Underlying demand-supply forces have exerted strong upward pressure on beef prices in recent years, including in Beijing (Figure 9). The data is collected by the Ministry of Agriculture in “observation points” (wholesale markets) throughout China based on daily sales but averaged over monthly periods to province level to represent the monthly average prices for generic types of livestock products, including bovine meat. Prices are for generic “beef” and don’t reflect premiums or discounts in differentiated markets, but nevertheless provide a good indicator of overall price levels.
Generic beef (and mutton) prices remained low and stable through the 1990s and the first half of the 2000s, but began to increase rapidly in 2006 to 2008 in line with food price spikes in China and internationally, and expansionary monetary policy and wages. Beef prices peaked in 2013, before stabilising in 2015. At Rmb54/kg, this equates to approximately US$12/kg of generic, undifferentiated “beef”. Subdued prices are now being reflected in lower cattle prices. Mutton prices climbed with beef and peaked higher and later, but then corrected sharply in 2014-15, due partly to a supply response (with shorter breeding cycles and higher lambing rates). Pork prices declined over the period for the same reasons, and because of state storage and production (sow-breeding) subsidies. Corn prices have declined in relative terms to beef prices from in 2012-13, spiked in mid-2014 and have since declined (with volatility) in over 2015, which may have had short term impacts on the viability of cattle fattening.