* China's official beef imports quadrupled last year
* Beef smuggled from countries such as Brazil, India
* China likely to allow Indian, Brazilian beef shipments
* To fill gap as Australian beef exports hit by drought
By Naveen Thukral and Dominique Patton
SINGAPORE/BEIJING, March 19 Sidestepping
Beijing's import curbs, industry sources estimate hundreds of
thousands of tonnes of beef from countries such as Brazil and
India is being smuggled into China via neighbouring Hong Kong
The massive, unofficial trade reflects China's hunger for
beef. Official imports quadrupled last year, as the growing
ranks of the middle class demanded more high-protein food, while
the grey market could be more than double that size.
Beijing is expected to lift earlier mad cow-related curbs on
Brazilian beef imports soon and to finalise a deal to allow in
Indian buffalo meat as other import channels shrink.
China's top supplier Australia, which accounted for about
half of official imports last year, faces a slump in production.
Drought has forced cattle farmers in the world's
third-biggest beef exporter to cull cows, stoking fears of a
looming global beef shortage with the herd in rival exporter the
United States also at the smallest in six decades.
Concern over supplies and strong demand helped push U.S.
live cattle futures to a record high last month.
With steps afoot to ease import restrictions, Brazil and
India are fighting to corner a bigger share of the Chinese beef
market and fill the gap left by Australia, which could struggle
to regain its foothold given lower pricing by some competitors.
The volume of beef imports in the grey market is thought to
be well above official imports of 400,000 tonnes last year.
"This isn't easy to estimate but according to industry it
could be around one million tonnes, more than twice official
imports," said Meng Qingxiang, professor at the China
Agriculture University in Beijing.
India's official data show Vietnam is its biggest beef
export market, although Hanoi does not include shipments from
India in its data, indicating meat is transported to China.
Indian buffalo meat exports to Vietnam jumped 17 percent to
330,109 tonnes in 2012/13 from a year ago, the data shows.
Buffalo meat is shipped from Mumbai's Jawaharlal Nehru port
to Vietnam's Hai Phong port in 40-foot refrigerated containers
holding 28 tonnes, exporters and industry official say.
"From there the meat products reach China by land because of
the low transportation costs, which are below shipping costs,"
said one dealer at a forwarding firm in Hanoi.
In the case of Brazilian beef, Hong Kong displaced Russia as
the top buyer in 2013, with shipments climbing three-fold to
360,000 tonnes, according to data from Association of Brazilian
Beef Exporters, much believed to be destined for China.
"Brazil's sales to Hong Kong have grown since 2007 and
during this period the population size and beef consumption in
Hong Kong have stayed relatively constant," said Pan Chenjun,
senior analyst at Rabobank in Beijing.
China's customs said it was continuously cracking down on
beef and frozen meat smuggling and in 2014 had launched a
campaign against smuggling of agricultural products.
It said customs had investigated 96 cases involving 88,000
tonnes of frozen products last year.
SET TO END RESTRICTIONS
While it does not currently buy beef directly from India or
Brazil, China's restrictions are likely to be eased soon.
A Beijing delegation is expected to visit Brazil to inspect
facilities, with an eye to lifting the 2012 mad-cow related ban.
Brazilian beef shipments could start before a June summit of
the BRICS bloc of emerging nations at Fortaleza, where President
Xi Jinping will meet his Brazilian counterpart Dilma Rousseff,
said the agriculture attache at Brazil's embassy in Beijing.
"It's not about approval as we already have the protocol to
export to China," said Andrea Bertolini. "It's about re-opening
the market. We really believe there are no technical reasons to
keep this ban in place."
China's quarantine authority, responsible for approving
importers, said it was doing a risk assessment on Brazilian
imports and redirected queries on Indian and U.S. beef to
China signed a memorandum of understanding last year with
India on importing buffalo meat, with the two sides trying to
resolve final issues, officials said in New Delhi.
U.S. beef is also currently barred from mainland China due
to previous mad cow cases but in any case the country is
unlikely to be in a position to significantly increase exports.
"If you consider China, Vietnam and Hong Kong, the option
for larger supplies are India and Brazil," said Brett Stuart,
chief executive of Global AgriTrends in Denver, Colorado.
STIR FRY TO STEAKS
China's beef imports this year could climb to 550,000
tonnes, up from 400,000 tonnes in 2013, boosted further as
poultry consumption is hit by a bird flu outbreak, said the U.S.
Department of Agriculture attache in Beijing.
Brazil has close to 200 million head of cattle while the
Indian buffalo population is estimated at 327 million. This
compares with Australia's 27-28 million head of cattle, which is
shrinking by the day as pastures wither in a severe drought
"The herd size in India and even Brazil is so big that it
will be a much bigger challenge and much more competition for
Australia," said Simon Quilty, meat and cattle analyst at
Indian buffalo meat, sold as a by-product of the dairy
industry, is mainly used in making sausages, hot pot and stir
fried dishes in China. Brazilian beef, which is similar to
grass-fed Australian meat, is mainly used for steaks.
Indian beef is cheaper than Australian beef. Indian boneless
buffalo meat in Vietnam was offered at around $3,200-$3,600 per
tonne to Vietnam, two exporters said.
That compares with an average $4,528 per tonne for
Australian beef shipped to China last year, according to the
U.S. Meat Export Federation.
In 2012, when Brazil was still exporting directly to
mainland China, its beef cost an average $4,404 per tonne.
Still there are uncertainties. Indian beef exports could
take a hit if Hindu nationalist Bharatiya Janata Party-led
coalition takes power in an election starting on April 7.
The BJP, like many Hindus, views cows as sacred and is
opposed to beef consumption and exports.
(Additional reporting by Meenakshi Sharma in MUMBAI, Ho Binh
Minh in HANOI and Theopolis Waters in CHICAGO; Editing by Ed