Required Report - public distribution

**Date:** 2/1/2006

**GAIN Report Number:** CH6002

CH6002

**China, Peoples Republic of**

**Livestock and Products**

**Semi-Annual Report**

**2006**

**Approved by:**

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

U.S. Embassy Beijing, Office of Agricultural Affairs

**Prepared by:**

Casey Bean/Zhang Jianping

**Report Highlights:**

As the result of the highly pathogenic avian influenza (HPAI) outbreaks
in China and other parts of the world, Chinese beef demand increased in
2005 as consumers shifted from poultry to red meat. However, China\'s
ban on imported U.S. beef remains in place, though market access was
achieved for bovine semen/embryos and non-ruminant products (e.g.,
swine/poultry feeds, pet foods, etc.). Additionally, China\'s zero
tolerance for certain pathogens on pork, beef and poultry products
continue to impact trade. During 2006, China\'s pork production,
comprising over half of the world\'s total supply, is forecast to
increase 5 percent to 52 MMT, while beef production will rise 6.9
percent to 7.7 MMT. China\'s beef imports are not forecast to increase
in 2006, while pork imports will decrease 4 percent due to a surplus in
domestic supplies and low prices.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Semi-Annual Report

Beijing \[CH1\]

\[CH\]

Table of Contents

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

[U.S. Market Access Update---Approval for Non-Ruminant Feed and Bovine
Semen/Embryos
3](#u.s.-market-access-updateapproval-for-non-ruminant-feed-and-bovine-semenembryos)

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

[Beef production in 2006 forecast to increase 6.9 percent to 7.7 MMT
4](#beef-production-in-2006-forecast-to-increase-6.9-percent-to-7.7-mmt)

[Main developments and factors impacting China's beef production
4](#main-developments-and-factors-impacting-chinas-beef-production)

[New livestock law and potential impact on cattle imports
5](#new-livestock-law-and-potential-impact-on-cattle-imports)

[Beef consumption in 2006 forecast to increase 6.8 percent to 7.6 MMT
5](#beef-consumption-in-2006-forecast-to-increase-6.8-percent-to-7.6-mmt)

[Factors impacting China's live cattle and beef imports
5](#factors-impacting-chinas-live-cattle-and-beef-imports)

[Increased beef exports will compensate for decreased live cattle
exports
6](#increased-beef-exports-will-compensate-for-decreased-live-cattle-exports)

[PS&D tables for cattle and beef 8](#psd-tables-for-cattle-and-beef)

[Cattle and beef trade matrix 9](#cattle-and-beef-trade-matrix)

[Swine and Pork 12](#swine-and-pork)

[Changes in the pork PS&D table 12](#changes-in-the-pork-psd-table)

[Three year high-profit period ended, pace of growth in 2006 forecast
slow
12](#three-year-high-profit-period-ended-pace-of-growth-in-2006-forecast-slow)

[Factors impacting swine and pork production
12](#factors-impacting-swine-and-pork-production)

[Consumption forecast to increase 4 percent in 2006
13](#consumption-forecast-to-increase-4-percent-in-2006)

[Pork imports in 2006 forecast to decrease 4 percent to 48,000 MT
13](#pork-imports-in-2006-forecast-to-decrease-4-percent-to-48000-mt)

[China's zero tolerance for pathogens remains a trade irritant
13](#chinas-zero-tolerance-for-pathogens-remains-a-trade-irritant)

[Swine and pork exports in 2006 forecast to recover
14](#swine-and-pork-exports-in-2006-forecast-to-recover)

[PS&D tables for swine and pork 15](#psd-tables-for-swine-and-pork)

[Swine and pork trade matrix 17](#swine-and-pork-trade-matrix)

# Situation and Outlook

China's beef production for 2006 is forecast to increase 6.9 percent
from last year to 7.7 MMT due to strong demand and a consumption shift
from poultry to red meats because of health concern to the persistent
presence of HPAI in China and other countries. China's booming economic
growth has also resulted in greater investment in the cattle and beef
industry. Although beef prices remain relatively high, rising Chinese
consumer incomes has made these purchases possible. As a result, beef
consumption is forecast to increase 6 percent in 2006.

China's pork production, which comprises over half of the world's total,
is forecast to increase 4.7 percent to 52 MMT, but the pace of growth is
forecast smaller than that of 2005. Pork products comprise the majority
of the animal protein in the Chinese diet. In recent years, significant
profits have resulted in rapid production and supply increases, and
China's pork industry is expected to enter a stable and lower priced
period during 2006. This trend may translate into decreased imports in
2006.

On October 1, 2005, China implemented a regulation called the "Hygienic
Standard for Fresh (Frozen) Meat of Livestock" (GB 2705-2005). Although
the new standard does not address pathogen tolerances, Chinese officials
indicate a zero tolerance for pathogens existed previously based on the
"China Food Hygiene Law" announced on August 2, 2001 (see CH1042 dated
November 2, 2001).

China's beef imports are forecast to remain flat at 3,000 MT in 2006 in
part due to the BSE-related import ban on the United States and other
countries with BSE. If the ban were lifted, FAS Beijing believes that
the U.S. market potential could reach over \$600 million (see below).

Since January 2004, following China\'s ban on imported U.S. cattle and
bovine products (including beef), USDA has provided China a significant
amount of BSE and meat safety technical information, hosted two teams of
Chinese BSE experts and held bilateral animal health discussions. Though
China\'s ban on imported U.S. beef remains in place, market access was
achieved last year for bovine semen/embryos and non-ruminant products
(e.g., swine/poultry feeds, pet foods, etc.). During 2006, USDA will
continue efforts to re-open the Chinese market to U.S. beef.

Live cattle imports in 2006 are forecast to decrease 8 percent to 48,000
head due to import policy changes and higher international prices. Live
cattle exports are forecast to decrease 3.8 percent to 51,000 head due
to decreased demand in Hong Kong.

Pork imports are forecast to decrease 4 percent to 48,000 MT in 2006 due
to sufficient supplies and reduced pork prices. Pork exports in 2006 are
forecast to recover about 17.6 percent to 300,000 MT after the disease,
Streptococcus suis, is under control. Pork exports will continue to
expand in 2006 due to the uncertainties surrounding poultry and HPAI.

# U.S. Market Access Update---Approval for Non-Ruminant Feed and Bovine Semen/Embryos

## 

On July 11, 2005, the General Administration for Quality Supervision,
Inspection and Quarantine of People's Republic of China (AQSIQ)
announced (Decree No. 97) approval for 52 U.S. facilities to export
animal genetic products to China. Later in the year, Chinese quarantine
authorities visited the United States in order to audit and register the
establishments, eventually leading to the market re-opening. According
to the decree, 38 bovine embryo transfer centers, 10 bovine semen
collection centers and 4 swine semen collection centers have passed the
Chinese examination procedures and are eligible to export their products
to China.

To see the export requirements for these genetic materials, please refer
to the following website:
http://www.aphis.usda.gov/vs/ncie/iregs/animals/ch.html

Then, on November 28, 2005, AQSIQ approved imports of non-ruminant U.S.
pet food, porcine protein, rendered products (tallow) and spray-dried
porcine blood. USDA and Chinese officials continue to discuss access for
U.S. non-protein bovine tallow.

Prior to China's BSE-related trade suspension on U.S. cattle, beef and
products, U.S. exports of semen and embryos exceeded \$1 million.
Further, China tightened its import regulations to reduce misuse of
tariff-free breeding cows for commercial purpose. As the result of
China's shortage of genetic stocks to improve the dairy industry, FAS
Beijing forecasts excellent opportunities for imported U.S. bovine semen
and embryos.

During 2003, U.S. direct exports of beef and beef variety meats to China
totaled \$123.3 million; live cattle totaled \$1 million; bovine semen
totaled \$0.5 million; embryo totaled \$0.9 million; bovine hides and
skin totaled \$488 million; and tallow exports totaled \$22.6 million.

According to industry contacts, excellent opportunities exist for growth
in imports of pet food and pet care products. China's imports of these
products\--stemming from pet care products and dog and cat food
primarily in coastal China\--grew in value 14% between 1998 and 2003.
Pet shops dominate the retail distribution, followed by grocery stores.
Industry sources expect retail sales of pet products to reach almost \$1
billion in 2008.

# Cattle and Beef 

## Beef production in 2006 forecast to increase 6.9 percent to 7.7 MMT

Post forecasts Chinese beef production for 2006 at 7.7 MMT, a 6.9
percent increase from the estimated 7.2 MMT in 2005. Post revised
upwards Chinese beef production numbers for 2005 and 2006 in the beef
and veal PS&D table from the previous estimation (7.6 MMT, 6.4 percent
increase) in the last livestock annual report CH5063. The revision is
based on beef data from the Ministry of Agriculture (MOA) during January
to September 2005.

China is the world's fourth largest producer and third largest consumer
(volume-wise) of beef and beef products. However, per capita beef
consumption is only about 6 kilograms/year due to the huge population.
Domestic beef production in 2006 will continue to expand in response to
consumer preferences for red meat over poultry as the result of avian
influenza in China. The mild winter in 2005 resulted in reduced cattle
deaths and compensated for the culled cattle infected by foot and mouth
disease (FMD) and other diseases. China's integration of beef production
areas and major processing plants has helped improve both cost and
distribution efficiency.

## Main developments and factors impacting China's beef production

China's rapid GDP growth will spur investment and consumer demand for
beef during 2006. At the end of 2005, China recently revised its GDP
growth upwards 0.2 percent to 9.4 percent for 1979-2004, based on
China's first national economic census. The GDP growth for 2005 was 9.8
percent.

The Central Government's financial support for agriculture increased 17
percent each year, on average, during the last five years. More support
will be provided in the 11^th^ Five-Year-Plan (2006-2010). On January 1,
2006, the Chinese Government eliminated all agricultural taxes in all
provinces. As a result of this incentive to farmers, China's grain and
feed production is forecast to remain high. In recent years, a new type
of cattle production has emerged called "feeding quarters", where
farmers move their animals from backyards to standard farms built and
managed by large processing plants. The plants utilize standardized
feed, feeding technology and quarantine measures. The farmers pay low
prices for renting the facility, while the processors buy cattle from
those "feeding quarters". The integration of production and processing
has improved efficiency and quality. This type of integrated cattle
production will expand in 2006.

Only a small percentage of China's beef cattle are pure breeds. Thus,
increasing beef production in China will benefit from artificial
insemination to cross breed between local cattle and pure beef cattle.
Significant opportunities lie ahead for U.S. exporters of genetic
materials.

Last year China's livestock sector faced the challenge of FMD (see
description of 2005 situation in the previous report CH5063). Then on
January 14 and 16, 2006, two new outbreaks occurred in Ningxia Hui
Autonomous Region and Jiangsu Provinces, and authorities culled 189
cattle. Live cattle exports are estimated to drop 10 percent in 2005 and
are forecast to further drop about 4 percent in 2006 in part due to FMD
concerns of importing countries, according to the trade. FMD occurred in
some main cattle and beef production areas like Shangdong and Hebei
Provinces.

## New livestock law and potential impact on cattle imports

On December 29, 2005, China announced its first livestock law since the
founding of the People's Republic of China. The law will become
effective on July 1, 2006, and the law regulates the protection of
domestic animal and poultry breeds, selection, cultivation and trade of
breeding animal and poultry, feeding and grazing, live animal and
poultry marketing and transportation, quality and health assurance. The
law forbids the sale of breeding animals or poultry with the following
status: 1) passing-off other breeds as needed breeds, 2) passing-off
lower generation as a higher generation, 3) passing-off unqualified as
qualified, 4) lacking an import permit, 5) lacking a health certificate
and ancestor records, and 6) lacking MOA's approval or verification as
breeding animals and poultry.

Importers must apply for imports with the provincial livestock bureau
and get final approval from MOA. The import permit is valid for 6
months. The law is aimed to address import malpractices. The policy
change, combined with high international prices, will keep China's live
cattle imports flat in 2006. The law does not address animal welfare
issues---a potential issue for importing countries.

## Beef consumption in 2006 forecast to increase 6.8 percent to 7.6 MMT 

China's beef consumption for 2006 in this beef PS&D table is very close
to the previous estimation in CH5063. Beef consumption will continue to
be strong throughout 2006. The spreading of HPAI cases in China resulted
in consumers shifting to red meat. Beef is considered healthy meat with
less fat, less feed pollution and no hormone additives. Although
wholesale beef prices increased 6.8 percent on average in 2005, more
disposable income made it possible for Chinese consumers to purchase
more beef. Given that the per capita beef consumption is very low (about
6 kg), China's beef consumption will likely continue to grow for the
foreseeable future.

## Factors impacting China's live cattle and beef imports

China's live cattle imports in 2006 are forecast to decrease 8 percent
to 48,000 head. Imports in 2005 were only 50,000 head, 50 percent lower
than the previous forecast in the report CH5063. Beef imports for 2006
are forecast to remain flat at 3,000 MT. In addition to tightened import
policy change, China faced higher international prices for cattle and
beef due to BSE restrictions. Chinese import unit price increased 4.2
percent for cattle and 157 percent for beef in the first 11 months of
2005. China's imports in 2006 will not likely increase unless the world
trade picture changes for BSE countries.

## Increased beef exports will compensate for decreased live cattle exports 

China's exports of beef only account for about 1 percent of total
production. FAS Beijing forecasts China's beef exports for 2006 to
increase 15 percent to 100,000 MT. FMD remains the main constraint for
cattle and beef exports. U.S. and Canadian beef access in Hong Kong
since the beginning of 2006 is expected to lead to a smaller demand for
live cattle and beef from the Mainland. China's beef exports would not
threaten U.S. exports because China mainly exports prepared beef.

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

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

                   2004       Revised           2005       Estimate          2006       Forecast          UOM       

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

  **Market Year               01-2004                      01-2005                      01-2006           MM/YYYY   
  Begin**                                                                                                           

  Total Cattle     134672     134672            137818     137818            140383     140718            (1000     
  Beg. Stks                                                                                               HEAD)     

  Dairy Cows Beg.  8932       8932              11020      11080             13224      13700             (1000     
  Stks                                                                                                    HEAD)     

  Beef Cows Beg.   62830      62830             65340      65640             67950      68580             (1000     
  Stocks                                                                                                  HEAD)     

  Production (Calf 54162      54162             56870      57020             59500      60100             (1000     
  Crop)                                                                                                   HEAD)     

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

  Total Imports    132        132               100        51                80         46                (1000     
                                                                                                          HEAD)     

  TOTAL Imports    132        132               100        51                80         46                (1000     
                                                                                                          HEAD)     

  TOTAL SUPPLY     188966     188966            194788     194889            199963     200864            (1000     
                                                                                                          HEAD)     

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

  Total Exports    59         59                62         53                65         51                (1000     
                                                                                                          HEAD)     

  TOTAL Exports    59         59                62         53                65         51                (1000     
                                                                                                          HEAD)     

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

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

  Other Slaughter  50189      50189             53400      53618             56700      57311             (1000     
                                                                                                          HEAD)     

  Total Slaughter  50189      50189             53400      53618             56700      57311             (1000     
                                                                                                          HEAD)     

  Loss             900        900               943        500               955        502               (1000     
                                                                                                          HEAD)     

  Ending           137818     137818            140383     140718            142243     143000            (1000     
  Inventories                                                                                             HEAD)     

  TOTAL            188966     188966            194788     194889            199963     200864            (1000     
  DISTRIBUTION                                                                                            HEAD)     

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

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

##  PS&D tables for cattle and beef

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

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

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

                   2004       Revised           2005       Estimate          2006        Forecast          UOM       

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

  **Market Year               01-2004                      01-2005                       01-2006           MM/YYYY   
  Begin**                                                                                                            

  Slaughter        50189      50189             53400      53618             56700       57311             (1000     
  (Reference)                                                                                              HEAD)     

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

  Production       6759       6759              7180       7222              7640        7718              (1000 MT  
                                                                                                           CWE)      

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

  Total Imports    5          5                 6          3                 6           3                 (1000 MT  
                                                                                                           CWE)      

  TOTAL Imports    5          5                 6          3                 6           3                 (1000 MT  
                                                                                                           CWE)      

  TOTAL SUPPLY     6764       6764              7186       7225              7646        7721              (1000 MT  
                                                                                                           CWE)      

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

  Total Exports    61         61                75         87                90          100               (1000 MT  
                                                                                                           CWE)      

  TOTAL Exports    61         61                75         87                90          100               (1000 MT  
                                                                                                           CWE)      

  Human Dom.       6703       6703              7111       7138              7556        7621              (1000 MT  
  Consumption                                                                                              CWE)      

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

  TOTAL Dom.       6703       6703              7111       7138              7556        7621              (1000 MT  
  Consumption                                                                                              CWE)      

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

  TOTAL            6764       6764              7186       7225              7646        7721              (1000 MT  
  DISTRIBUTION                                                                                             CWE)      

  Calendar Yr.     0          0                 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)      
  ---------------- ---------- ----------------- ---------- ----------------- ----------- ----------------- --------- -------

## Cattle and beef trade matrix

+----------------+---------+--------+--------+--------+---------------+
| CHINA LIVE     |         |        |        | 　     | 　            |
| CATTLE         |         |        |        |        |               |
| IMPORTS,       |         |        |        |        |               |
| 2003-2005      |         |        |        |        |               |
|                |         |        |        |        |               |
| '(Number of    |         |        |        |        |               |
| Head)          |         |        |        |        |               |
+----------------+---------+--------+--------+--------+---------------+
| 　             | Ja      |        | Jan    |        | January -     |
|                | nuary - |        | uary - |        | November      |
|                | D       |        | No     |        |               |
|                | ecember |        | vember |        |               |
+----------------+---------+--------+--------+--------+---------------+
| 　             | Q       | 　     | Qu     |        | \% Change     |
|                | uantity |        | antity |        |               |
|                |         |        | Comp   |        |               |
|                |         |        | arison |        |               |
+----------------+---------+--------+--------+--------+---------------+
| Origin         | 2003    | 2004   | 2004   | 2005   | 2005/04       |
+----------------+---------+--------+--------+--------+---------------+
| World          | 50,007  | 1      | 1      | 46,940 |   -60.39      |
|                |         | 32,446 | 18,495 |        |               |
+----------------+---------+--------+--------+--------+---------------+
| Australia      | 41,179  | 69,406 | 63,772 | 32,871 |   -48.46      |
+----------------+---------+--------+--------+--------+---------------+
| New Zealand    | 7,795   | 63,032 | 54,715 | 14,069 |   -74.29      |
+----------------+---------+--------+--------+--------+---------------+
| United States  | 1,022   | \-     | \-     | \-     |   0.00        |
+----------------+---------+--------+--------+--------+---------------+
| Canada         | 11      | \-     | \-     | \-     |   0.00        |
+----------------+---------+--------+--------+--------+---------------+
| Mexico         | \-      | 8      | 8      | \-     |   -100.00     |
+----------------+---------+--------+--------+--------+---------------+
| HS Code:       |         | 　     | 　     | 　     | 　            |
| 010210, 010290 |         |        |        |        |               |
+----------------+---------+--------+--------+--------+---------------+
| Source: GTA    |         | 　     | 　     | 　     | 　            |
| China          |         |        |        |        |               |
| Statistics     |         |        |        |        |               |
+----------------+---------+--------+--------+--------+---------------+

  ---------------- ----------- --------- ------------ -------- ----------------
  CHINA BEEF AND                         　           　       　
  VEAL IMPORTS,                                                
  2003-2005                                                    

  (Metric Tons)    　          　        　           　       　

  　               January -             January -             January -
                   December              November              November

  　               Quantity    　        Quantity              \% Change
                                         Comparison            

  Origin           2003        2004      2004         2005     2005/04

  World            8,395       3,451     3,371        1,161      -65.56

  Australia        2,231       2,159     2,080        1,069      -48.59

  Argentina        \-          \-        \-           55         0.00

  Uruguay          \-          2         2            25         941.88

  New Zealand      112         825       825          10         -98.80

  Brazil           467         422       422          \-         -99.99

  United States    5,533       41        41           \-         -100.00

  Other            52          2         1            2        100.00

  HS Code: 020110,                                             
  020120, 020130,                                              
  020210, 020220,                                              
  020230, 021020,                                              
  160250                                                       

  Source: GTA                  　        　           　       　
  China Statistics                                             
  ---------------- ----------- --------- ------------ -------- ----------------

  ------------- ----------- ---------- ------------ --------- ----------------
  HONG KONG                                                   　
  RE-EXPORTS OF                                               
  BEEF AND VEAL                                               
  TO CHINA,                                                   
  2003-2005                                                   

  (Metric Tons) 　          　         　           　        　

  　            January -              January -              January -
                December               November               November

  　            Quantity    　         Quantity               \% Change
                                       Comparison             

  Origin        2003        2004       2004         2005      2005/04

  World         8,663       3,718      3,695        722       -80.45

  New Zealand   602         1,020      1,020        168       -83.51

  Australia     214         27         27           144       426.61

  Brazil        941         1,193      1,193        132       -88.97

  Argentina     508         159        159          109       -31.77

  Canada        123         194        194          98        -49.69

  India         716         309        309          25        -91.9

  Ireland       905         244        244          25        -89.77

  Austria       \-          \-         \-           14        0

  United States 4,285       263        239          0         -99.97

  Other         370         309        309          8         -97.31

  HS Code:                                                    
  020110,                                                     
  020120,                                                     
  020130,                                                     
  020210,                                                     
  020220,                                                     
  020230,                                                     
  021020,                                                     
  160250                                                      

  Source of                                                   　
  data: WTA                                                   
  Hong Kong                                                   
  Census and                                                  
  Statistics                                                  
  Department                                                  
  ------------- ----------- ---------- ------------ --------- ----------------

  ---------------- ----------- --------- ------------ -------- ----------------
  CHINA LIVE                             　           　       　
  CATTLE EXPORTS,                                              
  2003-2005                                                    

  (Number of Head) 　          　        　           　       　

  　               January -             January -             January -
                   December              November              November

  　               Quantity    　        Quantity              \% Change
                                         Comparison            

  Destination      2003        2004      2004         2005     2005/04

  World            50,645      59,009    54,129       48,641     -10.14

  Hong Kong        44,929      47,377    42,937       43,095     0.37

  Macau            5,169       5,278     4,838        5,166      6.78

  Korea North      449         330       330          380        15.15

  Myanmar          \-          24        24           \-         -100.00

  Thailand         98          \-        \-           \-         0.00

  Jordan           \-          \-        6,000        \-         -100.00

  HS Code: 010210,             　        　           　       　
  010290                                                       

  Source: GTA                  　        　           　       　
  China Statistics                                             
  ---------------- ----------- --------- ------------ -------- ----------------

  ---------------- ----------- --------- ------------ -------- ----------------
  CHINA BEEF AND                         　           　       　
  VEAL EXPORTS,                                                
  2003-2005                                                    

  (Metric Tons)    　          　        　           　       　

  　               January -             January -             January -
                   December              November              November

  　               Quantity    　        Quantity              \% Change
                                         Comparison            

  Destination      2003        2004      2004         2005     2005/04

  World            25,797      37,171    31,838       48,022     50.84

  Japan            5,385       9,062     7,459        12,925     73.29

  Hong Kong        14,014      15,876    14,166       12,737     -10.08

  Korea South      1,704       3,638     2,794        10,829     287.61

  Jordan           10          739       483          4,067      742.74

  Kuwait           363         1,657     1,404        2,320      65.28

  Indonesia        1,098       943       868          1,234      42.18

  Korea North      105         492       461          1,127      144.37

  Malaysia         1,014       1,293     1,110        1,052      -5.24

  Lebanon          12          403       363          516        42.18

  United Arab      509         783       665          270        -59.44
  Emirates                                                     

  Macau            79          124       101          146        44.49

  Russia           1,169       1,435     1,435        141        -90.16

  Singapore        105         172       129          136        4.86

  Other            230         554       400          522      13.49

  HS Code: 020110,                                             
  020120, 020130,                                              
  020210, 020220,                                              
  020230, 021020,                                              
  160250                                                       

  Source: GTA                  　        　           　       　
  China Statistics                                             
  ---------------- ----------- --------- ------------ -------- ----------------

+----------------+---------------------------+-----+---+-----+------+
| Tariffs on     |                           |     |   |     |      |
| Cattle and     |                           |     |   |     |      |
| Beef,          |                           |     |   |     |      |
| Effective      |                           |     |   |     |      |
| January 1,     |                           |     |   |     |      |
| 2006           |                           |     |   |     |      |
|                |                           |     |   |     |      |
| 　             |                           |     |   |     |      |
+----------------+---------------------------+-----+---+-----+------+
| 　             | 　                        | 　  | 　 | 　 | E    |
|                |                           |     |   |     | ffec |
|                |                           |     |   |     | tive |
+----------------+---------------------------+-----+---+-----+------+
| 　             | 　                        | G   | M | V.A | Rate |
|                |                           | ene | F | .T. |      |
|                |                           | ral | N | 1/  |      |
+----------------+---------------------------+-----+---+-----+------+
| 　             | 　                        | 　  | 　 | 　 | (    |
|                |                           |     |   |     | mfn+ |
|                |                           |     |   |     | vat) |
+----------------+---------------------------+-----+---+-----+------+
| 　             | 　                        | 　  | 　 | 　 | 　   |
+----------------+---------------------------+-----+---+-----+------+
| 0102.1000      | Cattle, breeding          | 0%  | 0 | 13% | 1    |
|                |                           |     | % |     | 3.0% |
+----------------+---------------------------+-----+---+-----+------+
| 0102.9000      | Cattle, other             | 30% | 1 | 13% | 2    |
|                |                           |     | 0 |     | 4.3% |
|                |                           |     | % |     |      |
+----------------+---------------------------+-----+---+-----+------+
| 0201.1000      | Fresh or chilled carcass  | 70% | 2 | 13% | 3    |
|                | & half-carcass            |     | 0 |     | 5.6% |
|                |                           |     | . |     |      |
|                |                           |     | 0 |     |      |
|                |                           |     | % |     |      |
+----------------+---------------------------+-----+---+-----+------+
| 0201.2000      | Fresh or chilled other    | 70% | 1 | 13% | 2    |
|                | cuts with bone in         |     | 2 |     | 6.6% |
|                |                           |     | . |     |      |
|                |                           |     | 0 |     |      |
|                |                           |     | % |     |      |
+----------------+---------------------------+-----+---+-----+------+
| 0201.3000      | Fresh or chilled cuts,    | 70% | 1 | 13% | 2    |
|                | boneless                  |     | 2 |     | 6.6% |
|                |                           |     | . |     |      |
|                |                           |     | 0 |     |      |
|                |                           |     | % |     |      |
+----------------+---------------------------+-----+---+-----+------+
| 0202.1000      | Frozen carcass &          | 70% | 2 | 13% | 4    |
|                | half-carcass              |     | 5 |     | 1.3% |
|                |                           |     | % |     |      |
+----------------+---------------------------+-----+---+-----+------+
| 0202.2000      | Other frozen cuts with    | 70% | 1 | 13% | 2    |
|                | bone in                   |     | 2 |     | 6.6% |
|                |                           |     | . |     |      |
|                |                           |     | 0 |     |      |
|                |                           |     | % |     |      |
+----------------+---------------------------+-----+---+-----+------+
| 0202.3000      | Frozen cuts, boneless     | 70% | 1 | 13% | 2    |
|                |                           |     | 2 |     | 6.6% |
|                |                           |     | . |     |      |
|                |                           |     | 0 |     |      |
|                |                           |     | % |     |      |
+----------------+---------------------------+-----+---+-----+------+
| Source: China  | 　                        | 　  | 　 | 　 | 　   |
| Customs        |                           |     |   |     |      |
+----------------+---------------------------+-----+---+-----+------+

  -------------------- --------- --------- --------- --------------------
  CHINA WHOLESALE BEEF                               
  PRICES ON AVERAGE                                  

  2003-2005 (US\$/KG)                                

                                                     \% Change

                       2003      2004      2005      2005/04

  January              1.82      1.84      1.81      -1.63%

  February             1.82      1.79      1.98      10.61%

  March                1.78      1.82      1.93      6.04%

  April                1.77      1.79      1.88      5.03%

  May                  1.78      1.86      1.99      6.99%

  June                 1.75      1.84      1.96      6.52%

  July                 1.71      1.83      1.92      4.92%

  August               1.69      1.83      1.98      8.20%

  September            1.83      1.77      1.88      6.21%

  October              1.77      1.83      1.96      7.10%

  November             1.77      1.80      1.92      6.67%

  December             1.75      1.78      2.04      14.61%

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

# Swine and Pork

## Changes in the pork PS&D table 

Based on FAS headquarters guidance, the import and export numbers in the
pork PS&D table exclude HS Code 160249. As a result, the trade numbers
are smaller, particularly for exports. This revision does not impact
U.S. export numbers to China because the exports under this line are
limited. To calculate China's trade figures, FAS Beijing used the Global
Trade Atlas (GTA) and the World Trade Atlas (WTA) sourced from China
Customs and Hong Kong Census and Statistics Department (HKCSD). For U.S.
exports to China, we use the data from the U.S. Department of Commerce
and HKCSD for Hong Kong re-exports.

## Three year high-profit period ended, pace of growth in 2006 forecast slow

FAS Beijing forecasts China's pork production in 2006 at 52 MMT, a 4.7
percent increase from the estimated 49.7 MMT in 2005. Despite lower
prices since the second half of 2005, China's pork production will
continue to grow in 2006. The pace of growth will slow compared with
2005.

FAS Beijing adjusted downwards (1-2 percent) China's 2006 sow beginning
stock at 43.8 million head, pig crop at 700 million head, and ending
inventory at 678 million head, from the previous estimations in the last
annual livestock report CH5063.

Although many Chinese consumers have shifted to red meat due to HPAI in
China, pork prices did not go up like beef and sheep/goat meat. On the
contrary, pork prices started falling considerably in the second half of
2005 as the result of surplus supplies. According to the industry, swine
farmers also started loosing money in November 2005. The price ratio
between swine and grain dropped to 1:5.45, lower than the publicly
accepted critical point 1: 5.5. Swine procurement prices in main
producing provinces like Henan, Jiangsu and Hebei were only \$0.84/kg in
the last quarter of 2005 (prices were \$1.2/kg in the same period of the
previous year). Seventeen provinces are below the critical point, while
13 provinces are above it. The more competitive producers are in remote
areas or in feed grain production areas with lower production costs.

## Factors impacting swine and pork production

*\--Quick increase in inventory:* High swine prices at slaughter in 36
months gave incentives to farmers to increase swine inventories. The
pace of increase in swine beginning stocks jumped from 0.7 in 2004 to
3.4 percent in 2005 and forecast 3.8 percent in 2006. Increased
production has led to over supplies thus depressing prices.

*\--Increased commercial farms*: According to the industry, larger sized
commercial farms have been increasing, thus improving production
efficiency. The number of swine slaughtered from commercial farms
increased 26 percent in 2004 over the previous year. This has helped
increase production and bring down prices.

  --------------------------------- ------------- ------------ ------------
  China Commercial Swine Farms                                  

  Number of Head Kept on Farm       2002          2003         2004

  50 - 99                           790,307       851,429      1,056,793

  100 - 499                         212,909       249,016      328,811

  500 - 2999                        27,495        33,844       46,175

  3000 - 9999                       3,242         3,388        4,162

  10000 - 49999                     862           911          1,048

  Over 50000                        28            30           44

  Total                             1,034,843     1,138,618    1,437,033

  Source: China Swine Association                               
  --------------------------------- ------------- ------------ ------------

*\--Production pattern and information lacking*: Although commercial
farms have been increasing, about 70 percent of China's pigs are still
raised on backyard farms where it is difficult to coordinate and monitor
production. Swine farmers lack market information. Official statistics
are normally announced one to two years afterwards. There are no
official forecasts for future production.

*\--Disease and residue control a challenge*: Animal diseases (e.g.,
FMD) are difficult to monitor and control in China's widespread,
small-scale farming system, putting constraints on China's production
for the near term.

\--*Small-scale processing:* According to MOFCOM, there are over 40,000
slaughterhouses in China. However, 60 percent of slaughtering is
concentrated in the 50 largest plants. MOFCOM will grade them five
levels. Only grade 4 and 5 can handle slaughtering. Therefore, the
slaughter industry will have to consolidate to improve efficiency.

As prices are not favorable and are forecast to stay low in 2006, large
commercial swine farms are expected to stabilize their production. Some
smaller-scale ones have started to slaughter their sows. Therefore,
swine and pork production in 2006 appears not likely to grow at the same
pace of 2005. Better efficiency and forecast low prices may translate
into reduced imports in 2006.

## Consumption forecast to increase 4 percent in 2006

FAS Beijing adjusted upwards (4 percent) pork consumption in 2006 from
the previous annual report CH5063. Pork has served as the main
substitute for poultry following the HPAI outbreaks in China. Pork is
not only a traditional animal protein in the Chinese diet, but it is
also the cheapest compared with other red meats.

## Pork imports in 2006 forecast to decrease 4 percent to 48,000 MT

Despite its massive population, China is almost self-sufficient in pork
supplies, and imports account for less than 1 percent of total pork
production. Frozen boneless pork---a U.S. export commodity in demand
here\--accounts for the major portion of China's pork imports for
high-end consumers. However, U.S. data shows its pork exports
increasing, while Chinese data shows import of U.S. pork decreasing.
Smuggling and "sluggish" retrieval of statistics are possible
explanations.

The United States is the largest variety pork supplier to China,
accounting for 37 percent of China's total imports (226,736 MT) during
the first 11 months of 2005. A favorable dollar exchange rate will help
the competitiveness of U.S. exports to China.

## China's zero tolerance for pathogens remains a trade irritant

On October 1, 2005, China implemented a regulation called the "Hygienic
Standard for Fresh (Frozen) Meat of Livestock" (GB 2705-2005). Although
the new standard does not address pathogen tolerances, Chinese officials
indicate a zero tolerance for pathogens (Ecoli and Salmonella) existed
previously based on the "China Food Hygiene Law" announced on August 2,
2001 (see CH1042 dated November 2, 2001). Since December 12, 2005, the
Chinese Government suspended from exporting a number of U.S. meat and
poultry plants. In the new law, the new test indexes are:

> Physical and Chemical Test Indexes

  ------------------------------- --- -----------------------------------
  Item                                Index

  Volatile basic- nitrogen,       ≤   15
  mg/100g                             

  Lead (Pb), mg/kg                ≤   0.2

  Inorganic Arsenic, mg/kg        ≤   0.05

  Cadmium (Cd), mg/kg             ≤   0.1

  Gross Mercury (Hg), mg/kg       ≤   0.05
  ------------------------------- --- -----------------------------------

The China Food Hygiene Law States in Item 3, Article 9 that "it is
forbidden to produce, distribute or use foods containing pathogenic
parasites and microorganisms, or microorganisms with toxin exceeding
tolerances regulated by the state.

## Swine and pork exports in 2006 forecast to recover 

China's swine and pork exports in 2006 are forecast to recover and
increase 16 percent to 2 million head. China's swine export markets will
not change. For the first time since 2004, Japan will became China's
second largest pork market because of restrictions on U.S. and Canadian
beef and poultry from other Asian countries due to BSE and HPAI. This
trade picture may continue due to the uncertainty of HPAI.

## PS&D tables for swine and pork

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

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

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

                   2004       Revised           2005       Estimate          2006       Forecast          UOM       

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

  **Market Year               01-2004                      01-2005                      01-2006           MM/YYYY   
  Begin**                                                                                                           

  TOTAL Beginning  466017     466017            481891     481891            500324     500324            (1000     
  Stocks                                                                                                  HEAD)     

  Sow Beginning    40250      40250             42200      42200             44220      43800             (1000     
  Stocks                                                                                                  HEAD)     

  Production (Pig  636742     636742            675000     675000            715000     700000            (1000     
  Crop)                                                                                                   HEAD)     

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

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

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

  TOTAL SUPPLY     1102761    1102761           1156894    1156894           1215327    1200327           (1000     
                                                                                                          HEAD)     

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

  Total Exports    1973       1973              2000       1730              2000       2000              (1000     
                                                                                                          HEAD)     

  TOTAL Exports    1973       1973              2000       1730              2000       2000              (1000     
                                                                                                          HEAD)     

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

  OTHER SLAUGHTER  618007     618007            653400     653670            692600     678475            (1000     
                                                                                                          HEAD)     

  Total Slaughter  618007     618007            653400     653670            692600     678475            (1000     
                                                                                                          HEAD)     

  Loss             890        890               1170       1170              1675       800               (1000     
                                                                                                          HEAD)     

  Ending           481891     481891            500324     500324            519052     519052            (1000     
  Inventories                                                                                             HEAD)     

  TOTAL            1102761    1102761           1156894    1156894           1215327    1200327           (1000     
  DISTRIBUTION                                                                                            HEAD)     

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

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

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

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

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

                  2004       Revised           2005       Estimate          2006        Forecast          UOM       

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

  **Market Year              01-2004                      01-2005                       01-2006           MM/YYYY   
  Begin**                                                                                                           

  Slaughter       618007     618007            653400     653749            692600      678475            (1000     
  (Reference)                                                                                             HEAD)     

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

  Production      47016      47016             48900      49685             50900       52000             (1000 MT  
                                                                                                          CWE)      

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

  Total Imports   92         92                70         50                50          48                (1000 MT  
                                                                                                          CWE)      

  TOTAL Imports   92         92                70         50                50          48                (1000 MT  
                                                                                                          CWE)      

  TOTAL SUPPLY    47108      47108             48970      49735             50950       52048             (1000 MT  
                                                                                                          CWE)      

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

  Total Exports   383        383               400        255               415         300               (1000 MT  
                                                                                                          CWE)      

  TOTAL Exports   383        383               400        255               415         300               (1000 MT  
                                                                                                          CWE)      

  Human Dom.      46725      46725             48570      49480             50535       51748             (1000 MT  
  Consumption                                                                                             CWE)      

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

  TOTAL Dom.      46725      46725             48570      49480             50535       51748             (1000 MT  
  Consumption                                                                                             CWE)      

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

  TOTAL           47108      47108             48970      49735             50950       52048             (1000 MT  
  DISTRIBUTION                                                                                            CWE)      

  Calendar Yr.    88         48                50         53                38          48                (1000 MT  
  Imp. from U.S.                                                                                          CWE)      

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

##  Swine and pork trade matrix

  ---------------- ----------- --------- ------------ -------- ----------------
  CHINA SWINE                            　           　       　
  IMPORTS,                                                     
  2003-2005                                                    

  (Number of Head) 　          　        　           　       　

  　               January -             January -             January -
                   December              November              November

  　               Quantity    　        Quantity              \% Change
                                         Comparison            

  Origin           2003        2004      2004         2005     2005/04

  World            1,797       1,898     1,748        2,935      67.91

  United States    442         840       690          1,589      130.29

  Canada           1,083       480       480          1,032      115.00

  France           \-          \-        \-           314        0.00

  Denmark          272         578       578          \-         -100.00

  HS Code: 010310,                       　           　       　
  010391 and                                                   
  010392                                                       

  Source: GTA                  　        　           　       　
  China Statistics                                             
  ---------------- ----------- --------- ------------ -------- ----------------

  ---------------- ----------- --------- ------------ -------- ----------------
  CHINA PORK                                          　       　
  IMPORTS,                                                     
  2003-2005                                                    
  (Metric Tons)                                                

  (HS Code 160249              　        　           　       　
  is excluded)                                                 

  　               January -             January -             January -
                   December              November              November

  　               Quantity    　        Quantity              \% Change
                                         Comparison            

  Origin           2003        2004      2004         2005     2005/04

  World            149,117     70,683    68,280       29,154   -57.31

  Canada           33,897      23,968    22,465       17,429     -22.42

  United States    77,642      29,585    29,003       6,502      -77.58

  Denmark          37,505      17,000    16,684       4,627      -72.28

  France           0           2         \-           505      ∞

  Other            72          127       127          91       -28.35

  HS Codes:                                                    
  020311, 020312,                                              
  020319, 020321,                                              
  020322, 020329,                                              
  021011, 021012,                                              
  021019,                                                      

  160241, 160242                                               　
  and160249                                                    
  (excluded from                                               
  pork PS&D table)                                             

  Source: GTA                  　        　           　       　
  China Statistics                                             
  ---------------- ----------- --------- ------------ -------- ----------------

  ---------------- ----------- --------- ------------ -------- ----------------
  HONG KONG PORK                                               　
  RE-EXPORTS TO                                                
  CHINA, 2003-2005                                             

  (Metric Tons)    　          　        　           　       　

  　               January -             January -             January -
                   December              November              November

  　               Quantity    　        Quantity              \% Change
                                         Comparison            

  Origin           2003        2004      2004         2005     2005/04

  -The World-      54,397      59,655    58,406       5,567    -90.47

  Canada           8,680       9,899     9,695        1,478    -84.76

  Denmark          8,918       11,158    10,735       646      -93.98

  Spain            4,263       4,261     4,236        633      -85.05

  United States    3,056       8,800     8,595        557      -93.51

  Germany, Fed Rep 15,508      8,068     7,751        525      -93.23

  Brazil           3,608       3,422     3,397        401      -88.2

  France           2,079       2,600     2,576        386      -85

  Netherlands      3,036       5,381     5,381        295      -94.51

  Other            5,250       6,067     6,040        645      -89.32

  HS Codes:                                                    
  020311, 020312,                                              
  020319, 020321,                                              
  020322, 020329,                                              
  021011, 021012,                                              
  021019,                                                      

  160241, 160242,                                              　
  and 160249                                                   
  (excluded from                                               
  pork PS&D table)                                             

  Source: WTA Hong                                    　       　
  Kong Census and                                              
  Statistics                                                   
  Department                                                   
  ---------------- ----------- --------- ------------ -------- ----------------

  ---------------- ----------- ----------- ------------ ----------- ----------------
  CHINA LIVE SWINE                         　           　          　
  EXPORTS,                                                          
  2003-2005                                                         

  (Number of Head) 　          　          　           　          　

  　               January -               January -                January -
                   December                November                 November

  　               Quantity    　          Quantity                 \% Change
                                           Comparison               

  Destination      2003        2004        2004         2005        2005/04

  World            1,887,295   1,972,911   1,795,843    1,578,328     -12.11

  Hong Kong        1,764,935   1,853,771   1,686,374    1,466,931     -13.01

  Macau            121,600     118,899     109,284      110,149       0.79

  Korea North      681         106         75           1,148         1430.67

  Other            79          135         110          100         -9.09

  HS Code: 010310,                         　           　          　
  010391 and                                                        
  010392                                                            

  Source: GTA                  　          　           　          　
  China Statistics                                                  
  ---------------- ----------- ----------- ------------ ----------- ----------------

  ---------------- ----------- --------- ------------ --------- ----------------
  CHINA PORK                   　        　           　        　
  EXPORTS,                                                      
  2003-2005                                                     

  (Metric Tons)    　          　        　           　        　

  　               January -             January -              January -
                   December              November               November

  　               Quantity    　        Quantity               \% Change
                                         Comparison             

  Destination      2003        2004      2004         2005      2005/04

  World            305,137     413,321   366,223      352,162     -3.84

  Hong Kong        105,010     116,810   105,062      102,148     -2.77

  Japan            25,593      53,139    46,190       61,924      34.06

  Korea North      46,883      87,031    75,919       59,762      -21.28

  Russia           70,959      70,526    64,117       42,125      -34.30

  Singapore        16,489      21,319    18,904       15,109      -20.08

  Moldova          2,451       11,048    8,458        13,440      58.90

  Malaysia         14,225      14,656    13,070       11,069      -15.31

  Philippines      7,003       8,197     7,255        8,300       14.40

  Albania          2,266       3,571     3,283        5,428       65.34

  Kazakhstan       \-          248       248          5,300       2037.06

  Macau            4,157       4,403     3,977        4,915       23.58

  Ukraine          25          7,992     6,841        4,690       -31.44

  Korea South      1,246       1,887     1,847        4,219       128.39

  Indonesia        2,027       2,877     2,236        2,536       13.38

  Georgia          251         403       403          1,406       249.19

  Armenia          50          250       250          1,229       391.50

  United Arab      379         1,120     890          1,006       13.06
  Emirates                                                      

  Lebanon          736         689       654          890         36.07

  Vietnam          14          23        23           874         3773.16

  Kyrgyzstan       \-          \-        \-           818         0.00

  Uzbekistan       \-          1,773     1,725        725         -57.97

  Other            5,373       5,359     4,871        4,249     -9.02

  HS Codes:                                                     
  020311, 020312,                                               
  020319, 020321,                                               
  020322, 020329,                                               
  021011, 021012,                                               
  021019,                                                       

  160241, 160242                                                　
  and160249                                                     
  (excluded from                                                
  pork PS&D table)                                              

  Source: GTA                  　        　           　        　
  China Statistics                                              
  ---------------- ----------- --------- ------------ --------- ----------------

+-------+----------------------------+-------+------+------+---------+
| Ta    |                            | 　    | 　   | 　   | 　      |
| riffs |                            |       |      |      |         |
| on    |                            |       |      |      |         |
| Hogs  |                            |       |      |      |         |
| and   |                            |       |      |      |         |
| Pork, |                            |       |      |      |         |
| Effe  |                            |       |      |      |         |
| ctive |                            |       |      |      |         |
| Ja    |                            |       |      |      |         |
| nuary |                            |       |      |      |         |
| 1,    |                            |       |      |      |         |
| 2006  |                            |       |      |      |         |
+-------+----------------------------+-------+------+------+---------+
| 　    | 　                         | 　    | 　   | 　   | 　      |
+-------+----------------------------+-------+------+------+---------+
| 　    | 　                         | 　    | 　   | 　   | Ef      |
|       |                            |       |      |      | fective |
+-------+----------------------------+-------+------+------+---------+
| 　    | 　                         | Ge    | MFN  | V.   | Rate    |
|       |                            | neral |      | A.T. |         |
+-------+----------------------------+-------+------+------+---------+
| 　    | 　                         | 　    | 　   | 　   | (m      |
|       |                            |       |      |      | fn+vat) |
+-------+----------------------------+-------+------+------+---------+
| 0103  | Breeding Swine             | 0%    | 0%   | 13%  | 13.0%   |
| .1000 |                            |       |      |      |         |
+-------+----------------------------+-------+------+------+---------+
| 0103  | Other swine, less than 10  | 50%   | 10%  | 13%  | 24.3%   |
| .9110 | kg                         |       |      |      |         |
+-------+----------------------------+-------+------+------+---------+
| 0103  | Other swine, 10 kg or      | 50%   | 10%  | 13%  | 24.3%   |
| .9120 | more, but less than 50 kg  |       |      |      |         |
+-------+----------------------------+-------+------+------+---------+
| 0103  | Other swine, 50 kg or more | 50%   | 10%  | 13%  | 24.3%   |
| .9200 |                            |       |      |      |         |
+-------+----------------------------+-------+------+------+---------+
| 0203  | Fresh or chilled sucking   | 70%   | 20%  | 13%  | 35.6%   |
| .1110 | pig                        |       |      |      |         |
+-------+----------------------------+-------+------+------+---------+
| 0203  | Other                      | 70%   | 20%  | 13%  | 35.6%   |
| .1190 |                            |       |      |      |         |
+-------+----------------------------+-------+------+------+---------+
| 0203  | Fresh or chilled hams,     | 70%   | 20%  | 13%  | 35.6%   |
| .1200 | shoulders and cuts         |       |      |      |         |
|       |                            |       |      |      |         |
|       | with bones in              |       |      |      |         |
+-------+----------------------------+-------+------+------+---------+
| 0203  | Other                      | 70%   | 20%  | 13%  | 35.6%   |
| .1900 |                            |       |      |      |         |
+-------+----------------------------+-------+------+------+---------+
| 0203  | Frozen sucking pig         | 70%   | 1    | 13%  | 26.6%   |
| .2110 |                            |       | 2.0% |      |         |
+-------+----------------------------+-------+------+------+---------+
| 0203  | Other                      | 70%   | 1    | 13%  | 26.6%   |
| .2190 |                            |       | 2.0% |      |         |
+-------+----------------------------+-------+------+------+---------+
| 0203  | Frozen hams, shoulders and | 70%   | 1    | 13%  | 26.6%   |
| .2200 | cuts with bones            |       | 2.0% |      |         |
+-------+----------------------------+-------+------+------+---------+
| 0203  | Other                      | 70%   | 1    | 13%  | 26.6%   |
| .2900 |                            |       | 2.0% |      |         |
+-------+----------------------------+-------+------+------+---------+
| So    |                            |       |      |      |         |
| urce: |                            |       |      |      |         |
| China |                            |       |      |      |         |
| Cu    |                            |       |      |      |         |
| stoms |                            |       |      |      |         |
+-------+----------------------------+-------+------+------+---------+

  -------------------- --------- --------- --------- --------------------
  CHINA WHOLESALE PORK                               
  PRICES ON AVERAGE                                  

  2003-2005 (US\$/KG)                                \% Change

                       2003      2004      2005      2005/04

  January              2.08      1.40      1.65      17.86%

  February             2.43      1.45      1.69      16.55%

  March                2.11      1.49      1.63      9.40%

  April                2.14      1.56      1.60      2.56%

  May                  1.15      1.57      1.59      1.27%

  June                 1.16      1.62      1.59      -1.85%

  July                 2.22      1.66      1.61      -3.01%

  August               3.28      1.72      1.59      -7.56%

  September            3.20      1.75      1.55      -11.43%

  October              1.33      1.75      1.48      -15.43%

  November             1.38      1.67      1.42      -14.97%

  December             1.42      1.66      1.43      -13.86%

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

  -------------------- --------- --------- --------- --------------------
  CHINA WHOLESALE HOG                                
  PRICES ON AVERAGE                                  

  2003-2005 (US\$/KG)                                \% Change

                       2003      2004      2005      2005/04

  January              0.64      0.84      1.05      25.00%

  February             0.66      0.88      1.05      19.32%

  March                0.64      0.92      0.99      7.61%

  April                0.64      0.96      0.94      -2.08%

  May                  0.60      0.96      0.94      -2.08%

  June                 0.61      1.02      0.89      -12.75%

  July                 0.67      1.06      0.86      -18.87%

  August               0.68      1.10      0.87      -20.91%

  September            0.68      1.13      0.87      -23.01%

  October              0.77      1.12      0.77      -31.25%

  November             0.81      1.05      0.74      -29.52%

  December             0.86      1.02      0.76      -25.49%

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