A longstanding producer of pigs and carp for the capital, the district of Huairou is encouraging local farmers to breed Angus cattle as contracted suppliers for Dalian Xuelong Co, based in northern China.
The deal will open up new sources of cattle for Xuelong, which distributes Japanese-style wagyu beef to retail outlets and restaurants in Beijing.
In a statement released to local media, Huairou authorities have set a target of breeding 5,000 calves a year with a 40,000-head kill by 2020.
'Great economic benefits'
The government document also details how the premium prices enjoyed by wagyu-style Angus cattle will bring “great economic benefits” to Huairou.
Pens and training are being subsidised by Huairou local government to encourage farmers to take up breeding of Angus cattle.
Meanwhile, local firm La BA Gou Men Xiang He Niu Biotech Co has been identified as a provider of artificial insemination services for the region. The firm claims its semen is certified by the Australian Angus Association.
Xuelong has not indicated whether it will build a new processing plant in Huairou or process the cattle in Dalian, a seven hour drive from Beijing. However, cattle producers in Huairou are clearly expecting a windfall.
“Highly marbled Angus beef costs about ten times the price of normal beef… in Japan this beef is known as a national treasure,” explained a sales assistant surnamed Guo, reached by phone at Xuelong’s beef store on Yunwushan Road in Shanghai’s Changning district.
Rising beef prices have drawn many new players to China’s beef sector. But Xuelong started out in the business as a supplier of rice straw from northern China to nearby Japan – where such straw is fed to cattle in wagyu farms.
Xuelong founder and chairman Xing Xuesen has been admired in Chinese business circles for his company’s success. But sourcing beef cattle remains a challenge in China, where imports and domestic wholesale beef prices have both gained in recent years.
Imports of frozen (non offal) beef rose from 282,890 tonnes (t) in 2013 to 295,017t in 2014. The wholesale price of beef has held steady at RMB54.50/kg since September 2014, according to data from China’s ministry of agriculture.
Pork prices by contrast are more volatile, having swung from RMB17 to RMB20/kg from the end of March to end of June 2015. Beef was a better bet, according to one Huairou government official. He also thought the region’s mulberry trees and persimmon fruits would add a great flavour to the beef.