first half year of 2005.
Processed pork is the biggest category of U.S. pork exports to Hong Kong
(excluding offals). U.S. pork loins are regarded as expensive items and
are supplied at upscale outlets.

China is the largest pork supplier for the Hong Kong market. The human
Streptococcus suis infection cases in China's Sichuan province reported
in Hong Kong in late July had a transient negative effect on Hong Kong's
pork consumption and trade. China's frozen pork exports from Sichuan
Province, a major pork exporting province, were suspended for about a
month starting late July.

Hong Kong has a rather stable pork market. However, the market still
fluctuates with prices. The average pork prices in the January -- June
2005 rose by 21 percent. The price effects together with the
Streptococcus suis incident are expected to cause pork imports in 2005
to decline to 250,000 MT.

In the coming years, it is expected that the consumption share of fresh
meats will continue to decline while that of chilled/frozen meats will
rise. Consumers increasingly get used to chilled/frozen products over
the years. They value the convenience, hygiene and economical factors
that chilled/frozen products offer.

On the production side, the Hong Kong government is gauging the response
from farm operators about the introduction of a voluntary license
surrender scheme. Given the pollution problems and transmission risk of
the potentially deadly Japanese encephalitis virus from pigs to humans
via mosquitoes, the Hong Kong government is considering to buy out the
operation rights of farm licensee holders. Consequently, the local
production of pigs is expected to decline in the future.

# 

# Statistical Tables -- Meat, Beef and Veal

## PS & D Table

+---------------------+-----+-----+-----+-----+-----+-----+---------+
| **Hong Kong**       |     |     |     |     |     |     |         |
|                     |     |     |     |     |     |     |         |
| ###### Commodity    |     |     |     |     |     |     |         |
|                     |     |     |     |     |     |     |         |
| **Meat, Beef and    |     |     |     |     |     |     |         |
| Veal**              |     |     |     |     |     |     |         |
|                     |     |     |     |     |     |     |         |
| **(1000 MT          |     |     |     |     |     |     |         |
| CWE)(1000 HEAD)**   |     |     |     |     |     |     |         |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
|                     | 2   | R   | 2   | Es  | 2   | Fo  | UOM     |
|                     | 004 | evi | 005 | tim | 006 | rec |         |
|                     |     | sed |     | ate |     | ast |         |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
|                     | U   | P   | U   | P   | U   | P   |         |
|                     | SDA | ost | SDA | ost | SDA | ost |         |
|                     | Of  | Est | Of  | Est | Of  | Est |         |
|                     | fic | ima | fic | ima | fic | ima |         |
|                     | ial | te\ | ial | te\ | ial | te\ |         |
|                     | \   | [Ne | \   | [Ne | \   | [Ne |         |
|                     | [Ol | w\] | [Ol | w\] | [Ol | w\] |         |
|                     | d\] |     | d\] |     | d\] |     |         |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| Market Year Begin   |     | 0   |     | 0   |     | 0   | MM/YYYY |
|                     |     | 1/2 |     | 1/2 |     | 1/2 |         |
|                     |     | 004 |     | 005 |     | 006 |         |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| Slaughter           | 0   | 0   | 0   | 0   | 0   | 0   | (1000   |
| (Reference)         |     |     |     |     |     |     | HEAD)   |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| Beginning Stocks    | 0   | 0   | 0   | 0   | 0   | 0   | (1000   |
|                     |     |     |     |     |     |     | MT CWE) |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| Production          | 14  | 14  | 14  | 14  | 0   | 14  | (1000   |
|                     |     |     |     |     |     |     | MT CWE) |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| Intra EC Imports    | 0   | 0   | 0   | 0   | 0   | 0   | (1000   |
|                     |     |     |     |     |     |     | MT CWE) |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| Total Imports       | 81  | 81  | 80  | 81  | 0   | 85  | (1000   |
|                     |     |     |     |     |     |     | MT CWE) |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| TOTAL Imports       | 81  | 81  | 80  | 81  | 0   | 85  | (1000   |
|                     |     |     |     |     |     |     | MT CWE) |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| TOTAL SUPPLY        | 95  | 95  | 94  | 95  | 0   | 99  | (1000   |
|                     |     |     |     |     |     |     | MT CWE) |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| Intra EC Exports    | 0   | 0   | 0   | 0   | 0   | 0   | (1000   |
|                     |     |     |     |     |     |     | MT CWE) |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| Total Exports       | 0   | 0   | 0   | 0   | 0   | 0   | (1000   |
|                     |     |     |     |     |     |     | MT CWE) |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| TOTAL Exports       | 0   | 0   | 0   | 0   | 0   | 0   | (1000   |
|                     |     |     |     |     |     |     | MT CWE) |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| Human Dom.          | 95  | 95  | 94  | 95  | 0   | 99  | (1000   |
| Consumption         |     |     |     |     |     |     | MT CWE) |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| Other Use, Losses   | 0   | 0   | 0   | 0   | 0   | 0   | (1000   |
|                     |     |     |     |     |     |     | MT CWE) |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| TOTAL Dom.          | 95  | 95  | 94  | 95  | 0   | 99  | (1000   |
| Consumption         |     |     |     |     |     |     | MT CWE) |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| Ending Stocks       | 0   | 0   | 0   | 0   | 0   | 0   | (1000   |
|                     |     |     |     |     |     |     | MT CWE) |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| TOTAL DISTRIBUTION  | 95  | 95  | 94  | 95  | 0   | 99  | (1000   |
|                     |     |     |     |     |     |     | MT CWE) |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| Calendar Yr. Imp.   | 1   | 1   | 1   | 3   | 0   | 13  | (1000   |
| from U.S.           |     |     |     |     |     |     | MT CWE) |
+---------------------+-----+-----+-----+-----+-----+-----+---------+
| Calendar Yr. Exp.   | 0   | 0   | 0   | 0   | 0   | 0   | (1000   |
| to U.S.             |     |     |     |     |     |     | MT CWE) |
+---------------------+-----+-----+-----+-----+-----+-----+---------+

# 

Note: PS&D production figures include local and imported live cattle for
slaughter. Import and export numbers are in carcass-weight-equivalent
using 1.36 conversion factor for all fresh/chilled and frozen beef and
1.79 for processed beef. Imports are calculated as Imports minus
Re-exports. Exports are calculated as Exports minus Re-exports.

## Table 1: Supply and Consumption of Live Cattle (head)

  ------------ ----------- ----------- --------- ------------- -------------
               2000        2001        2002      2003          2004

  Local Supply 120         148         138       79            118

  Imports      56,856      50,651      47,912    45,333        47,539

  Total        56,976      50,799      48,050    45,352        47,657
  ------------ ----------- ----------- --------- ------------- -------------

Source : Hong Kong Agriculture, Fisheries and Conservation Department

## Table 2: Average Retail Prices of Beef Relative to Pork and Poultry (Freshly Slaughtered)

+-----------------+-------+-------+-------+-------+-------+----------+
| US\$/kg         | 2000  | 2001  | 2002  | 2003  | 2004  | 2005     |
|                 |       |       |       |       |       |          |
|                 |       |       |       |       |       | Jan --   |
|                 |       |       |       |       |       | May      |
+-----------------+-------+-------+-------+-------+-------+----------+
| Chicken (top    | \     | \     | \     | \     | \     | \$5.65   |
| grade)          | $4.49 | $4.60 | $4.58 | $4.22 | $5.60 |          |
+-----------------+-------+-------+-------+-------+-------+----------+
| Beef (best      | \     | \     | \     | \$7.2 | \     | \$8.68   |
| quality)        | $7.17 | $7.20 | $7.15 |       | $7.17 |          |
+-----------------+-------+-------+-------+-------+-------+----------+
| Beef (belly     | \     | \     | \     | \     | \     | \$5.47   |
| flesh)          | $5.34 | $5.36 | $5.35 | $5.45 | $5.47 |          |
+-----------------+-------+-------+-------+-------+-------+----------+
| Pork (best cut) | \     | \     | \     | \     | \     | \$4.25   |
|                 | $4.87 | $4.54 | $4.26 | $4.10 | $4.03 |          |
+-----------------+-------+-------+-------+-------+-------+----------+
| Pork Chop       | \     | \     | \     | \     | \     | \$5.05   |
|                 | $5.92 | $5.58 | $5.18 | $4.89 | $4.82 |          |
+-----------------+-------+-------+-------+-------+-------+----------+

Source: Hong Kong Census & Statistics Department

Exchange Rate: US\$ 1 = HK\$7.75

## Table 3: Average Retail Prices of Beef Relative to Pork and Chicken (Frozen)

  ------------------------------ ------------- ---------------------------
  Product Categories             Weight        HK\$(US\$ = HK\$7.75)

  Boneless mid-joint wings       2 lb          22
  (Brazil)                                     

  Wing tips (Brazil)             3 lb          10

  Whole broiler legs (USA)       2 lb          21

  Boneless thigh meat (Brazil)   2 lb          21

  Mid-joint wings (Brazil)       2 lb          33

                                               

  Bone-in ribeye (US)                          115/lb

  Short ribs (US)                2 lb          66

  Sirloin (US)                                 48/lb

  Rib-finger (Brazil)            3.3 lb        59

  Heel muscle (Brazil)           2 lb          27

  Tendon (Brazil)                2.5 lb        16

                                               

  Bacon (Canada)                 ½ lb          10

  Knuckle (Canada)               2 lb          18

  Bone-in pork chop              2 lb          36

  Tenderloin                     1 lb          10.5

  Sparerib                       2 lb          23
  ------------------------------ ------------- ---------------------------

Source : Retailer

## Table 4: Average Wholesale Prices of Live Cattle

+--------+--------+--------+--------+-------+------------+-----------+
| U      | 2000   | 2001   | 2002   | 2003  | 2004       | Jan --    |
| S\$/MT |        |        |        |       |            | May       |
|        |        |        |        |       |            |           |
|        |        |        |        |       |            | 2005      |
+--------+--------+--------+--------+-------+------------+-----------+
| Live   | 2,373  | 2,356  | 2,360  | 2,449 | 2,402      | 2,593     |
| Cattle |        |        |        |       |            |           |
+--------+--------+--------+--------+-------+------------+-----------+

Source : Hong Kong Census & Statistics Department

## Table 5: Hong Kong Beef Imports in Value by Suppliers, Jan -- Jun

  ------------- ----------- ---------- ---------- ----------- ---------- ---------- ------------
  Millions of                                                 \% Share              \% Change
  US Dollars                                                                        

  Country       2003        2004       2005       2003        2004       2005       \- 05/04 -

                                                                                    

  \--The        71.83       73.28      75.59      100         100        100        3.15
  World\--                                                                          

  Brazil        13.23       23.58      20.14      18.42       32.17      26.65      -14.56

  Canada        0.54        1.86       16.19      0.75        2.54       21.42      770.57

  China         12.30       13.41      12.59      17.12       18.29      16.66      -6.04

  Australia     4.88        9.21       11.51      6.79        12.56      15.23      25.04

  New Zealand   8.37        9.64       6.67       11.65       13.15      8.83       -30.77

  Argentina     3.27        7.62       4.35       4.56        10.4       5.75       -42.97

  **United      **26.39**   **4.36**   **0.26**   **36.74**   **5.95**   **0.34**   **-94.03**
  States**                                                                          
  ------------- ----------- ---------- ---------- ----------- ---------- ---------- ------------

## Table 6: Hong Kong Beef Imports in Quantity by Suppliers, Jan -- Jun

  -------------------- ------------ ------------ ------------ ------------
                                                              \% Change

  Country              MT 2003      MT 2004      MT 2005      \- 05/04 -

  \--The World\--      30,324       30,735       29,516       -3.97

  Brazil               8,629        11,961       10,390       -13.13

  China                7,263        7,854        6,683        -14.92

  Canada               89           868          5,172        495.57

  Argentina            2,473        4,262        2,657        -37.65

  Australia            900          1,095        1,153        5.31

  India                504          245          1,143        365.8

  New Zealand          1,968        1,651        1,080        -34.57

  **United States**    **6,671**    **923**      **41**       **-95.57**
  -------------------- ------------ ------------ ------------ ------------

## Table 7 : Hong Kong Beef Re-exports 

  ----------- ---------- ------- ------ -------- ------- ------- ------- --------
              Millions                  \%                               \%
              of US                     Change                           Change
              Dollars                                                    

  Country     2003       2004    2005   \- 05/04 MT 2003 MT 2004 MT 2005 \- 05/04
                                        -                                -

                                                                         

  \--The      9.05       4.73    6.50   37.34    4,842   2,343   3,280   40
  World\--                                                               

  Macau       0.96       2.08    3.20   53.66    294     753     818     8.59

  Taiwan      0.00       0.00    1.71   0        0       0       1,111   0

  China       7.96       2.36    0.80   -66.33   4,533   1,428   654     -54.17

  Vietnam     0.00       0.07    0.79   952.69   0       67      694     932.07
  ----------- ---------- ------- ------ -------- ------- ------- ------- --------

## Table 8: Average Import Prices & Market Share, Jan -- Jun 

  ----------- ---------- ---------- ---------- -------- ------- ------- -------
                                               \%       Maket           
                                               Change   Share           

  Country     -/ KG -    -/ KG -    -/ KG -    \- 05/04 2003    2004    2005
              2003       2004       2005       -                        

  \--The      2.37       2.38       2.56       7.56     100%    100%    100%
  World\--                                                              

  Brazil      1.53       1.97       1.94       -1.52    28%     39%     35%

  China       1.69       1.71       1.88       9.94     24%     26%     23%

  Canada      6.09       2.14       3.13       46.26    0%      3%      18%

  Argentina   1.32       1.79       1.64       -8.38    8%      14%     9%

  Australia   5.42       8.41       9.99       18.79    3%      4%      4%

  India       1.06       1.21       1.26       4.13     2%      1%      4%

  New Zealand 4.25       5.84       6.18       5.82     6%      5%      4%

  United      3.95       4.72       6.36       34.75    22%     3%      0%
  States                                                                
  ----------- ---------- ---------- ---------- -------- ------- ------- -------

## Table 9: Hong Kong Beef Imports by Categories, , Jan -- June

  --------------------- ----------- -------------- -------------- -----------
  Millions of U.S.                                                \% Change
  Dollars                                                         

                        2003        2004           2005           \- 05/04 -

  **Beef**              **71.83**   **73.28**      **75.59**      **3.15**

  chilled beef          10.43       11.78          15.54          32

  frozen beef           52.32       53.99          47.67          -11.7

  processed beef        9.07        7.51           12.37          64.74
  --------------------- ----------- -------------- -------------- -----------

## Table 10 : Hong Kong Beef Re-exports by Categories, , Jan -- Jun

  ----------------------- ---------- -------------- ------------- -----------
  Millions of U.S.                                                \% Change
  Dollars                                                         

                          2003       2004           2005          \- 05/04 -

  **Beef**                **9.05**   **4.73**       **6.50**      **37.34**

  chilled beef            0.13       0.12           0.49          299.86

  frozen beef             7.78       3.86           5.12          32.71

  processed beef          1.14       0.75           0.89          18.29
  ----------------------- ---------- -------------- ------------- -----------

## Table 11: Hong Kong Retained Imports of Beef by Categories, , Jan -- Jun

  ---------------------- ----------- -------------- ------------- -----------
  Millions of U.S.                                                \% Change
  Dollars                                                         

                         2003        2004           2005          \- 05/04 -

  **Beef**               **62.78**   **68.55**      **69.10**     **1%**

  chilled beef           10.30       11.65          15.05         29%

  frozen beef            44.55       50.14          42.56         -15%

  processed beef         7.93        6.76           11.48         70%
  ---------------------- ----------- -------------- ------------- -----------

## Table 12 : Hong Kong's Beef Offal Imports by Major Suppliers, Jan -- June

  --------------- ------ ------ -------- -------- -------- -------- ---------
  Millions of                                     \% Share          \% Change
  U.S. Dollars                                                      

  Country         2003   2004   2005     2003     2004     2005     \- 05/04
                                                                    -

                                                                    

  \--The World\-- 58     64     65       100      100      100      1.25

  Brazil          28     38     42       48.39    59.88    65.14    10.14

  Argentina       7      14     14       12       21.84    21.08    -2.25

  Australia       3      3      4        5.42     4.39     5.52     27.33

  Uruguay         2      3      3        3.59     5.21     4.55     -11.58

  New Zealand     1      2      1        1.76     2.68     1.12     -57.69

  Canada          2      0      0        2.83     0.19     0.55     193.47

  United States   13     2      0        22.37    2.47     0.03     -98.62
  --------------- ------ ------ -------- -------- -------- -------- ---------

## Table 13: Hong Kong's Beef Offal Re-exports, Jan -- June

  --------------- ------- ------- ------- -------- -------- -------- ---------
  Millions of                                      \% Share          \% Change
  U.S. Dollars                                                       

  Country         2003    2004    2005    2003     2004     2005     \- 05/04
                                                                     -

                                                                     

  \--The World\-- 53.53   36.01   11.17   100      100      100      -68.98

  Taiwan          0.09    0.00    6.01    0.17     0        53.81    0

  China           53.15   22.43   4.25    99.3     62.28    38.06    -81.04

  Macau           0.26    0.65    0.77    0.48     1.81     6.86     17.91

  Indonesia       0.02    0.12    0.07    0.04     0.32     0.66     -36.87

  Vietnam         0.00    3.17    0.05    0        8.79     0.45     -98.41
  --------------- ------- ------- ------- -------- -------- -------- ---------

# Statistical Table -- Meat, Swine

# 

## PS&D Table

+---------------------+-----+-----+-----+-----+-----+-----+----------+
| **Hong Kong**       |     |     |     |     |     |     |          |
|                     |     |     |     |     |     |     |          |
| **Commodity**       |     |     |     |     |     |     |          |
|                     |     |     |     |     |     |     |          |
| ####                |     |     |     |     |     |     |          |
| ### **Meat, Swine** |     |     |     |     |     |     |          |
|                     |     |     |     |     |     |     |          |
| **(1000 MT          |     |     |     |     |     |     |          |
| CWE)(1000 HEAD)**   |     |     |     |     |     |     |          |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
|                     | 2   | R   | 2   | Es  | 2   | Fo  | UOM      |
|                     | 004 | evi | 005 | tim | 006 | rec |          |
|                     |     | sed |     | ate |     | ast |          |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
|                     | > U | P   | U   | P   | U   | P   |          |
|                     | SDA | ost | SDA | ost | SDA | ost |          |
|                     | >   | Est | Of  | Est | Of  | Est |          |
|                     |  Of | ima | fic | ima | fic | ima |          |
|                     | fic | te\ | ial | te\ | ial | te\ |          |
|                     | ial | [Ne | \   | [Ne | \   | [Ne |          |
|                     | > \ | w\] | [Ol | w\] | [Ol | w\] |          |
|                     | [Ol |     | d\] |     | d\] |     |          |
|                     | d\] |     |     |     |     |     |          |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| Market Year Begin   |     | 0   |     | 0   |     | 0   | MM/YYYY  |
|                     |     | 1/2 |     | 1/2 |     | 1/2 |          |
|                     |     | 004 |     | 005 |     | 006 |          |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| Slaughter           | 0   | 0   | 0   | 0   | 0   | 0   | (1000    |
| (Reference)         |     |     |     |     |     |     | HEAD)    |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| Beginning Stocks    | 0   | 0   | 0   | 0   | 0   | 0   | (1000 MT |
|                     |     |     |     |     |     |     | CWE)     |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| Production          | 152 | 194 | 150 | 175 | 0   | 175 | (1000 MT |
|                     |     |     |     |     |     |     | CWE)     |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| Intra EC Imports    | 0   | 0   | 0   | 0   | 0   | 0   | (1000 MT |
|                     |     |     |     |     |     |     | CWE)     |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| Total Imports       | 332 | 332 | 335 | 250 | 0   | 270 | (1000 MT |
|                     |     |     |     |     |     |     | CWE)     |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| TOTAL Imports       | 332 | 332 | 335 | 250 | 0   | 270 | (1000 MT |
|                     |     |     |     |     |     |     | CWE)     |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| TOTAL SUPPLY        | 484 | 526 | 485 | 425 | 0   | 445 | (1000 MT |
|                     |     |     |     |     |     |     | CWE)     |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| Intra EC Exports    | 0   | 0   | 0   | 0   | 0   | 0   | (1000 MT |
|                     |     |     |     |     |     |     | CWE)     |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| Total Exports       | 0   | 0   | 0   | 0   | 0   | 0   | (1000 MT |
|                     |     |     |     |     |     |     | CWE)     |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| TOTAL Exports       | 0   | 0   | 0   | 0   | 0   | 0   | (1000 MT |
|                     |     |     |     |     |     |     | CWE)     |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| Human Dom.          | 484 | 526 | 485 | 425 | 0   | 445 | (1000 MT |
| Consumption         |     |     |     |     |     |     | CWE)     |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| Other Use, Losses   | 0   | 0   | 0   | 0   | 0   | 0   | (1000 MT |
|                     |     |     |     |     |     |     | CWE)     |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| TOTAL Dom.          | 484 | 526 | 485 | 425 | 0   | 445 | (1000 MT |
| Consumption         |     |     |     |     |     |     | CWE)     |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| Ending Stocks       | 0   | 0   | 0   | 0   | 0   | 0   | (1000 MT |
|                     |     |     |     |     |     |     | CWE)     |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| TOTAL DISTRIBUTION  | 484 | 526 | 485 | 425 | 0   | 445 | (1000 MT |
|                     |     |     |     |     |     |     | CWE)     |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| Calendar Yr. Imp.   | 3   | 3   | 3   | 3   | 0   | 3   | (1000 MT |
| from U.S.           |     |     |     |     |     |     | CWE)     |
+---------------------+-----+-----+-----+-----+-----+-----+----------+
| Calendar Yr. Exp.   | 0   | 0   | 0   | 0   | 0   | 0   | (1000 MT |
| to U.S.             |     |     |     |     |     |     | CWE)     |
+---------------------+-----+-----+-----+-----+-----+-----+----------+

#  

Note : PS&D production figures include local and imported pigs
slaughtered in Hong Kong. All numbers used in the PS&D table are in
carcass-weight-equivalent (CWE), using a conversion factor of 1.51.
Imports are calculated as Imports minus Re-exports. Exports are
calculated as Exports minus Re-exports.

## Table 14: Supply and Consumption of Live Pigs (head)

  -------------- -------------- -------------- -------------- --------------
                 2001           2002           2003           2004

  Local Supply   465,000        444,300        390,900        380,850

  Imports        1,840,454      1,733,020      1,767,538      1,870,365

  Total          2,305,454      2,177,320      2,158,438      2,251,215
  -------------- -------------- -------------- -------------- --------------

## 

Source : Hong Kong Agriculture, Fisheries and Conservation Department

## Table 15: Average Wholesale Prices of Live Pigs (head)

  ---------- ---------- ---------- ---------- ------------- ----------------
  US\$/MT    2001       2002       2003       2004          2005 (Jan --
                                                            May)

  Live Pigs  1,643      1,628      1,620      1,712         1,778
  ---------- ---------- ---------- ---------- ------------- ----------------

Exchange Rate: US\$1.00 -- HK\$7.75

Source: Hong Kong Census & Statistics Department

## Table 16: Hong Kong Pork Imports in Value by Suppliers, Jan - June

  ------------- -------- -------- -------- -------- -------- -------- ---------
  Millions of                                       \% Share          \% Change
  U.S. Dollars                                                        

  Country       2003     2004     2005     2003     2004     2005     \- 05/04
                                                                      -

                                                                      

  \--The        155.14   195.75   201.03   100      100      100      2.7
  World\--                                                            

  China         77.43    96.93    94.17    49.91    49.52    46.84    -2.85

  Brazil        32.45    35.42    46.68    20.91    18.09    23.22    31.81

  Vietnam       4.73     12.70    13.72    3.05     6.49     6.82     8.07

  Thailand      13.00    6.59     8.88     8.38     3.36     4.42     34.84

  Netherlands   5.73     9.23     6.80     3.69     4.72     3.38     -26.34

  United States 4.89     7.21     6.40     3.15     3.68     3.19     -11.14
  ------------- -------- -------- -------- -------- -------- -------- ---------

## Table 17: Hong Kong Pork Imports in Quantity by Suppliers, Jan -- June

  ---------------- -------------- -------------- -------------- ----------
                                                                \% Change

  Country          \- MT - 2003   \- MT - 2004   \- MT - 2005   \- 05/04 -

  \--The World\--  117,588        144,255        121,793        -15.57

  China            50,867         63,665         54,551         -14.32

  Brazil           26,196         23,930         24,041         0.47

  Netherlands      5,422          9,373          6,438          -31.32

  Vietnam          3,098          8,017          6,309          -21.31

  Germany          10,383         12,472         6,285          -49.6

  Spain            1,432          2,435          5,389          121.3

  Belgium          263            972            3,509          261.03

  Canada           6,268          5,632          3,294          -41.51

  Thailand         5,112          2,468          3,240          31.29

  United States    2,144          3,718          2,640          -29
  ---------------- -------------- -------------- -------------- ----------

## Table 18: Hong Kong Pork Re-exports by Destination, Jan -- June

<table style="width:100%;">
<colgroup>
<col style="width: 20%" />
<col style="width: 20%" />
<col style="width: 20%" />
<col style="width: 9%" />
<col style="width: 6%" />
<col style="width: 6%" />
<col style="width: 6%" />
<col style="width: 0%" />
<col style="width: 0%" />
<col style="width: 0%" />
<col style="width: 0%" />
<col style="width: 0%" />
<col style="width: 0%" />
<col style="width: 0%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="3"><table>
<colgroup>
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 11%" />
</colgroup>
<tbody>
<tr class="odd">
<td>Millions of US Dollars</td>
<td colspan="3">% Change</td>
<td colspan="2"></td>
<td></td>
<td>% Change</td>
<td></td>
</tr>
<tr class="even">
<td>Country</td>
<td>2003</td>
<td>2004</td>
<td>2005</td>
<td>- 05/04 -</td>
<td>MT, 2003</td>
<td>MT, 2004</td>
<td>MT, 2005</td>
<td>- 05/04 -</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>The World</td>
<td>16.16</td>
<td>30.48</td>
<td>15.19</td>
<td>-50.16</td>
<td>22,678</td>
<td>37,179</td>
<td>14,639</td>
<td>-60.63</td>
</tr>
<tr class="odd">
<td>Taiwan</td>
<td>0.00</td>
<td>0.00</td>
<td>6.55</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>8,492</td>
<td>0</td>
</tr>
<tr class="even">
<td>Macau</td>
<td>2.27</td>
<td>3.56</td>
<td>4.52</td>
<td>26.7</td>
<td>20,605</td>
<td>34,853</td>
<td>3,018</td>
<td>-91.34</td>
</tr>
<tr class="odd">
<td>China</td>
<td>13.49</td>
<td>26.76</td>
<td>2.70</td>
<td>-89.9</td>
<td>1,837</td>
<td>2,270</td>
<td>2,316</td>
<td>2.02</td>
</tr>
</tbody>
</table></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="7"></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="7"></td>
</tr>
<tr class="odd">
<td colspan="7"><h2 id="table-19-average-pork-prices">Table 19: Average
Pork Prices </h2>
<table>
<colgroup>
<col style="width: 22%" />
<col style="width: 21%" />
<col style="width: 21%" />
<col style="width: 21%" />
<col style="width: 14%" />
</colgroup>
<tbody>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td>% Change</td>
</tr>
<tr class="even">
<td>Country</td>
<td>-/ KG - 2003</td>
<td>-/ KG - 2004</td>
<td>-/ KG - 2005</td>
<td>- 05/04 -</td>
</tr>
<tr class="odd">
<td>--The World--</td>
<td>1.32</td>
<td>1.36</td>
<td>1.65</td>
<td>21.32</td>
</tr>
<tr class="even">
<td>China</td>
<td>1.52</td>
<td>1.52</td>
<td>1.73</td>
<td>13.82</td>
</tr>
<tr class="odd">
<td>Brazil</td>
<td>1.24</td>
<td>1.48</td>
<td>1.94</td>
<td>31.08</td>
</tr>
<tr class="even">
<td>Netherlands</td>
<td>1.06</td>
<td>0.99</td>
<td>1.06</td>
<td>7.07</td>
</tr>
<tr class="odd">
<td>Vietnam</td>
<td>1.53</td>
<td>1.58</td>
<td>2.17</td>
<td>37.34</td>
</tr>
<tr class="even">
<td>Germany</td>
<td>0.56</td>
<td>0.64</td>
<td>0.68</td>
<td>6.25</td>
</tr>
<tr class="odd">
<td>Spain</td>
<td>0.65</td>
<td>0.88</td>
<td>0.81</td>
<td>-7.95</td>
</tr>
<tr class="even">
<td>Belgium</td>
<td>0.89</td>
<td>0.92</td>
<td>0.99</td>
<td>7.61</td>
</tr>
<tr class="odd">
<td>Canada</td>
<td>0.66</td>
<td>0.91</td>
<td>1.04</td>
<td>14.29</td>
</tr>
<tr class="even">
<td>Thailand</td>
<td>2.54</td>
<td>2.67</td>
<td>2.74</td>
<td>2.62</td>
</tr>
<tr class="odd">
<td>United States</td>
<td>2.28</td>
<td>1.94</td>
<td>2.43</td>
<td>25.26</td>
</tr>
</tbody>
</table></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td colspan="7"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>

## Table 20 : Hong Kong Pork Imports by Categories, Jan -- June 

  -------------------------- --------- ------------ ------------- ----------
  Millions of US Dollars                                          \% Change

                             2003      2004         2005          \- 05/04 -

  **Pork**                   **155**   **196**      **201**       **2.7**

  chilled pork               12        5            7             49.67

  frozen pork                104       138          136           -1.33

  processed pork             40        54           58            8.95
  -------------------------- --------- ------------ ------------- ----------

## Table 21 : Hong Kong Pork Re-exports by Categories, Jan -- June

  --------------- ----------- ----------- ----------- --------- --------- --------- ------------
  Millions of US                                                \% Share            \% Change
  Dollars                                                                           

                  2003        2004        2005        2003      2004      2005      \- 05/04 -

  **Pork**        **16.16**   **30.48**   **15.19**   **100**   **100**   **100**   **-50.16**

  frozen pork     12.38       17.72       9.95        76.63     58.14     65.47     -43.87

  processed pork  3.47        9.64        5.22        21.48     31.64     34.38     -45.84

  chilled pork    0.31        3.12        0.02        1.9       10.23     0.15      -99.28
  --------------- ----------- ----------- ----------- --------- --------- --------- ------------

+--------------------------------------------------------------------+---+---+---+---+---+---+---+
|                                                                    |   |   |   |   |   |   |   |
+--------------------------------------------------------------------+---+---+---+---+---+---+---+
| ## Table                                                           |   |   |   |   |   |   |   |
|  22 : Hong Kong Pork Offal Imports by Major Suppliers, Jan -- June |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|   -------                                                          |   |   |   |   |   |   |   |
| ------ ------- -------- --------- ------- ------- ------- -------- |   |   |   |   |   |   |   |
|   M                                                                |   |   |   |   |   |   |   |
| illions of                                      \%              \% |   |   |   |   |   |   |   |
|   US Do                                                            |   |   |   |   |   |   |   |
| llars                                       Share           Change |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|   Country                                                          |   |   |   |   |   |   |   |
|        2003    2004     2005      2003    2004    2005    \- 05/04 |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|                                                                  - |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|   \--Th                                                            |   |   |   |   |   |   |   |
| e        58.77   94.57    63.06     100     100     100     -33.32 |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|  World\--                                                          |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|   Net                                                              |   |   |   |   |   |   |   |
| herlands   5.96    12.92    13.65     10.14   13.67   21.65   5.63 |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|   Germ                                                             |   |   |   |   |   |   |   |
| any       12.68   9.96     12.72     21.58   10.53   20.17   27.76 |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|   Denm                                                             |   |   |   |   |   |   |   |
| ark       10.43   21.84    11.18     17.74   23.09   17.73   -48.8 |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|   Braz                                                             |   |   |   |   |   |   |   |
| il        3.38    4.49     6.49      5.75    4.74    10.3    44.77 |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|   Unite                                                            |   |   |   |   |   |   |   |
| d States 14.46   21.99    3.85      24.61   23.25   6.1     -82.51 |   |   |   |   |   |   |   |
|   -------                                                          |   |   |   |   |   |   |   |
| ------ ------- -------- --------- ------- ------- ------- -------- |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
| ## Table 23:                                                       |   |   |   |   |   |   |   |
| Hong Kong Pork Offal Re-exports by Major Destinations, Jan -- June |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|   -----                                                            |   |   |   |   |   |   |   |
| ----- -------- -------- --------- ------- ------- ------- -------- |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|  Millions                                       \%              \% |   |   |   |   |   |   |   |
|   of                                                               |   |   |   |   |   |   |   |
| US                                          Share           Change |   |   |   |   |   |   |   |
|   Dollars                                                          |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|   Count                                                            |   |   |   |   |   |   |   |
| ry    2003     2004     2005      2003    2004    2005    \- 05/04 |   |   |   |   |   |   |   |
|                                                                  - |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|   \--                                                              |   |   |   |   |   |   |   |
| The     58.30    83.74    15.78     100     100     100     -81.16 |   |   |   |   |   |   |   |
|   World\--                                                         |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|   Chi                                                              |   |   |   |   |   |   |   |
| na      58.03    83.48    8.51      99.53   99.69   53.91   -89.81 |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|   Taiwan     0.02     0.00     6.36      0.04    0       40.34   0 |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
|   Mac                                                              |   |   |   |   |   |   |   |
| au      0.25     0.17     0.74      0.43    0.21    4.67    327.86 |   |   |   |   |   |   |   |
|   -----                                                            |   |   |   |   |   |   |   |
| ----- -------- -------- --------- ------- ------- ------- -------- |   |   |   |   |   |   |   |
+--------------------------------------------------------------------+---+---+---+---+---+---+---+

## Table 24: U.S. Pork Exports to Hong Kong, Jan -- June

  ---------------- ------ --------- ---------- ------- ------- ------- --------
  Millions of US                                       \%              \%
  Dollars                                              Share           Change

                   2003   2004      2005       2003    2004    2005    \- 05/04
                                                                       -

  **Pork**         4.89   7.21      6.40       100     100     100     -11.14

  processed pork   3.78   4.82      4.51       77.42   66.91   70.44   -6.45

  frozen pork      1.07   2.25      1.81       21.84   31.27   28.21   -19.83

  chilled pork     0.04   0.13      0.09       0.74    1.82    1.35    -34.23
  ---------------- ------ --------- ---------- ------- ------- ------- --------

# Narrative on Supply and Demand, Policy & Marketing

## Production

In the wake of the high mortality rate of human Streptococcus suis cases
in China's Sichuan province, China suspended supplies of frozen pork
from Sichuan to Hong Kong starting July 28 (Gain report #5023). As a
precautionary measure, the Hong Kong government suspended imports of
frozen pork from Shenzhen and Henan on August 15 following Shenzhen's
recall of meats from Henan province. Reportedly, Sichuan and Henan
account for about 20 percent and 16 percent of China's frozen pork
exports to Hong Kong respectively. Imports were resumed on August 24
after Hong Kong inspectors had completed checks on the pig farms and
processing plants in the three areas and confirmed they have met Hong
Kong standards.

An immediate effect of the Streptococcus suis cases in China is that the
Hong Kong government tightened controls over farm icensing policy and
threatened to withdraw pig farmers' licenses if they did not pack
carcasses properly before disposal. The government also stepped up
inspection of local farms and the ante-mortem and post-mortem inspection
of pigs in slaughterhouses.

In addition, the Hong Kong government listed Streptococcus suis as a
statutory notifiable disease so as to facilitate the monitoring the
spread of the disease in Hong Kong. As at August 26, there are 11
Streptococcus suis infection cases in Hong Kong in 2005.

In order to reduce the risk of the environmental problems caused by pigs
farms and to stop transmission of the potentially deadly Japanese
encephalitis virus to humans via mosquitoes, the Hong Kong government
has been considering to end pig farming in Hong Kong by introducing a
voluntary license surrender scheme. Reportedly, the Hong Kong government
had meetings with pig associations to gauge the initial response of
farmers. The government is considering to pay about HK\$1,800 (US\$232)
for each pig. Those farmers who choose to continue operating will work
on a demerit scheme. A farmer will have his license cancelled if a
maximum mark limit has been deducted as a result of his violating
farming regulations.

The pig association is counter proposing about HK\$2,500 (US\$323) per
pig as the condition to surrender farming licenses. Pig farmers
understand that the future of pig farming in Hong Kong does not look
prosperous given the imminent import of chilled pork from China and the
ever increasingly stringent farming conditions. They are however
bargaining for the best prices for government's compensation. Presently,
there are about 280 pig farms in Hong Kong. All the issued licenses
allow a maximum pig population of 430,000 head.

The Hong Kong government has announced a year ago that Hong Kong was
about to allow imports of chilled pork from China. However, chilled pork
from China is not yet allowed into Hong Kong. It is expected that
chilled pork will be a threat to the business of fresh pork because of
price differences. Also there are temptations for retailers to sell
chilled pork as fresh pork so as to earn greater profit margins. To
prevent such malpractices, the trade is pressing the government to allow
shops to sell either chilled or fresh pork but not two types in the same
shop under one license.

On average, local production supplies around 1000 pigs daily while
imports from China amount to 5100 head. The self-sufficiency ratio was
20.3 percent. The supplies of live pigs to Hong Kong in the first half
of 2005 decreased about 10 percent compared to the same period last
year. The supplies of live pigs in Hong Kong is monopolized by a company
called Ng Fung Hong, which is the only company in Hong Kong having sole
right in supplying pigs and cattle from China to Hong Kong. The
wholesale prices of live pigs in 2005 rose about 4 percent compared to
last year. Increased feed prices and reduced supplies from China were
the key factors causing increased wholesale prices.

As for live cattle, Hong Kong relies entirely on supplies from China
too. Traders complained that daily supplies of live cattle has been
reduced in recent months from 140 head to 70 head. They pressed Ng Fung
Hong to increase supply. Both wholesale prices of live cattle and retail
prices of fresh beef have risen.

## Consumption

The consumption of fresh pork was adversely affected when the human
Streptococcus suis infection cases in China were reported in Hong Kong
in late July and early August. Supplies of frozen pork from the
provinces of Henan and Sichuan and Shenzhen city were suspended for a
while. Retail sales of fresh pork at one point were slashed by 30
percent. However, there was not much increase in retail sales of frozen
pork from other countries including the U.S. U.S. pork are very
expensive and the market is very different from Chinese frozen pork.
Frozen pork from China is widely used in stores selling roast pork while
U.S. pork is used in upscale restaurants and sold in high-end
supermarkets. Brazilian pork did not benefit because their cuts are
different from those supplied by China except for spareribs. The
decreased consumption in pork was counterbalanced by the increased
consumption in chicken and beef products.

Nonetheless, the consumption of fresh pork has now recovered to normal.
However, Hong Kong was then affected by another food scare associated
with freshwater fish. China supplies over 90 percent of the freshwater
fish for the Hong Kong market, and many import samples were found to
contain cancer chemical called malachite green. Out of the 54 samples
tested, 13 were confirmed positive as at August 24. Imports of
freshwater fish dropped by 80 percent.

U.S. beef is still not allowed in Hong Kong resulting from the BSE cases
in the U.S. Canadian beef has become the first substitute of U.S. beef.
Australian beef, due to short supplies, has not been able to take up the
market as much as Canadian beef. Australian beef, however, does
exceptionally well in primal cuts.

Hong Kong is a mature market. The consumption of beef and pork is rather
stable but is still vulnerable to price fluctuations. Both beef and pork
consumption for 2006 is forecast to rise moderately by 4 to 5 percent.

The consumption share of fresh meats in the future is expected to
continue to decline while that of chilled/frozen meats will rise.
Consumers increasingly get used to chilled/frozen products over the
years. They value the convenience, hygiene and economical factors that
chilled/frozen products offer. These products are usually sold at
supermarkets with refrigerating facilities. Supermarkets in the past few
years have successfully diverted much business from wet markets.

The change of consumption pattern of various meat products and fish is
given below.

Pork Consumption Pattern

  ------------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- ----------
                MT, 2000      \% share   MT, 2001      \% share   MT, 2002      \% share   MT, 2003      \% share   MT, 2004      \% share

                                                                                                                                  

  **Live pigs** **203,160**   **45%**    **205,750**   **44%**    **185,680**   **40%**    **178,650**   **37%**    **194,187**   **37%**

  Local         38,790        9%         40,510        9%         38,250        8%         33,650        7%         32,753        6%

  From China    164,370       37%        165,240       35%        147,430       32%        145,000       30%        161,434       31%

                                                                                                                                  

  **Retained    **246,560**   **55%**    **260,028**   **56%**    **275,350**   **60%**    **302,332**   **63%**    **331,617**   **63%**
  Pork**                                                                                                                          

  Chilled Pork  10,084        2%         13,744        3%         17,156        4%         11,491        2%         -2,900        -1%

  Frozen Pork   182,902       41%        189,199       41%        202,527       44%        225,003       47%        253,797       48%

  Processed     53,575        12%        57,084        12%        55,667        12%        65,838        14%        80,720        15%
  Pork                                                                                                                            

                                                                                                                                  

  **Total**     **449,720**   **100%**   **465,778**   **100%**   **461,030**   **100%**   **480,982**   **100%**   **525,804**   **100%**
  ------------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- ----------

Pork figures are calculated in carcass-weight-equivalent (CWE), using a
conversion factor of 1.51.

Beef Consumption Pattern

  ------------ ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
               MT, 2000     \% share   MT, 2001     \% share   MT, 2002     \% share   MT, 2003     \% share   MT, 2004     \% share

                                                                                                                            

  **Live       **16,930**   **19%**    **15,030**   **18%**    **14,273**   **17%**    **13,490**   **14%**    **14,135**   **15%**
  Cattle**                                                                                                                  

                                                                                                                            

  **Retained   **70,889**   **81%**    **70,458**   **82%**    **70,895**   **83%**    **79,792**   **86%**    **80,216**   **85%**
  Beef**                                                                                                                    

  Chilled Beef 3,776        4%         3,458        4%         4,243        5%         4,886        5%         3,089        3%

  Frozen Beef  55,976       64%        53,511       63%        55,714       65%        60,080       64%        59,264       63%

  Processed    11,137       13%        13,490       16%        10,938       13%        14,825       16%        17,863       19%
  Beef                                                                                                                      

                                                                                                                            

  **Total**    **87,819**   **100%**   **85,488**   **100%**   **85,168**   **100%**   **93,282**   **100%**   **94,351**   **100%**
  ------------ ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------

Beef figures are calculated in carcass-weight-equivalent (CWE), using a
conversion factor of 1.36 conversion factor for all chilled/frozen beef
and 1.70 for processed beef.

Chicken Consumption Pattern (excluding feet)

  ---------- --------- ------- --------- ------- --------- ------- --------- ------- --------- -------
             MT, 2000  \%      MT, 2001  \%      MT, 2002  \%      MT, 2003  \%      MT, 2004  \%
                       share             share             share             share             share

  Live       64,870    28%     59,130    24%     60,910    27%     58,310    27%     28,973    11%
  Chickens                                                                                     

  Retained   167,615   72%     183,460   76%     163,820   73%     154,061   73%     244,000   89%
  chicken                                                                                      
  meat                                                                                         

  Total      232,485   100%    242,590   100%    224,730   100%    212,371   100%    272,973   100%
  ---------- --------- ------- --------- ------- --------- ------- --------- ------- --------- -------

Source: Hong Kong Census & Statistics Department

Fish Consumption Pattern

  ------------ --------- ------- --------- ------- --------- ------- --------- ------- --------- -------
  (MT)         2000      \%      2001      \%      2002      \%      2003      \%      2004      \%
                         share             share             share             share             share

  Freshwater   46,370    28%     44,880    29%     49,300    32%     36,474    25%     41,340    26%
  Fish                                                                                           

  Marine Fish  119,080   72%     112,050   71%     107,140   68%     107,843   75%     117,752   74%

  Total        165,450   100%    156,930   100%    156,440   100%    144,317   100%    159,092   100%
  ------------ --------- ------- --------- ------- --------- ------- --------- ------- --------- -------

Source: Agriculture, Fisheries and Conservation Department

Per Capita Consumption of Various Meat Products and Fish

Note: Retained Pork and Retained Beef are based on
Carcass-weight-equivalent

  -------------- ------------- -------- ------------- -------- ------------- -------- ------------- -------- ------------- --------
                 MT, 2000      Kg, Per  MT, 2001      Kg, Per  MT, 2002      Kg, Per  MT, 2003      \% share MT, 2004      Kg, Per
                               capita                 capita                 capita                                        capita

                                                                                                                           

  Live pigs      203,160       30       205,750       30       185,680       27       178,650       26       194,187       28

  Retained Pork  246,560       37       260,028       38       275,350       41       302,332       44       331,617       48

  **Total**      **449,720**   **67**   **465,778**   **69**   **461,030**   **68**   **480,982**   **70**   **525,804**   **76**

                                                                                                                           

  Live Cattle    16,930        3        15,030        2        14,273        2        13,490        2        14,135        2

  Retained Beef  70,889        11       70,458        10       70,895        10       79,792        12       80,216        12

  **Total**      **87,819**    **13**   **85,488**    **13**   **85,168**    **13**   **93,282**    **14**   **94,351**    **14**

                                                                                                                           

  Live Chickens  64,870        10       59,130        9        60,910        9        58,310        9        28,973        4

  Retained       167,615       25       183,460       27       163,820       24       154,061       23       244,000       35
  chicken meat                                                                                                             

  **Total**      **232,485**   **35**   **242,590**   **36**   **224,730**   **33**   **212,371**   **31**   **272,973**   **39**

                                                                                                                           

  Freshwater     46,370        7        44,880        7        49,300        7        36,474        5        41,340        6
  Fish                                                                                                                     

  Marine Fish    119,080       18       112,050       17       107,140       16       107,843       16       117,752       17

  **Total**      **165,450**   **25**   **156,930**   **23**   **156,440**   **23**   **144,317**   **21**   **159,092**   **23**
  -------------- ------------- -------- ------------- -------- ------------- -------- ------------- -------- ------------- --------

## Trade

U.S. beef is not allowed entry into Hong Kong since December 24, 2003
following a BSE case in the U.S. According to the U.S. statistics, the
U.S. exported \$82 million worth of beef products, including offals, to
Hong Kong in 2003. Hong Kong was the 5^th^ largest export market of U.S.
beef, in terms of value. Based on 2003 statistics, Hong Kong's ban on
U.S. beef is translated to approximately a loss of \$6.8 million export
value each month. The estimated loss for the past 20 months amounted to
\$136 million.

The second BSE case in the U.S. confirmed in June 2005 was reported in
Hong Kong, yet the reports did not create any safety concern for
consuming beef or U.S. beef.

The Hong Kong government led a high level delegation to the U.S. for a
technical visit to review the BSE surveillance and monitoring program in
June. The trip result has not yet been released.

The Hong Kong market has been re-opened to Canadian beef since late
November 2004. Canadian beef exports to Hong Kong increased tremendously
since then. Presently, 12 Canadian plants are eligible to export
products to Hong Kong. The market share of Canadian beef has risen from
2 percent in 2002 to 21 percent in 2005. (Canadian beef was banned to
Hong Kong between May 2003 and November 2004.) Canada became the second
largest supplier of beef to Hong Kong in terms of value. Canadian beef
has taken up much of the market previously occupied by U.S. beef. Given
the short supplies of Australian beef for the Hong Kong market,
Australian beef merely accounted for 15 percent of the market share.
Industry representatives indicated that Canada and Australia only can
fill up about 60 to 70 percent of the void left by U.S. beef.

Beef imports in 2006 are expected to rise by 5 percent based on the
assumption that U.S. beef is allowed in Hong Kong. U.S. beef has
established a strong foothold in the market. While other suppliers have
successfully expanded their market share when the ban on U.S. beef is in
place, upscale catering institutions are expected to switch back to U.S.
beef when the ban is lifted. However, it could be a challenge for U.S.
beef to completely regain its market share because buyers have
established some new business relationships and their ultimate
procurement decision will depend on the quality and price of the
products.

There are two reasons that pork imports for 2005 was revised to 250,000
MT, which was lower than the initial estimate of 335,000 MT. First, the
initial estimate was based on the assumption that China's chilled pork
supplies are allowed entry to Hong Kong. However, Hong Kong has not yet
allowed chilled pork supplies from China. Given the recent food scares
concerning food supplies from China, the Hong Kong government probably
will be very thorough in conducting their plant inspections in China
before reaching a protocol in allowing chilled pork imports to Hong
Kong. Once chilled pork is allowed in Hong Kong, it is expected that
imports of chilled pork will soar because it will be far more price
competitive than fresh pork.

Second, as indicated in table 19, average pork prices rose tremendously
by 21 percent, traders become more prudent in placing orders. Pork
imports already dropped 16 percent in the first six months of 2005.

China continues to be the largest supplier of pork to Hong Kong. The
pork cuts from China are different from Brazilian supplies. Chinese pork
cuts such as pork loin, belly, pork shoulder sell largely to Chinese
restaurants or to retail stores to be processed to roast pork. Brazilian
pork are mainly supplied to restaurants and fast food chains.

Hong Kong imported \$6.4 million of pork products from the U.S. in the
first half year of 2005. Processed pork constitutes the largest portion
(70 percent), followed by frozen pork (28 percent ) and chilled pork (2
percent). U.S. pork occupies a very niche market and sell to upscale
supermarkets and restaurants.

Re-exports to China

It is forecast that the role of Hong Kong as a re-export center for meat
products to China will diminish in the future. As tables 13 and 23
indicated Hong Kong's re-export of offals to China declined tremendously
in 2005 compared to last year. Beef offal and pork offal declined by 81
percent and 90 percent respectively. There are increasingly more and
more direct shipments to China given the expensive terminal costs in
Hong Kong and the charges (HK\$4000/container) incurred by the
compulsory pre-inspection requirement conducted by China Inspection Co.
in Hong Kong. (Effective November 1, 2004, all meat re-exports to China
through Hong Kong have to be pre-inspected by China Inspection Co. in
Hong Kong. ) Traders revealed that if they have all the necessary
permits and supporting documents, they will opt to ship products
directly from the U.S. to ports in China. Traders said that many liners
already have direct shipping routes linking ports from North America to
major ones in China. However, products from South America still are
re-exported to China through Hong Kong because of the lack of direct
shipping between ports in South America and China. A company indicated
that about 50 percent of its products to China are of direct shipments
already. Another said the percentage was as high as 80 percent.

#