Beijing-based director of the China Sheep and Goat Industry Association (CAAA), Zhao Yin, said the outbreak of the peste des petits ruminants (PPR) virus led to massive distortions in some regions in 2014-15.
A clampdown on internal transport in a bid to prevent the spread of the virus – thought to cause infertility in ewes – had created localised gluts of meat and panic selling by farmers eager to quit livestock before prices fell further.
Confident the virus had been controlled, authorities in 2016 lifted transport restrictions, and culling had largely stopped, Yin said.
“The herd numbers only reduced in certain regions. It has been controlled well.”
The 2015 price crash also meant less sheep meat was imported as overseas producers sought higher-paying markets.
According to China’s General Administration of Customs sheep meat imports in the first eight months of 2015 fell by 50,000 tonnes year-on-year to 177,000 tonnes.
Last year’s slump in imports and stabilising domestic production, combined with rising consumption of sheep meat by Chinese consumers, had underpinned firmer prices so far in 2016, Yin said.
At its current retail price of 54 yuan/kg (NZ$11.15) sheep meat was still short of its 2014 peak of 64 yuan/kg (NZ$13.21) when it was more expensive than beef, pork and chicken.
Now it was second in price to beef but still more expensive than the two white meats.
“Currently it is in a reasonable price range, so we could see an increase in consumption.”
In a turnaround from 2015 when most made losses Yin said he expected Chinese farmers to make a modest profit this year.
Silver Fern Farms group category manager Grant Howie expected prices to remain firm throughout the coming NZ lamb slaughter season as Chinese farmers built numbers back up again in regions hit by the PPR virus and in light of better profitability.
According to China’s General Administration of Customs sheep meat imports in the first eight months of 2015 fell by 50,000 tonnes year-on-year to 177,000 tonnes.
“Our sources are saying that domestically there is likely to be a shortage of lamb in China. We do not think it is going to be a dramatic shortage but that is quite a difference to last year when there was a surplus.”
Asked if resurgent prices could cause another trader-led bubble in sheep meat Howie said it was a possibility.
In 2013 and 2014 traders – ranging from state-backed mining companies to private individuals with no previous experience of the meat trade but attracted by high prices and the chance of quick profits – piled into the market and drove prices up to very high levels only to crash them again as they dumped inventories when prices turned.
“Season by season we are going to see quite major swings in price. That trader element will contribute to that.”
Longer term, Alliance Group general manager of marketing Murray Brown expected Chinese production would increase as smaller farmers were squeezed out by larger and more efficient feedlot operators.
“They are looking more at the genetic side of their business. What we are finding is not an increase in numbers but the weights of their lambs are increasing.”
Whereas typical weights had been 13-14kg carcaseweight (CW), feedlots were now producing lambs of 16-18kg CW.
“With the largest flock in the world those sorts of numbers are adding more meat into the market.”
CAAA’s Yin, however, said local production increases were unlikely to significantly reduce the need for imports.
In 2014 per capita consumption of sheep meat in China increased by 4.4% to 3.33kg/person. Since 2000 it had increased by 60%.
“Average consumption in China still has lots of room to grow.”
