Required Report - public distribution

**Date:** 1/31/2005

**GAIN Report Number:** CH5010

CH5000

**China, Peoples Republic of**

**Livestock and Products**

**Semi-Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Maurice House

U.S. Embassy

**Prepared by:**

Casey Bean/Zhang Jianping

**Report Highlights:** In November 2004, China and the US signed an
import protocol for US bovine semen and embryos. Before actual trade
begins, China has requested an inspection by Chinese officials of each
embryo and semen collection facility. China's import suspension on other
bovine products, including live cattle, beef products and non-protein
tallow, remains in place. During 2005, technical meetings between
Chinese and US experts are the next step on US beef access. China's
cattle imports shot up 232 percent from a year ago to 110,000 head
driven by strong demand by the dairy sector. US pork exports last year
increased over 100 percent to 40,000 MT, and the forecast is for
continued growth in exports.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Unscheduled Report

Beijing \[CH1\]

\[CH\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Cattle and Beef 4](#cattle-and-beef)

[Post forecasts China's beef production to increase 6 percent in 2005
4](#post-forecasts-chinas-beef-production-to-increase-6-percent-in-2005)

[BSE Surveillance Efforts 4](#bse-surveillance-efforts)

[China's meat production target exceeded, but beef growth even faster
4](#chinas-meat-production-target-exceeded-but-beef-growth-even-faster)

[Wholesale and retail beef prices forecast to remain high in 2005
5](#wholesale-and-retail-beef-prices-forecast-to-remain-high-in-2005)

[Food safety a central government priority; China's "zero" tolerance for
pathogens on imported meat products remains a challenge for suppliers
5](#food-safety-a-central-government-priority-chinas-zero-tolerance-for-pathogens-on-imported-meat-products-remains-a-challenge-for-suppliers)

[Live cattle imports continue increasing, but pace expected to slow
5](#live-cattle-imports-continue-increasing-but-pace-expected-to-slow)

[Australia loses live cattle import share to New Zealand\--Mexico a new
supplier
5](#australia-loses-live-cattle-import-share-to-new-zealand--mexico-a-new-supplier)

[Post forecasts beef imports recovering in 2005
6](#post-forecasts-beef-imports-recovering-in-2005)

[China's cattle exports in 2005 forecast to rise 10 percent up, while
beef exports will rise 28 percent
6](#chinas-cattle-exports-in-2005-forecast-to-rise-10-percent-up-while-beef-exports-will-rise-28-percent)

[PSD\--Cattle 7](#psd--cattle)

[PSD\--Beef 8](#psd--beef)

[Swine and Pork 14](#swine-and-pork)

[China's swine and pork production forecast to rise in 2005
14](#chinas-swine-and-pork-production-forecast-to-rise-in-2005)

[Scale of China's swine operations expanding
14](#scale-of-chinas-swine-operations-expanding)

[Increased pressure on small-scale swine farmers
14](#increased-pressure-on-small-scale-swine-farmers)

[Swine genetic improvements---continued export opportunity for US
suppliers
15](#swine-genetic-improvementscontinued-export-opportunity-for-us-suppliers)

[Increased use of compound feed benefits China's swine industry
15](#increased-use-of-compound-feed-benefits-chinas-swine-industry)

[Pork consumption forecast 4.8 percent up from 47 to 49 million MT in
2005
15](#pork-consumption-forecast-4.8-percent-up-from-47-to-49-million-mt-in-2005)

[Total pork imports in 2004 fell slightly due to AI impact, but US
exports rose over 100 percent, and the forecast for 2005 is continued
growth
16](#total-pork-imports-in-2004-fell-slightly-due-to-ai-impact-but-us-exports-rose-over-100-percent-and-the-forecast-for-2005-is-continued-growth)

[China's new meat regulation (No. 49) encourages pork trade towards the
Mainland
16](#chinas-new-meat-regulation-no.-49-encourages-pork-trade-towards-the-mainland)

[China's pork exports forecast to increase 12 percent in 2005
16](#chinas-pork-exports-forecast-to-increase-12-percent-in-2005)

[PSD\--Swine 18](#psd--swine)

[PSD\--Pork 19](#psd--pork)

# Executive Summary

On September 28, 2004, China lifted the import suspension on bovine
semen, embryos and non-protein tallow from BSE countries\--including the
United States. Then in November 2004, the quarantine agencies of the two
countries held the first US-China animal quarantine bilateral meeting in
Hawaii. At that meeting, China and the US signed an import protocol for
US bovine semen and embryos. However, before imports are resumed, China
has requested that Chinese officials inspect each collection center.
China's ban on live cattle and beef still remains in place.

It is uncertain when the cattle and beef market will be re-opened in
China. Chinese officials insistence that China still remains free of BSE
indicates they have serious concerns about the transmission of the
disease. In order to press for beef access, the USDA has proposed to
China that technical experts from both sides (USDA's APHIS and FSIS on
the US side and AQSIQ and MOA on the Chinese side) meet to continue
exchanging information on BSE risk and meat safety.

During 2005, no further tariff deductions are scheduled for livestock
products. China's commitment when joining the WTO for bound tariff
deductions on meat products ended in 2004. The value added tax (VAT), 13
percent, will also remain the same in 2005. This year, for the first
time, China listed its export tax rebate in the 2005 Customs Tariff
Book. A five percent tax rebate is provided to Chinese exporters of live
cattle and beef and a 13 percent rebate is provided to Chinese exporters
under HS Code 0203.29.

China's live cattle imports during January to November 2004, more than
doubled the total number of the previous year. Australia and New Zealand
were the only suppliers, and both countries appear positioned to
dominate this market in 2005.

On the production side, China's livestock output value during 2004 is
estimated at \$121 billion, a record level. Sales of livestock products
represented 39 percent of farmers' per capita cash income from selling
agricultural products in 2004. The Chinese Government continues to
emphasize livestock as an important source of farmers' income. This
government support, combined with the agricultural tax reduction, will
provide strong incentives to China's beef and pork producers in 2005.

Last year, pork was the only US meat product that could be exported to
China due to China's ban on US cattle and beef for BSE and US poultry
products for avian influenza. US exports to China increased 133 percent
to 40,000 MT.

# Cattle and Beef

## Post forecasts China's beef production to increase 6 percent in 2005

China's cattle and beef industry is forecast to continue expanding in
2005 due to strong consumer demand---particularly as the 2008 Olympic
games approach. Post forecasts China's beef production at 7 MMT, a 6
percent increase from last year, and end-of-year cattle inventories to
increase 2 percent to 142.6 million head as China stepped-up the number
of cattle slaughtered. Beef carcass weight in 2005 is expected to remain
at 134 kilograms (kg)\--about 197 kg lower than the average carcass
weight in the US.

Cattle and beef production is moving gradually towards the more
efficient production areas in the 7 provinces of Central China and the
Northeast. The Ministry of Agriculture (MOA) has termed these areas
"advantageous beef development areas", and the regions accounted for
over 60 percent of China's total beef production last year. Better
production conditions helped improve the slaughter rate**.** This is
expected to continue in 2005.

Inconsistent beef and dairy cow breeds remain the chief constraint to
increasing China's beef production. China's resulting demand for dairy
and beef cattle genetics is illustrated by the doubling of year-on-year
breeding cattle imports during 2004. If the import protocols with China
for bovine genetics can be implemented in 2005, demand for US products
is forecast to be extremely high.

## BSE Surveillance Efforts

To address the threat of BSE in China, the Ministry of Agriculture
oversees domestic BSE surveillance efforts. According to Chinese
officials, China tests approximately 4,500 head per year, though China
slaughters about 50 million cattle each year. Officials indicate they
collect about 150 samples a year for BSE testing from each province in
China. The five types tested are normal, downer, stock, dead and
slaughtered cattle. Seventy percent of samples from 26 provinces are
tested at MOA's national BSE lab in Qingdao, Shandong Province. The
other 30 percent are from the Northeast, Inner Mongolia and Beijing, and
are tested at the China Agricultural University lab in Beijing. Other
institutes or university lab facilities may also undertake BSE tests for
their own research purpose.

## China's meat production target exceeded, but beef growth even faster 

When China made its tenth five year (2000-2005) and long term
(2005-2015) plans, the country targeted that by the end of 2005, total
meat production would reach 70 MMT, of which beef and mutton would
comprise 9.9 MMT, pork 45.5 MMT and poultry meat 14 MMT.
Percentage-wise, beef and mutton ratio would rise to 14.1 percent,
poultry meat a rise to 20 percent, while the pork meat ratio would fall
to 65 percent. By 2015, total meat production would increase to 90 MMT,
of which beef and mutton be 13.5 MMT, pork 55.8 MMT and poultry meat
19.8 MMT. In 2015, the beef and mutton ratio would rise to 15 percent
and poultry meat to 22 percent, while the pork ratio would continue
falling to 62 percent.

The outbreak of avian influenza in China during January to March 2004
induced many Chinese consumers to switch from poultry to red meat
consumption. Official meat data for 2004 is not yet available, but
according to the industry, total meat production last year was in the
range of 72-73 MMT. The year-on-year increase of beef was 10 percent,
pork 4.8 percent and poultry was flat. During 2005, the risk of a new AI
outbreak, coupled with more government support to develop grass-fed
animals in order to reduce the demand for feed grains, could drive the
beef growth pace even higher than the level of 2004.

Although China's beef and veal imports dropped considerably in 2004, the
import loss was offset partly by larger domestic beef production and
increased imports from New Zealand and Brazil. As a result, per capita
beef consumption still increased slightly.

## Wholesale and retail beef prices forecast to remain high in 2005 

According to MOA data, during 2004 wholesale beef prices increased 1.8
percent and retail prices increased 7.5 percent as the result of strong
domestic demand, overall increased feed prices and higher international
beef prices. Assuming there are continued increases in domestic beef
production and strong consumer demand, the Chinese Government is
unlikely to resume state reserves of live animals---which are
subsequently sold on the market\--since beef prices in 2005 may not
exceed the level of 2004.

## Food safety a central government priority; China's "zero" tolerance for pathogens on imported meat products remains a challenge for suppliers

In response to the China's Central Government mandate to strengthen food
safety, last December 7 Chinese agencies, including AQSIQ, the State
Standardization Committee, the Ministry of Agriculture, the National
Development and Reform Commission, the Ministry of Commerce, the
Ministry of Health and the State Food and Drug Administration, initiated
Food Standard Development Programs. The objective is to make equivalent
the existing food standards at the national, industry and local levels.
The program will be completed in two years. Chinese officials forecast
that the adoption of international standards for processed food safety
standards in China will increase from 23 percent to 55 percent.

USDA continues to encourage China to revise its regulation for a zero
tolerance for E. coli and Salmonella on imported, raw meat and poultry.
This regulation impacts access for any imported product at the
inspection station where the pathogens are detected.

Effective in January 2005, China added 10 food products, including meat
and dairy products, to the Market Permit System. Adding to the other
five products enforced in 2004, there are altogether 15 products. Before
entering the domestic market, these products must have a "QS" (food
safety) mark on the packaging approved by AQSIQ. The new products have a
6-month grace period before enforcement begins on July 1, 2005.

## Live cattle imports continue increasing, but pace expected to slow 

China's live cattle imports in 2005 are forecast to increase 25 percent
from last year to 150,000 head. Imports through November 2004 already
jumped 232 percent from 35,660 head to 118,487 head over the same
period. Most imports are breeding dairy cattle, reflecting China's drive
to improve genetic stocks, but also because average import prices were
slightly lower than a year ago. As China's economy grows at about 9
percent annually, consumers demand more dairy product and animal
proteins. Given China's low ratio of high quality dairy and beef cattle,
strong import demand for breeding animals is forecast to continue this
year, but at a slower pace than last year. China's own production is
improving and the increased bank interest rates from last November may
encourage farmers to reduce spending.

## Australia loses live cattle import share to New Zealand\--Mexico a new supplier 

Australia is still the largest supplier of live cattle to China, but its
export share fell to New Zealand from 81 percent to 53 percent last year
during January to November 2004. A smaller crop due to bad weather last
year constrained Australian exports. Also, the price per head was higher
than animals from New Zealand. Mexico established itself as a new
supplier to China last year, although its share is almost nothing with 8
head exported.

## Post forecasts beef imports recovering in 2005 

As a result of China's successful efforts to source beef from countries
other than Canada and the US, during 2005 China's beef and veal imports
increase from 10,000 MT in 2004 to 15,000 MT. However, this level is
still below the import level of 2003. Beef products and veal are
supplied to high-end users such as luxury hotel chains. The limited
volume of high quality beef produced in China translated to domestic
supply lagging demand. Several countries in South America and other
places reached agreement last year to export meat to China. Based on
higher expectations of China's imports, FAS Beijing adjusted upwards
China's import number in the attached PS&D table.

The US was China's largest beef supplier before the BSE case in December
2003 resulted in China's import suspension. During 2003, China's imports
of US beef and variety meats (including re-exports from Hong Kong to
China) were about \$100 million. Australia replaced the US after China
banned US beef, but Australia's export share did not increase since
imported New Zealand and Brazilian beef compensated for a portion of the
supply shortfall. The competitive prices of both countries are one
reason.

## China's cattle exports in 2005 forecast to rise 10 percent up, while beef exports will rise 28 percent

Based on the update World Trade Atlas, post adjusted China's export
forecasts number for live cattle in 2005 up from 55,000 head in the
previous annual report to 72,000 head in the current report. Post also
adjusted China's beef export forecast number for 2005 up from 50,000 MT
to 72,000 MT.

The export increase is due to demand in all of China's export
destinations. Additionally, following the ban placed on imported US and
Canadian beef products by many importing countries, the world supply of
beef has fallen. As a result, although China's export beef price
increased 20 percent in 2004, it was still cheaper compared with the
average international price. The lower US dollar exchange rate in 2004
did not impact China's exports, since China is using a fixed exchange
rate between USD and RMB.

# PSD\--Cattle

  ---------------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------
  **PSD Table**                                                                                

  **Country**      **China,                                                                    
                   Peoples                                                                     
                   Republic                                                                    
                   of**                                                                        

  **Commodity**    **Animal                                    (1000                           
                   Numbers,                                    HEAD)                           
                   Cattle**                                                                    

                   2003       Revised    2004       Estimate   2005       Forecast   UOM       

                   USDA       Post       USDA       Post       USDA       Post                 
                   Official   Estimate   Official   Estimate   Official   Estimate             
                   \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]              

  **Market Year               01/2003               01/2004               01/2005    MM/YYYY   
  Begin**                                                                                      

  Total Cattle     130848     130848     134672     134672     138712     138728     (1000     
  Beg. Stks                                                                          HEAD)     

  Dairy Cows Beg.  6873       6873       7587       8932       8350       11500      (1000     
  Stks                                                                               HEAD)     

  Beef Cows Beg.   60501      60501      62830      62830      65340      65340      (1000     
  Stocks                                                                             HEAD)     

  Production (Calf 51654      51654      54649      54649      54819      57381      (1000     
  Crop)                                                                              HEAD)     

  Intra EC Imports 0          0          0          0          0          0          (1000     
                                                                                     HEAD)     

  Total Imports    50         50         100        120        150        150        (1000     
                                                                                     HEAD)     

  TOTAL Imports    50         50         100        120        150        150        (1000     
                                                                                     HEAD)     

  TOTAL SUPPLY     182552     182552     189421     189441     193681     196259     (1000     
                                                                                     HEAD)     

  Intra EC Exports 0          0          0          0          0          0          (1000     
                                                                                     HEAD)     

  Total Exports    51         50         55         59         60         65         (1000     
                                                                                     HEAD)     

  TOTAL Exports    51         50         55         59         60         65         (1000     
                                                                                     HEAD)     

  Cow Slaughter    0          0          0          0          0          0          (1000     
                                                                                     HEAD)     

  Calf Slaughter   0          0          0          0          0          0          (1000     
                                                                                     HEAD)     

  Other Slaughter  47030      47030      49914      49914      53051      53051      (1000     
                                                                                     HEAD)     

  Total Slaughter  47030      47030      49914      49914      53051      53051      (1000     
                                                                                     HEAD)     

  Loss             799        800        740        740        500        500        (1000     
                                                                                     HEAD)     

  Ending           134672     134672     138712     138728     140070     142643     (1000     
  Inventories                                                                        HEAD)     

  TOTAL            182552     182552     189421     189441     193681     196259     (1000     
  DISTRIBUTION                                                                       HEAD)     

  Calendar Yr.     2          2          0          0          0          0          (1000     
  Imp. from U.S.                                                                     HEAD)     

  Calendar Yr.     0          0          0          0          0          0          (1000     
  Exp. to U.S.                                                                       HEAD)     
  ---------------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------

#  

# PSD\--Beef

  ---------------- ---------- ---------- ---------- ---------- ----------- ---------- --------- -------
  **PSD Table**                                                                                 

  **Country**      **China,                                                                     
                   Peoples                                                                      
                   Republic                                                                     
                   of**                                                                         

  **Commodity**    **Meat,                                     (1000 MT                         
                   Beef and                                    CWE)(1000                        
                   Veal**                                      HEAD)                            

                   2003       Revised    2004       Estimate   2005        Forecast   UOM       

                   USDA       Post       USDA       Post       USDA        Post                 
                   Official   Estimate   Official   Estimate   Official    Estimate             
                   \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]     \[New\]              

  **Market Year               01/2003               01/2004                01/2005    MM/YYYY   
  Begin**                                                                                       

  Slaughter        47030      47030      49914      49914      53051       53051      (1000     
  (Reference)                                                                         HEAD)     

  Beginning Stocks 0          0          0          0          0           0          (1000 MT  
                                                                                      CWE)      

  Production       6305       6305       6683       6683       7110        7110       (1000 MT  
                                                                                      CWE)      

  Intra EC Imports 0          0          0          0          0           0          (1000 MT  
                                                                                      CWE)      

  Total Imports    12         25         10         10         15          15         (1000 MT  
                                                                                      CWE)      

  TOTAL Imports    12         25         10         10         15          15         (1000 MT  
                                                                                      CWE)      

  TOTAL SUPPLY     6317       6330       6693       6693       7125        7125       (1000 MT  
                                                                                      CWE)      

  Intra EC Exports 0          0          0          0          0           0          (1000 MT  
                                                                                      CWE)      

  Total Exports    43         43         45         56         50          72         (1000 MT  
                                                                                      CWE)      

  TOTAL Exports    43         43         45         56         50          72         (1000 MT  
                                                                                      CWE)      

  Human Dom.       6274       6287       6648       6637       7075        7053       (1000 MT  
  Consumption                                                                         CWE)      

  Other Use,       0          0          0          0          0           0          (1000 MT  
  Losses                                                                              CWE)      

  TOTAL Dom.       6274       6287       6648       6637       7075        7053       (1000 MT  
  Consumption                                                                         CWE)      

  Ending Stocks    0          0          0          0          0           0          (1000 MT  
                                                                                      CWE)      

  TOTAL            6317       6330       6693       6693       7125        7125       (1000 MT  
  DISTRIBUTION                                                                        CWE)      

  Calendar Yr.     19         19         0          0          0           0          (1000 MT  
  Imp. from U.S.                                                                      CWE)      

  Calendar Yr.     0          0          0          0          0           0          (1000 MT  
  Exp. to U.S.                                                                        CWE)      
  ---------------- ---------- ---------- ---------- ---------- ----------- ---------- --------- -------

#  

# 

  ------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------
  China Import                                                                                   
  Statistics                                                                                     

  UDG: Live                                                                                      
  Cattle, HS                                                                                     
  0102                                                                                           

  Year To Date:                                                                                  
  January -                                                                                      
  November                                                                                       

  **Partner     **Unit**   **Quantity**                         **%                              **% Change**
  Country**                                                     Share**                          

                           **2002**       **2003**   **2004**   **2002**   **2003**   **2004**   **2004/2003**

  World         NO         10,229         35,660     118,495    100        100        100        232.29

  Australia     NO         9,220          28,908     63,772     90.14      81.07      53.82      120.6

  New Zealand   NO         \-             5,719      54,715     0          16.04      46.17      856.72

  Mexico        NO         \-             \-         8          0          0          0.01       0

  United States NO         256            1,022      \-         2.5        2.87       0          -100

  Canada        NO         753            11         \-         7.36       0.03       0          -100
  ------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------

  ------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------
  China Import                                                                                   
  Statistics                                                                                     

  UDG: Live                                                                                      
  Cattle, HS                                                                                     
  0102                                                                                           

  Year Ending:                                                                                   
  December                                                                                       

  **Partner     **Unit**   **Quantity**                         **%                              **% Change**
  Country**                                                     Share**                          

                           **2001**       **2002**   **2003**   **2001**   **2002**   **2003**   **2003/2002**

  World         NO         2,775          11,432     50,007     100        100        100        337.43

  Australia     NO         2,231          9,280      41,179     80.4       81.18      82.35      343.74

  New Zealand   NO         \-             \-         7,795      0          0          15.59      0

  United States NO         317            256        1,022      11.42      2.24       2.04       299.22

  Canada        NO         227            1,896      11         8.18       16.59      0.02       -99.42
  ------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------

  -------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------
  China Import                                                                                    
  Statistics                                                                                      

  UDG: Beef and                                                                                   
  Veal,                                                                                           

  Year To Date:                                                                                   
  January -                                                                                       
  November                                                                                        

  **Partner      **Unit**   **Quantity**                         **%                              **% Change**
  Country**                                                      Share**                          

                            **2002**       **2003**   **2004**   **2002**   **2003**   **2004**   **2004/2003**

  World          T          9,749          7,786      3,371      100        100        100        -56.71

  Australia      T          1,956          2,098      2,080      20         26.95      61.7       -0.88

  New Zealand    T          200            101        825        2          1.3        24.48      715.06

  Brazil         T          24             467        422        0          6          12.52      -9.71

  United States  T          7,294          5,068      41         75         65.09      1.21       -99.2

  Uruguay        T          \-             \-         2          \-         0          0.07       0

  China          T          \-             \-         1          \-         0          0.02       90.73

  Taiwan         T          2              5          \-         0          0.06       0.01       -96.2

  Germany        T          \-             \-         \-         \-         0          0          0

  Korea South    T          \-             1          \-         \-         0.01       0          -98.52

  Thailand       T          7              6          \-         0          0.07       0          -100

  Japan          T          \-             \-         \-         \-         0          0          -100

  Singapore      T          \-             \-         \-         \-         0          0          0

  South Africa   T          1              \-         \-         0          0          0          0

  France         T          \-             \-         \-         \-         0          0          0

  Canada         T          265            39         \-         3          0.5        0          -100
  -------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------

#  

# 

  -------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------
  China Import                                                                                    
  Statistics                                                                                      

  UDG: Beef and                                                                                   
  Veal,                                                                                           

  Year Ending:                                                                                    
  November                                                                                        

  **Partner      **Unit**   **Quantity**                         **%                              **% Change**
  Country**                                                      Share**                          

                            **2001**       **2002**   **2003**   **2001**   **2002**   **2003**   **2003/2002**

  World          T          5,356          10,157     9,526      100        100        100        -6.22

  United States  T          3,043          7,578      6,535      56.83      74.61      68.61      -13.76

  Australia      T          2,029          2,077      2,282      37.89      20.45      23.95      9.87

  Brazil         T          \-             24         467        0          0.24       4.91       1844.61

  Canada         T          43             265        118        0.81       2.61       1.24       -55.5

  New Zealand    T          185            202        111        3.45       1.99       1.17       -44.9

  Thailand       T          5              7          6          0.09       0.07       0.06       -13.9

  Taiwan         T          \-             2          5          0.01       0.02       0.05       175.59

  Korea South    T          \-             1          1          0.01       0.01       0.01       -37.25

  China          T          17             \-         \-         0.31       0          0          0

  Japan          T          33             \-         \-         0.62       0          0          0

  Germany        T          \-             \-         \-         0          0          0          0

  Argentina      T          \-             \-         \-         0          0          0          0

  Colombia       T          \-             \-         \-         0          0          0          0

  France         T          \-             \-         \-         0          0          0          -100

  Singapore      T          \-             \-         \-         0          0          0          -100

  South Africa   T          \-             1          \-         0          0.01       0          -100

  Switzerland    T          \-             \-         \-         0          0          0          0
  -------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------

# 

  ---------- -------------- ----------- --------------------- ----------- ----------
                                        **World Trade Atlas**             

                                        **Product Group**                 

                                        **Hong Kong Beef                  
                                        Re-Exports**                      

                                        **Quantity**                      

                                                                          

  ** **      ** **          ** **       **January -           ** **       ** **
                                        November**                        

                                                                          **%
                                                                          Change**

  **Rank**   **Origin**     **- KG -    **- KG - 2003**       **- KG -    **- 04/03
                            2002**                            2004**      -**

  0          -The World-    9,226,134   7,909,884             3,694,551   -53.29

  1          Brazil         1,328,476   904,893               1,193,171   31.86

  2          New Zealand    382,489     538,091               1,019,848   89.53

  3          India          235,880     603,348               308,652     -48.84

  4          Ireland        1,176,034   757,285               244,224     -67.75

  5          United States  5,442,198   3,978,733             238,959     -93.99

  6          Canada         77,647      98,181                194,300     97.9

  7          Argentina      \-          507,536               159,270     -68.62

  8          Other          583,410     521,817               336,127     -35.59%
  ---------- -------------- ----------- --------------------- ----------- ----------

#  

# 

  ---------- -------------- ----------- --------------------- ----------- ----------
                                        **World Trade Atlas**             

                                        **Product Group**                 

                                        **Hong Kong Beef                  
                                        Re-Exports**                      

                                        **Quantity**                      

                                                                          

  ** **      ** **          ** **       **January -           ** **       ** **
                                        December**                        

                                                                          **%
                                                                          Change**

  **Rank**   **Origin**     **- KG -    **- KG - 2002**       **- KG -    **- 03/02
                            2001**                            2003**      -**

  0          -The World-    5,460,652   11,099,653            8,663,393   -21.95

  1          United States  3,327,678   6,521,817             4,284,930   -34.3

  2          Brazil         403,516     1,350,331             941,257     -30.29

  3          Ireland        207,096     1,274,515             905,249     -28.97

  4          India          329,997     235,880               715,800     203.46

  5          New Zealand    406,545     996,919               602,173     -39.6

  6          Argentina      80,946      \-                    507,536     0

  7          Australia      378,387     291,165               213,648     -26.62

  8          Canada         198,825     77,647                123,201     58.67

  9          Other          127,662     351,379               369,599     5.19%
  ---------- -------------- ----------- --------------------- ----------- ----------

# 

  -------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------
  China Export                                                                                    
  Statistics                                                                                      

  UDG: Live                                                                                       
  Cattle, HS                                                                                      
  0102                                                                                            

  Year To Date:                                                                                   
  January -                                                                                       
  November                                                                                        

  **Partner      **Unit**   **Quantity**                         **%                              **% Change**
  Country**                                                      Share**                          

                            **2002**       **2003**   **2004**   **2002**   **2003**   **2004**   **2004/2003**

  World          NO         50,716         44,838     54,129     100        100        100        20.72

  Hong Kong      NO         44,224         39,662     42,937     87.2       88.46      79.32      8.26

  Jordan         NO         \-             \-         6,000      0          0          11.08      0

  Macau          NO         4,768          4,629      4,838      9.4        10.32      8.94       4.52

  Korea North    NO         17             449        330        0.03       1          0.61       -26.5

  Myanmar        NO         674            \-         24         1.33       0          0.04       0

  Thailand       NO         \-             98         \-         0          0.22       0          -100

  Malaysia       NO         1,033          \-         \-         2.04       0          0          0
  -------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------

  ------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------
  China Export                                                                                   
  Statistics                                                                                     

  UDG: Live                                                                                      
  Cattle, HS                                                                                     
  0102                                                                                           

  Year Ending:                                                                                   
  December                                                                                       

  **Partner     **Unit**   **Quantity**                         **%                              **% Change**
  Country**                                                     Share**                          

                           **2001**       **2002**   **2003**   **2001**   **2002**   **2003**   **2003/2002**

  World         NO         57,171         58,280     50,645     100        100        100        -13.1

  Hong Kong     NO         50,674         49,163     44,929     88.64      84.36      88.71      -8.61

  Macau         NO         5,174          5,335      5,169      9.05       9.15       10.21      -3.11

  Korea North   NO         1,323          17         449        2.31       0.03       0.89       2541.18

  Thailand      NO         \-             \-         98         0          0          0.19       0

  Malaysia      NO         \-             3,091      \-         0          5.3        0          -100

  Myanmar       NO         \-             674        \-         0          1.16       0          -100
  ------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------

  ----------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------
  China Export                                                                                       
  Statistics                                                                                         

  UDG: Beef and                                                                                      
  Veal,                                                                                              

  Year To Date:                                                                                      
  January -                                                                                          
  November                                                                                           

  **Partner         **Unit**   **Quantity**                         **%                              **% Change**
  Country**                                                         Share**                          

                               **2002**       **2003**   **2004**   **2002**   **2003**   **2004**   **2004/2003**

  World             T          23,785         22,406     31,838     100        100        100        42.09

  Hong Kong         T          12,856         12,703     14,166     54.05      56.69      44.49      11.52

  Japan             T          3,062          4,611      7,459      12.87      20.58      23.43      61.75

  Korea South       T          1,653          1,482      2,794      6.95       6.62       8.77       88.48

  Russia            T          1,726          591        1,435      7.26       2.64       4.51       142.91

  Kuwait            T          483            266        1,404      2.03       1.19       4.41       426.89

  Malaysia          T          1,087          929        1,110      4.57       4.15       3.49       19.49

  Indonesia         T          828            948        868        3.48       4.23       2.73       -8.44

  United Arab       T          568            393        665        2.39       1.75       2.09       69.25
  Emirates                                                                                           

  Jordan            T          \-             10         483        0          0.04       1.52       4687.6

  Korea North       T          172            87         461        0.72       0.39       1.45       431.01

  Lebanon           T          36             12         363        0.15       0.05       1.14       2975.37

  Singapore         T          98             87         129        0.41       0.39       0.41       48.04

  Macau             T          54             61         101        0.23       0.27       0.32       65.43

  Other             T          1,163          226        401        4.89       1          1.25       -483.67
  ----------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------

  --------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------
  UDG: Beef and                                                                                    
  Veal,                                                                                            

  Year Ending:                                                                                     
  December                                                                                         

  **Partner       **Unit**   **Quantity**                         **%                              **% Change**
  Country**                                                       Share**                          

                             **2001**       **2002**   **2003**   **2001**   **2002**   **2003**   **2003/2002**

  World           T          37,884         26,764     25,797     100        100        100        -3.61

  Hong Kong       T          16,716         14,390     14,014     44.12      53.77      54.32      -2.61

  Japan           T          5,510          3,768      5,385      14.54      14.08      20.87      42.91

  Korea South     T          1,777          1,903      1,704      4.69       7.11       6.61       -10.45

  Russia          T          1,658          1,812      1,169      4.38       6.77       4.53       -35.48

  Indonesia       T          728            947        1,098      1.92       3.54       4.26       15.9

  Malaysia        T          1,021          1,154      1,014      2.7        4.31       3.93       -12.07

  United Arab     T          310            632        509        0.82       2.36       1.97       -19.48
  Emirates                                                                                         

  Kuwait          T          767            509        363        2.03       1.9        1.41       -28.57

  Korea North     T          456            196        105        1.2        0.73       0.41       -46.26

  Singapore       T          134            135        105        0.35       0.5        0.41       -21.81

  Macau           T          171            71         79         0.45       0.26       0.31       11.28

  Nigeria         T          \-             38         75         0          0.14       0.29       100

  Brunei          T          18             19         62         0.05       0.07       0.24       231.67
  Darussalam                                                                                       

  Other           T          8,620          1,190      115        22.73      4.47       0.44       -90.16
  --------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------

  ---------------- -------- -------- -------- ----------------------------
  CHINA\'S RETAIL                             
  BEEF PRICES ON                              
  AVERAGE                                     

  (RMB/KG, USD                                
  1=8.27)                                     

                   2002     2003     2004     \% Change 2004/03

  January          14.00    15.26    16.35    7.14%

  February         14.00    15.29    16.18    5.82%

  March            14.21    15.03    16.24    8.05%

  April            13.72    15.02    16.28    8.39%

  May              13.91    15.91    16.32    2.58%

  June             13.96    15.08    16.36    8.49%

  July             13.94    15.04    16.36    8.78%

  August           14.16    15.07    16.54    9.75%

  September        14.25    15.26    16.71    9.50%

  October          14.29    15.43    16.81    8.94%

  November         14.70    15.87    16.87    6.30%

  December         14.77    15.97    16.93    6.01%

  Source: The                                 
  Ministry of                                 
  Agriculture                                 
  ---------------- -------- -------- -------- ----------------------------

# Swine and Pork

## China's swine and pork production forecast to rise in 2005

China's pork production for 2005 is forecast to increase 4.8 percent
from 47.3 MMT in 2004 to 49.6 MMT, slightly up from the previous
forecast of 4.5 percent in the 2004 annual report. Post also adjusted
upwards the pig crop production numbers in the PSD table from the
previous forecast of 619 million head to 651 million head, and for 2004
from the previous forecast of 608 million head to 624 million head,
based on NSB recently published 2003 slaughter and average carcass
weight numbers.

A reversal of the downward trend for pork's share of total meat
production continued during 2004 driven by higher swine and pork prices.
According to MOA data, the average wholesale pork price in 2004 was
\$1.61 per kg, up 16 percent from a year ago. The average retail pork
price in 2004 was \$1.64 per kg, up 29 percent from 2003. Hog prices on
average in 2004 climbed 45 percent.

China's swine and grain conversion in the third quarter of 2004 was
1:6.49 (i.e., the price of 1 kg of hog compared with 1 kg of corn) well
above the profitable ratio of 1:5.5, encouraging farmers to increase
sows numbers. The sow ratio (i.e., the number of sows in the swine
population) in 2005 is forecast at 9.8 percent of total pig inventory,
slightly higher than the previous year. China's desire ratio is 8
percent. These factors would lead to pork production increases
continuing in 2005 at least at the same pace of 2004.

China's pork production increase is not the result of increased carcass
weight, but a higher ratio of swine slaughtered**.** China's average
pork carcass weight in 2005 is forecast to remain 76 kg as in the
previous year. It is about 12 kg lower than the average carcass weight
in the US. More use of protein feed has resulted in shortening swine
fattening period.

## Scale of China's swine operations expanding

Although small-sized pig farms still account for a larger part of swine
production, backyard production has been decreasing, while commercial
and scale production has been expanding. Provinces have different
definitions of the scale of commercial farms. For example, Sichuan
Province, the largest swine province, considers a farm with 100 head,
instead of 50 head in the past, a large-scale farm. Generally, 50-head
size is considered a professional commercial farm. (See the table on
page 17 for a picture of the scale of China's swine industry.) The trend
of larger sized operations with better efficiency will continue in 2005.

China's pork share will reduce from 65 percent in 2005 to 63 percent in
2010. However, it is hard to say and the progress will also very slow.
Pork is still the main meat for China, especially in the countryside.

## Increased pressure on small-scale swine farmers

Due to chronic low efficiency and profitability, many Chinese farmers
are abandoning pig culture in their backyards. Increased production
costs, such as feed grains, stricter land use laws, higher requirements
of environmental protection and disease control, have driven many
farmers away from swine production. Also, new employment has made it
possible for rural labors to move into urban areas.

The rising price of pork is the only factor encouraging small-scale
farmers to remain in the business. After the SARS outbreak in 2003 and
AI in 2004, many Chinese consumers switched to pork. This increased
demand helped push pork prices further up. In 2004, China's swine and
pork prices were high throughout the year. Farmer net earnings per swine
were RMB 200-250 in 2004, RMB 50 more than the previous year.

Pork prices in China are forecast to stabilize in 2005. One reason is
government policies may constrain rises in swine and pork prices. In
2004, the Government' started providing direct cash subsidies to grain
farmers that reversed the trend of grain decreases. Further, during
2004, 22 provinces out of 31 phased out agricultural taxes. The swine
slaughter tax on farmers was also cancelled. These tax policies and
larger grain crops are expected to help stabilize feed grain prices,
thus benefiting swine and pork production. Further, high meat prices
have impacted low-income consumers. The government resumed state
reserves of live animals---subsequently sold on the market\--in 2004.
MOFCOM has published a recommended standard of live animal producing
bases for state meat reserve. All these factors will constrain pork
prices.

## Swine genetic improvements---continued export opportunity for US suppliers

According to the industry, China's high quality, lean pork swine of the
total slaughtered comprises only 25-30 percent. Most swine varieties at
backyards or small farms are not high yielding, resulting in low
productivity. Per capita sow produces 1.7 litters a year with a survival
of only 70-85 percent, while in the US per capita sow produces 2.3
litters with a survival of 95 percent. As living standards improve,
Chinese consumers are demanding healthier, leaner pork products. The US
surpassed Canada to become the largest supplier to China in 2004. This
potential could continue in 2005, because FMD diseases in some parts of
the world have constrained their exports.

## Increased use of compound feed benefits China's swine industry

The MOA estimates China's compound feed production in 2005 at 80-100
million MT, concentrated feed at 15-18 MMT and premix feed at 3-5 MMT.
After the AI outbreaks and drop in feed demand from the poultry sector
ended in March 2004, China's feed production recovered quickly to
compensate for the production losses during the AI period. China's
average annual feed production increased 20.95 percent during 1980-2003.

The current compound feed use ratios in China among the poultry, swine,
fishery and ruminant sectors are 52%, 31%, 11% and 6%, respectively.
Large-scale and commercial farms prefer to use compound feed. Feed and
pork conversion has changed from 3.3:1 from ten years ago to 3.0:1. The
swine-fattening period has been shorted to about 40 days.

According to the feed industry, corn usage in feed accounts for 60-70
percent for fattening swine. Of the other 30 percent, soy meal accounts
for 70 percent, cotton and rape meal accounts for 20 percent, and wheat
and fish meal accounts for 10 percent. Given the fact that China is
short of feed protein resources, 70 percent of soybeans for soil meal
production, 70 percent of fish meal and 50 percent of lysine supplies
must be imported. Good swine production and constraint domestic feed
protein supply will translate into continued large imports of soybean
and soy meal during 2005 and beyond.

## Pork consumption forecast 4.8 percent up from 47 to 49 million MT in 2005

Post adjusted China's pork consumption forecast for 2005 in the PSD
table slightly up from 47.19 million MT, in the previous annual
livestock report, to 49.26 million MT based on higher expectation of
pork production. The year-on-year change in 2004 was because pork
consumption substituted for poultry meat during the AI outbreak period.
As poultry consumption is still fragile due to potential risks of
further AI outbreaks, pork consumption will continue to be strong in
2005.

## Total pork imports in 2004 fell slightly due to AI impact, but US exports rose over 100 percent, and the forecast for 2005 is continued growth

Post revised China's pork import number in the PSD table from 152,000 MT
in to 138,000 MT for 2004, and from 138,000 MT to 136,000 MT for 2005.
The reason is due to re-adding Hong Kong re-exports to China.
Previously, Hong Kong re-exports were unavailable when the PSD table was
done for the previous annual report.

Overall, China's pork imports fell in 2004 due to increased domestic
pork production, stronger import demand for pork variety meats and the
impact of avian influenza (i.e., issuance of import permits and
transportation slowdowns). The sharp increase in pork variety meat
imports in 2004, despite higher prices, was due to consumer demand and
China's need to substitute reduced beef and poultry supplies as a result
of BSE and avian influenza factors.

To more accurately calculate US pork exports to China in 2004, FAS
Beijing switched to US export statistics (instead of China's reported
imports) and added Hong Kong re-exports of pork to the Mainland. The
reason for the change is because the 50 percent drop in imports of US
pork (e.g., from 59,900 MT to 29,003 MT), as reported by China's 2004
import statistics, is not realistic. In fact, according to US trade
sources, US exports to China have increased significantly. One plausible
explanation for the dramatic decline is China's aggressive crackdown on
smuggled meat and poultry products; as a result, a significant volume of
pork reported as US pork in the 2004 is likely other countries' product
labeled as US pork. To further justify post's change to the US export
figure, China's reported pork import figure for 2004, 29,003 MT,
approaches the US export figure, 25,181.

## China's new meat regulation (No. 49) encourages pork trade towards the Mainland

On November 1, 2004 AQSIQ implemented a new meat import regulation, No.
49 Announcement (see GAIN report CH4016). The new measures, aimed to
reduce imported meat smuggling, stipulate how authorities inspect and
clear these products. One important provision is that all meat
transshipped through Hong Kong must be pre-inspected and sealed by the
China Hong Kong Inspection Company before entering the Mainland or
bonded warehouses. According to the trade, this pre-inspection procedure
lasts about 40 minutes.

The No. 49 Announcement also requires inner labeling to state both
establishment number and product names. In response to FAS Beijing
requests, AQSIQ agreed to give US packers a one-month grace period to
enable trade of US pork products as long as they were shipped before
December 1. AQSIQ also agreed to accept a loose inner labeling instead
of a printed-on labeling on inner plastic bags. Finally, AQSIQ agreed to
accept a single language (English) instead of a bilingual inner box
label.

China's reported efforts to crackdown on smuggling have significantly
impacted the trade picture. According to US export data during the first
11 months of 2004, the Chinese customs data only exaggerated 4,000 MT of
US direct exports to China, a much smaller gap compared to 64,000 MT in
2003 and 34,000 MT in 2002. As a result, the difficulty of re-exporting
pork through Hong Kong is having the Chinese Government's desired affect
of shifting pork trade directly to the Mainland.

## China's pork exports forecast to increase 12 percent in 2005

Post forecasts China's pork exports for 2005 will increase 12 percent
from 399,000 MT to 455,000 MT due to stronger demand in destination
markets. Hong Kong will continue to be the largest destination market.
China's year on year exports to Hong Kong in 2004 increased over 10
percent. Other import destination markets include North Korea, Russia,
Japan, Singapore and Malaysia. North Korea has replaced Russia to become
China's second largest export market due to Russia's import quota
restriction.

Part of the driving factor could be the need in the destination markets
to substitute their smaller imports of beef from North America. China's
agricultural tax elimination, the short and economical transportation
distances could make China's exports even more competitive.

  -------------- ----------------- ------------ --------------------- ------------
  National Swine                                                      
  Size of Farm                                                        
  and                                                                 
  Slaughtered                                                         
  Pig for 2002                                                        

  Slaughtered    No. of Farms      （%）Share   Total                 （%）Share
                                                Slaughtered(1,000)    

  1～9           99,894,369        94.806       338,588               55.51

  10～49         4,438,302         4.212        105,344               17.27

  50～99         790,307           0.750        53,637                8.79

  100～499       212,909           0.202        51,651                8.47

  500～2999      27,495            0.026094     29,363                4.81

  3000～9999     3,242             0.003077     16,432                2.69

  10000～49999   862               0.000818     12,838                2.11

  above 50000    28                0.000027     20,584                0.34

                 105,367,514       100          609,914               100
  -------------- ----------------- ------------ --------------------- ------------

  -------------- ---------------- ------------ ---------------------- ------------
  National Swine                                                      
  Size of Farm                                                        
  and                                                                 
  Slaughtered                                                         
  Pig for 2003                                                        

  Slaughtered    No. of Farms     （%）Share   Total                  （%）Share
                                               Slaughtered(1,000)     

  1～9           101,963,901      94.483       347,731                52.867

  10～49         4,815,474        4.462        120,945                18.388

  50～99         851,429          0.789        58,999                 8.970

  100～499       249,016          0.231        59,639                 9.067

  500～2999      33,844           0.031        36,477                 5.546

  3000～9999     3,388            0.003139     17,420                 2.648

  10000～49999   911              0.000844     14,181                 2.156

  above 50000    30               0.000028     2,358                  0.359

                 107,917,993      100          657,750                100
  -------------- ---------------- ------------ ---------------------- ------------

#  PSD\--Swine

  ---------------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------
  **PSD Table**                                                                                

  **Country**      **China,                                                                    
                   Peoples                                                                     
                   Republic                                                                    
                   of**                                                                        

  **Commodity**    **Animal                                    (1000                           
                   Numbers,                                    HEAD)                           
                   Swine**                                                                     

                   2003       Revised    2004       Estimate   2005       Forecast   UOM       

                   USDA       Post       USDA       Post       USDA       Post                 
                   Official   Estimate   Official   Estimate   Official   Estimate             
                   \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]              

  **Market Year               01/2003               01/2004               01/2005    MM/YYYY   
  Begin**                                                                                      

  TOTAL Beginning  462915     462915     466017     466017     470410     469279     (1000     
  Stocks                                                                             HEAD)     

  Sow Beginning    44550      44550      45350      45350      45800      46166      (1000     
  Stocks                                                                             HEAD)     

  Production (Pig  597814     597814     608500     624181     619480     651384     (1000     
  Crop)                                                                              HEAD)     

  Intra EC Imports 0          0          0          0          0          0          (1000     
                                                                                     HEAD)     

  Total Imports    2          2          2          3          2          3          (1000     
                                                                                     HEAD)     

  TOTAL Imports    2          2          2          3          2          3          (1000     
                                                                                     HEAD)     

  TOTAL SUPPLY     1060731    1060731    1074519    1090201    1089892    1120666    (1000     
                                                                                     HEAD)     

  Intra EC Exports 0          0          0          0          0          0          (1000     
                                                                                     HEAD)     

  Total Exports    1887       1887       1800       1950       1800       1950       (1000     
                                                                                     HEAD)     

  TOTAL Exports    1887       1887       1800       1950       1800       1950       (1000     
                                                                                     HEAD)     

  Sow Slaughter    0          0          0          0          0          0          (1000     
                                                                                     HEAD)     

  OTHER SLAUGHTER  592005     592005     601395     618058     609215     645252     (1000     
                                                                                     HEAD)     

  Total Slaughter  592005     592005     601395     618058     609215     645252     (1000     
                                                                                     HEAD)     

  Loss             822        822        914        914        900        900        (1000     
                                                                                     HEAD)     

  Ending           466017     466017     470410     469279     477977     472564     (1000     
  Inventories                                                                        HEAD)     

  TOTAL            1060731    1060731    1074519    1090201    1089892    1120666    (1000     
  DISTRIBUTION                                                                       HEAD)     

  Calendar Yr.     0          0          0          0          0          1          (1000     
  Imp. from U.S.                                                                     HEAD)     

  Calendar Yr.     0          0          0          0          0          0          (1000     
  Exp. to U.S.                                                                       HEAD)     
  ---------------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------

# PSD\--Pork

  ---------------- ---------- ---------- ---------- ---------- ----------- ---------- --------- -------
  **PSD Table**                                                                                 

  **Country**      **China,                                                                     
                   Peoples                                                                      
                   Republic                                                                     
                   of**                                                                         

  **Commodity**    **Meat,                                     (1000 MT                         
                   Swine**                                     CWE)(1000                        
                                                               HEAD)                            

                   2003       Revised    2004       Estimate   2005        Forecast   UOM       

                   USDA       Post       USDA       Post       USDA        Post                 
                   Official   Estimate   Official   Estimate   Official    Estimate             
                   \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]     \[New\]              

  **Market Year               01/2003               01/2004                01/2005    MM/YYYY   
  Begin**                                                                                       

  Slaughter        592005     592005     601395     618058     609215      645252     (1000     
  (Reference)                                                                         HEAD)     

  Beginning Stocks 0          0          0          0          0           0          (1000 MT  
                                                                                      CWE)      

  Production       45186      45186      47170      47350      47500       49675      (1000 MT  
                                                                                      CWE)      

  Intra EC Imports 0          0          0          0          0           0          (1000 MT  
                                                                                      CWE)      

  Total Imports    149        152        155        138        122         136        (1000 MT  
                                                                                      CWE)      

  TOTAL Imports    149        152        155        138        122         136        (1000 MT  
                                                                                      CWE)      

  TOTAL SUPPLY     45335      45338      47325      47488      47622       49811      (1000 MT  
                                                                                      CWE)      

  Intra EC Exports 0          0          0          0          0           0          (1000 MT  
                                                                                      CWE)      

  Total Exports    282        362        330        400        400         450        (1000 MT  
                                                                                      CWE)      

  TOTAL Exports    282        362        330        400        400         450        (1000 MT  
                                                                                      CWE)      

  Human Dom.       45053      44976      46995      47088      47188       49361      (1000 MT  
  Consumption                                                                         CWE)      

  Other Use,       0          0          0          0          0           0          (1000 MT  
  Losses                                                                              CWE)      

  TOTAL Dom.       45053      44976      46995      47088      47188       49361      (1000 MT  
  Consumption                                                                         CWE)      

  Ending Stocks    0          0          0          0          0           0          (1000 MT  
                                                                                      CWE)      

  TOTAL            45335      45338      47325      47488      47588       49811      (1000 MT  
  DISTRIBUTION                                                                        CWE)      

  Calendar Yr.     78         78         45         45         45          45         (1000 MT  
  Imp. from U.S.                                                                      CWE)      

  Calendar Yr.     0          0          0          0          0           0          (1000 MT  
  Exp. to U.S.                                                                        CWE)      
  ---------------- ---------- ---------- ---------- ---------- ----------- ---------- --------- -------

  -------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------
  China Import                                                                                    
  Statistics                                                                                      

  UDG: Swine,                                                                                     

  Year To Date:                                                                                   
  January -                                                                                       
  November                                                                                        

  **Partner      **Unit**   **Quantity**                         **%                              **% Change**
  Country**                                                      Share**                          

                            **2002**       **2003**   **2004**   **2002**   **2003**   **2004**   **2004/2003**

  World          NO         936            1,355      1,748      100        100        100        29

  United States  NO         231            \-         690        24.68      0          39.47      0

  Denmark        NO         417            272        578        44.55      20.07      33.07      112.5

  Canada         NO         \-             1,083      480        0          79.93      27.46      -55.68

  France         NO         288            \-         \-         30.77      0          0          0
  -------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------

  -------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------
  China Import                                                                                    
  Statistics                                                                                      

  UDG: Swine,                                                                                     

  Year Ending:                                                                                    
  December                                                                                        

  **Partner      **Unit**   **Quantity**                         **%                              **% Change**
  Country**                                                      Share**                          

                            **2001**       **2002**   **2003**   **2001**   **2002**   **2003**   **2003/2002**

  World          NO         1,256          1,163      1,797      100        100        100        54.51

  Canada         NO         164            \-         1,083      13.06      0          60.27      0

  United States  NO         461            231        442        36.7       19.86      24.6       91.34

  Denmark        NO         490            644        272        39.01      55.37      15.14      -57.76

  France         NO         \-             288        \-         0          24.76      0          -100

  Sweden         NO         141            \-         \-         11.23      0          0          0
  -------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------

  ------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------
  China Import                                                                                   
  Statistics                                                                                     

  UDG: Pork,                                                                                     

  Year To Date:                                                                                  
  January -                                                                                      
  November                                                                                       

  **Partner     **Unit**   **Quantity**                         **%                              **% Change**
  Country**                                                     Share**                          

                           **2002**       **2003**   **2004**   **2002**   **2003**   **2004**   **2004/2003**

  World         T          140,298        119,552    68,280     100        100        100        -42.89

  United States T          105,406        59,900     29,003     75.13      50.1       42.48      -51.58

  Canada        T          33,813         29,729     22,465     24.1       24.87      32.9       -24.43

  Denmark       T          797            29,857     16,684     0.57       24.97      24.43      -44.12

  Other         T          282            67         126        0.2        0.06       0.18       200
  ------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------

  ------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------
  China Import                                                                                   
  Statistics                                                                                     

  UDG: Pork,                                                                                     

  Year Ending:                                                                                   
  December                                                                                       

  **Partner     **Unit**   **Quantity**                         **%                              **% Change**
  Country**                                                     Share**                          

                           **2001**       **2002**   **2003**   **2001**   **2002**   **2003**   **2003/2002**

  World         T          94,357         144,979    149,117    100        100        100        2.85

  United States T          39,560         108,220    77,642     41.93      74.65      52.07      -28.26

  Denmark       T          17,733         1,471      37,505     18.79      1.01       25.15      2449.27

  Canada        T          22,249         35,002     33,897     23.58      24.14      22.73      -3.16

  Other                    14,799         272        72         15.67      0.18       0.05       -72.22
  ------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------

  ---------- ------------ ----------- -------------------- --------------- ----------
                                      **World Trade                        
                                      Atlas**                              

                                      **Product Group**                    

                                      **Hong Kong Beef                     
                                      Re-Exports to                        
                                      China**                              

                                      **Quantity**                         

  ** **      ** **        ** **       **January -          ** **           ** **
                                      November**                           

                                                                           **%
                                                                           Change**

  **Rank**   **Origin**   **- KG -    **- KG - 2003**      **- KG - 2004** **- 04/03
                          2002**                                           -**

  0          -The World-  9,226,134   7,909,884            3,694,551       -53.29

  1          Brazil       1,328,476   904,893              1,193,171       31.86

  2          New Zealand  382,489     538,091              1,019,848       89.53

  3          India        235,880     603,348              308,652         -48.84

  4          Ireland      1,176,034   757,285              244,224         -67.75

  5          United       5,442,198   3,978,733            238,959         -93.99
             States                                                        

  6          Canada       77,647      98,181               194,300         97.9

  7          Argentina    \-          507,536              159,270         -68.62

  8          Iran         \-          81,540               103,042         26.37

  9          Indonesia    \-          \-                   100,000         0

  10         Germany, Fed 151,146     56,585               53,813          -4.9
             Rep                                                           

  11         Australia    262,531     201,521              27,289          -86.46

  12         Denmark      \-          \-                   25,000          0

  13         Other        169,733     182,171              26,983          -85.19%
  ---------- ------------ ----------- -------------------- --------------- ----------

  ---------- ------------- ------------ ------------------------- ------------ ----------
                                        **World Trade Atlas**                  

                                        **Product Group**                      

                                        **Hong Kong Pork                       
                                        Re-Exports to China**                  

                                        **Quantity**                           

                                                                               

  ** **      ** **         ** **        **January - December**    ** **        ** **

                                                                               **%
                                                                               Change**

  **Rank**   **Origin**    **- KG -     **- KG - 2002**           **- KG -     **- 03/02
                           2001**                                 2003**       -**

  0          -The World-   36,038,165   34,677,750                54,397,401   56.87

  1          Germany, Fed  8,658,581    11,430,707                15,507,839   35.67
             Rep                                                               

  2          Denmark       6,774,808    3,187,838                 8,917,643    179.74

  3          Canada        6,496,788    6,340,206                 8,679,804    36.9

  4          Spain         732,643      964,794                   4,262,814    341.84

  5          Brazil        1,396,468    3,067,793                 3,608,435    17.62

  6          United States 2,733,834    2,396,535                 3,055,991    27.52

  7          Netherlands   3,263,293    1,657,761                 3,035,825    83.13

  8          France        1,133,827    1,736,079                 2,078,837    19.74

  9          Belgium       \-           \-                        1,550,052    0

  10         Ireland       469,905      405,838                   1,047,618    158.14

  11         United        374,715      674,581                   763,891      13.24
             Kingdom                                                           

  12         Other         32,034,862   31,862,132                52,508,749   64.80%
  ---------- ------------- ------------ ------------------------- ------------ ----------

  ------------ ---------- -------------- ----------- ----------- ---------- ---------- ---------- ---------------
  China Export                                                                                    
  Statistics                                                                                      

  UDG: Swine,                                                                                     

  Year To                                                                                         
  Date:                                                                                           
  January -                                                                                       
  November                                                                                        

  **Partner    **Unit**   **Quantity**                           **%                              **% Change**
  Country**                                                      Share**                          

                          **2002**       **2003**    **2004**    **2002**   **2003**   **2004**   **2004/2003**

  World        NO         1,717,179      1,692,053   1,795,843   100        100        100        6.13

  Hong Kong    NO         1,604,718      1,581,403   1,686,374   93.45      93.46      93.9       6.64

  Macau        NO         110,708        109,947     109,284     6.45       6.5        6.09       -0.6

  Other        NO         1,753          703         185         0.11       0.04       0          -1
  ------------ ---------- -------------- ----------- ----------- ---------- ---------- ---------- ---------------

  ------------ ---------- -------------- ----------- ----------- ---------- ---------- ---------- ---------------
  China Export                                                                                    
  Statistics                                                                                      

  UDG: Swine,                                                                                     

  Year Ending:                                                                                    
  December                                                                                        

  **Partner    **Unit**   **Quantity**                           **%                              **% Change**
  Country**                                                      Share**                          

                          **2001**       **2002**    **2003**    **2001**   **2002**   **2003**   **2003/2002**

  World        NO         1,972,595      1,888,606   1,887,295   100        100        100        -0.07

  Hong Kong    NO         1,837,537      1,766,326   1,764,935   93.15      93.53      93.52      -0.08

  Macau        NO         133,097        120,489     121,600     6.75       6.38       6.44       0.92

  Myanmar      NO         1,866          833         681         0.09       0.04       0.04       -18.25

  Korea North  NO         65             958         55          0          0.05       0          -94.26

  Other        NO         30             \-          24          0          0          0          0
  ------------ ---------- -------------- ----------- ----------- ---------- ---------- ---------- ---------------

  -------------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------
  China Export                                                                                          
  Statistics                                                                                            

  UDG: Pork,                                                                                            

  Year To Date:                                                                                         
  January - November                                                                                    

  **Partner Country**  **Unit**   **Quantity**                         **%                              **% Change**
                                                                       Share**                          

                                  **2002**       **2003**   **2004**   **2002**   **2003**   **2004**   **2004/2003**

  World                T          214,872        272,015    366,223    100        100        100        34.63

  Hong Kong            T          77,735         95,883     105,062    36.18      35.25      28.69      9.57

  Korea North          T          8,678          39,314     75,919     4.04       14.45      20.73      93.11

  Russia               T          68,904         63,524     64,117     32.07      23.35      17.51      0.93

  Japan                T          12,653         22,201     46,190     5.89       8.16       12.61      108.06

  Singapore            T          14,813         14,566     18,904     6.89       5.35       5.16       29.79

  Malaysia             T          9,784          12,682     13,070     4.55       4.66       3.57       3.06

  Moldova              T          \-             2,426      8,458      0          0.89       2.31       248.71

  Philippines          T          10,090         6,595      7,255      4.7        2.42       1.98       10.01

  Ukraine              T          25             25         6,841      0.01       0.01       1.87       ∞

  Macau                T          2,879          3,712      3,977      1.34       1.36       1.09       7.16

  Albania              T          1,682          1,941      3,283      0.78       0.71       0.9        69.12

  Indonesia            T          1,761          1,840      2,236      0.82       0.68       0.61       21.53

  Korea South          T          321            1,122      1,847      0.15       0.41       0.5        64.59

  Other                T          5,549          6,187      9,067      2.59       2.27       2.44       7.00
  -------------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------

  --------------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------
  China Export                                                                                           
  Statistics                                                                                             

  UDG: Pork,                                                                                             

  Year Ending: December                                                                                  

  **Partner Country**   **Unit**   **Quantity**                         **%                              **% Change**
                                                                        Share**                          

                                   **2001**       **2002**   **2003**   **2001**   **2002**   **2003**   **2003/2002**

  World                 T          171,541        236,213    305,137    100        100        100        29.18

  Hong Kong             T          76,631         85,748     105,010    44.67      36.3       34.41      22.46

  Russia                T          26,491         75,588     70,959     15.44      32         23.25      -6.12

  Korea North           T          5,116          9,012      46,883     2.98       3.82       15.36      420.22

  Japan                 T          11,797         14,197     25,593     6.88       6.01       8.39       80.28

  Singapore             T          19,112         16,345     16,489     11.14      6.92       5.4        0.88

  Malaysia              T          10,196         10,983     14,225     5.94       4.65       4.66       29.52

  Philippines           T          6,418          10,983     7,003      3.74       4.65       2.3        -36.24

  Macau                 T          3,097          3,257      4,157      1.81       1.38       1.36       27.63

  Moldova               T          64             \-         2,451      0.04       0          0.8        0

  Albania               T          1,480          1,832      2,266      0.86       0.78       0.74       23.69

  Indonesia             T          1,600          1,950      2,027      0.93       0.83       0.66       3.97

  Korea South           T          309            372        1,246      0.18       0.16       0.41       235.03

  Lebanon               T          594            911        736        0.35       0.39       0.24       -19.16

  Other                 T          8,639          5,035      6,091      5.01       2.09       1.96       -6.22%
  --------------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------------

  ---------------- -------- -------- -------- -----------------------------
  CHINA\'S RETAIL                             
  HOG PRICES ON                               
  AVERAGE (2002 -                             
  2004)                                       

  (RMB/KG, USD 1 =                            
  8.27)                                       

                   2002     2003     2004     \% Change 2004/03

  January          6.26     6.11     7.58     24.06%

  February         6.26     5.83     7.57     29.85%

  March            5.99     5.83     7.84     34.48%

  April            5.58     5.74     8.24     43.55%

  May              5.54     5.59     8.27     47.94%

  June             5.57     5.75     8.64     50.26%

  July             5.57     6.03     8.87     47.10%

  August           5.73     6.31     9.24     46.43%

  September        5.85     6.88     9.59     39.39%

  October          5.91     6.94     9.41     35.59%

  November         6.02     7.53     8.87     17.80%

  December         6.08     7.54     8.86     17.51%

  Source: The                                 
  Ministry of                                 
  Agriculture                                 
  ---------------- -------- -------- -------- -----------------------------

  --------------- -------- -------- --------- ----------------------------
  CHINA\'S RETAIL                             
  PORK PRICES ON                              
  AVERAGE                                     

  (RMB/KG, USD                                
  1=8.27)                                     

                  2002     2003     2004      \% Change 2004/03

  January         11.00    10.50    12.44     18.48%

  February        11.00    10.50    12.30     17.14%

  March           10.33    10.04    12.65     26.00%

  April           9.77     9.92     13.07     31.75%

  May             9.76     9.68     13.16     35.95%

  June            9.97     9.86     13.73     39.25%

  July            9.74     10.15    14.10     38.92%

  August          10.01    8.22     14.72     79.08%

  September       10.11    11.03    15.21     37.90%

  October         10.18    11.56    15.08     30.45%

  November        10.29    12.41    14.48     16.68%

  December        10.26    12.43    14.24     14.56%

  Source: The                                 
  Ministry of                                 
  Agriculture                                 
  --------------- -------- -------- --------- ----------------------------

  ---------------- -------- -------- --------- ---------------------------
  CHINA\'S RETAIL                              
  PIGLET PRICES ON                             
  AVERAGE (2002 -                              
  2004)                                        

  (RMB/KG, USD 1 =                             
  8.27)                                        

                   2002     2003     2004      \% Change 2004/03

  January          8.70     7.75     9.36      20.77%

  February         8.70     7.75     9.89      27.61%

  March            8.95     7.96     10.98     37.94%

  April            7.88     7.98     11.78     47.62%

  May              7.57     7.60     11.83     55.66%

  June             8.04     7.76     12.77     64.56%

  July             7.47     7.98     13.49     69.05%

  August           7.61     8.22     14.60     77.62%

  September        7.73     10.45    15.75     50.72%

  October          7.83     8.95     15.40     72.07%

  November         7.79     9.25     14.13     52.76%

  December         7.69     9.14     13.61     48.91%
  ---------------- -------- -------- --------- ---------------------------

+----------------+-------+--------+--------+--------------------------+
| CHINA\'S       |       |        |        |                          |
| RETAIL PIGLET  |       |        |        |                          |
| PRICES ON      |       |        |        |                          |
| AVERAGE        |       |        |        |                          |
| (2002 - 2004)  |       |        |        |                          |
|                |       |        |        |                          |
| (RMB/KG, USD 1 |       |        |        |                          |
| = 8.27)        |       |        |        |                          |
+----------------+-------+--------+--------+--------------------------+
|                | 2002  | 2003   | 2004   | \% Change 2004/03        |
+----------------+-------+--------+--------+--------------------------+
| January        | 8.70  | 7.75   | 9.36   | 20.77%                   |
+----------------+-------+--------+--------+--------------------------+
| February       | 8.70  | 7.75   | 9.89   | 27.61%                   |
+----------------+-------+--------+--------+--------------------------+
| March          | 8.95  | 7.96   | 10.98  | 37.94%                   |
+----------------+-------+--------+--------+--------------------------+
| April          | 7.88  | 7.98   | 11.78  | 47.62%                   |
+----------------+-------+--------+--------+--------------------------+
| May            | 7.57  | 7.60   | 11.83  | 55.66%                   |
+----------------+-------+--------+--------+--------------------------+
| June           | 8.04  | 7.76   | 12.77  | 64.56%                   |
+----------------+-------+--------+--------+--------------------------+
| July           | 7.47  | 7.98   | 13.49  | 69.05%                   |
+----------------+-------+--------+--------+--------------------------+
| August         | 7.61  | 8.22   | 14.60  | 77.62%                   |
+----------------+-------+--------+--------+--------------------------+
| September      | 7.73  | 10.45  | 15.75  | 50.72%                   |
+----------------+-------+--------+--------+--------------------------+
| October        | 7.83  | 8.95   | 15.40  | 72.07%                   |
+----------------+-------+--------+--------+--------------------------+
| November       | 7.79  | 9.25   | 14.13  | 52.76%                   |
+----------------+-------+--------+--------+--------------------------+
| December       | 7.69  | 9.14   | 13.61  | 48.91%                   |
+----------------+-------+--------+--------+--------------------------+
| Source: The    |       |        |        |                          |
| Ministry of    |       |        |        |                          |
| Agriculture    |       |        |        |                          |
+----------------+-------+--------+--------+--------------------------+