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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
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