Replies to LegCo questions
LCQ8: Supply and price of fresh beef
Following is a question by the Hon Wong Kwok-hing and a written reply by
the Secretary for Food and Health, Dr Ko Wing-man, in the Legislative
Council today (January 9):
Question:
According to media reports, the agent which imports live cattle from the
Mainland raised the wholesale price of fresh beef six times last year,
pushing the retail price to new heights time and again. The current retail
price of fresh beef has already exceeded $100 a catty. In addition, the
quantity of live cattle imported daily fluctuates greatly. The aforesaid
situations have led to a tight supply of fresh beef, the public having to
bear expensive beef price, and business difficulties for beef retailers
and restaurants. In this connection, will the Government inform this
Council:
(a) whether the authorities have taken measures to stabilise the price and
supply of fresh beef; if so, of the details; if not, the reasons for that;
(b) given that the authorities have indicated earlier that they would
conduct a market survey to gather and compare information on the prices,
quality and costs of fresh beef in nearby mainland cities and Hong Kong,
in order to get a better understanding of the reasons for the surge of
fresh beef price, when the survey will be completed and the findings
published;
(c) given the comments that the import of live cattle through a single
agent at present has rendered the supply and wholesale price of fresh beef
susceptible to manipulation and retailers lacking bargaining power, which
causes a continuous surge of fresh beef price, whether the authorities
will consider opening up the market to increase competition, so as to
stabilise the supply and price of fresh beef; if they will, of the
details; if not, the reasons for that; and
(d) whether the authorities have investigated if there are lawbreakers
currently smuggling live cattle into the territory, or even illegally
slaughtering some local stray cattle for selling as imported fresh beef;
if so, of the details; if not, the reasons for that?
Reply:
President,
Maintaining stable and adequate supply of foodstuffs from diverse sources
is the policy objective of the Government, in addition to ensuring food
safety.
At present, all the live cattle that are imported into Hong Kong come from
the Mainland. Between 2009 and 2011, the supply had been reasonably
stable, with the market importing on average 70 to 80 live cattle each
day. The supply in the first half of 2012 stayed at around this level. In
the second half of 2012, we saw a drop in market demand due to a
significant increase in the wholesale price of live cattle. In the month
of December 2012, the daily supply of live cattle was 61 on average.
According to information available to us, the surge in the price of fresh
beef is mainly due to tight supply and a significant increase in demand
for live cattle in the Mainland. As we understand it, the present breeding
stock of cattle in the whole country is at the lowest level in five years.
The fertility rate of cattle and their slow rate of growth are such that
cattle farmers, having to come to terms with the long breeding cycle,
would not seek to expand their breeding capacity in haste. The resulting
tight supply in fresh beef when taken together with other factors such as
the upward movement of transport costs and wages have led to stiff prices.
In the past year, the prices of fresh beef in the Mainland and Hong Kong
both registered continuous increases. While the rates of increase in the
wholesale price of live cattle in both places were broadly comparable, the
retail price of fresh beef in the Mainland had gone up by a margin that
was even wider than that in Hong Kong.
My reply to the various parts of the question is as follows:
(a) In light of the surge in the price of fresh beef, we have had meetings
with representatives of the trade and other stakeholders in recent months
to take stock of market conditions on the ground and issues of concern to
the trade, including constructive exchanges with them on the supply and
price of live cattle. To better understand the market situation, we will
commission a consultant to conduct a market survey covering the prices,
quality and costs of fresh beef in Hong Kong and nearby Mainland cities,
thereby providing empirical data for informed comparisons as well as an
objective basis for the Government to analyse issues related to the market
and consider the way forward.
(b) The preparation work for commissioning the consultant is in progress.
We aim to complete the market survey and release the findings in the
second quarter of this year.
(c) There has been a suggestion that the Government should open up the
live cattle wholesale market and bring in competition as a means to help
spur lower prices.
The Government has an open mind about the merits of this suggestion. That
said, we must give careful consideration to the possible long-term
implications on the supply and price of live cattle. At present, the surge
in the price of live cattle is mainly attributed to tight supply and high
demand. As such, an increase in the number of import agent may not
necessarily help ameliorate the market realities. On the other hand, our
present market is relatively modest in size. Under such circumstances,
would an increase in the number of import agent merely serve to weaken
their bargaining power in sourcing live cattle from farmers, thereby
reducing the incentives for farmers to maintain stable supply? In the
light of tight overall supply, would the competition among agents in the
bidding process translate instead into upward pressure on prices? These
are questions that we must address. The Government will take them
carefully into consideration when examining whether we should open up the
live cattle wholesale market.
(d) The Agriculture, Fisheries and Conservation Department (AFCD) and the
Customs and Excise Department have been regularly conducting joint
operations at various boundary control points to combat smuggling
activities. Up to the present moment, no illegal smuggling of cattle into
Hong Kong has been found. AFCD and the Food and Environmental Hygiene
Department have not received complaints about illegal slaughtering of
local stray cattle. Nor have they come across reports of missing stray
cattle or the carcass of dead cattle being found. In addition, both
departments are not aware of any intelligence about the smuggling of
cattle or the slaughtering of local stray cattle by unscrupulous merchants
for sale as fresh beef imported from the Mainland.
Ends/Wednesday, January 9, 2013
Issued at HKT 14:58
NNNN