A Brief on 'Beef'

A Brief on ‘Beef’

Despite Malaysia’s per capita consumption of bovine meat is among the highest in Southeast Asia, Malaysia is one of its lowest producers in the region. Malaysia’s bovine meat self-sufficiency level fell from 30% in 2010 to 22% in 2018.

The price of local bovine meat rose by 82% between 2008 and 2018. Within the same period, the price of the cheaper option, imported bovine meat, more than doubled.

To explain the rising price of imported bovine meat in Malaysia, the MyCC report notes the presence of dominant players in the import trade, which may have oligopolistic control over prices.

The price of bovine meat does not seasonally vary much within a year. It also did not show any sharp increase during festive seasons, probably because bovine meat price is controlled by the government during festive seasons. Bovine meat is mostly imported in frozen form. In 2018, 150 thousand MT (USD498 million) of frozen bovine meat was imported mainly from India (78% share in value term) and two thousand MT (USD20 million) of fresh or chilled bovine meat were imported, of which 91% were from Australia.

Introduction

Bovine meat (meat derived from cattle or buffalo) is the third most consumed meat in the world after pigmeat and poultry meat. In Malaysia, bovine meat is widely referred to as beef although semantically, this is not accurate. Beef refers to cattle meat whereas buffalo meat is known by various names in different countries. The visual and taste similarities of the two make it indistinguishable by most consumers. Data presented by agencies such as the Department of Veterinary Services do not distinguish between cattle meat and buffalo meat implying that they are considered the same, at least in official statistics.

Did you know?

Cattle and buffalo-some differences

Cattle and buffalo belong to the subfamily of Bovinae. General characteristics include cloven hooves and at least males having horns.

Cattle (Bos Taurus) are the most common type of large domesticated ungulates and are raised for meat and milk.

Buffalo may refer to several different species. However, the one commonly referred to in Southeast Asia (SEA) is water buffalo (Bubalus bubalis), which have been domesticated as draft animals, particularly for tilling rice fields.

In terms of physical differences, cattle can be found in many different colours such as white, black and brown, whereas buffaloes are mostly black or gray. Buffalo usually have longer horns compared to cattle. Cattle have a flap along the neck called a dewlap while buffaloes do not.

Buffalo meat is generally darker and tougher than beef. The colour of buffalo fat is white, whereas that of cattle varies from pale cream to yellowish. Buffalo meat contains less saturated fat, calories, cholesterol as well as more protein and minerals as compared to cattle beef.

Bovine Meat Consumption

Globally, bovine meat consumption has steadily increased from 31.5 million tonnes (MT) in 1963 to 65.7 million MT in 2013. The United States is the largest consumer of bovine meat—11.6 million MT in 2013, that is 18% of the world total—followed by Brazil (7.86 million MT) and China (7.09 million MT). In terms of per capita consumption, Argentinians consume the highest quantity on average, 55.48 kg/capita in 2013, followed by Brazilians (39.25 kg/capita) and Americans (36.24 kg/capita).

In Malaysia, total meat consumption, which includes poultry meat, pig meat, bovine meat and mutton, has increased almost threefold in half a century, from 91 kcal/capita/day in 1963 to 266 kcal/capita/day in 2013. The share of bovine meat in total meat consumption has increased by over one percentage point from 7.7% to 9.0% over the same period. Malaysians favour consumption of poultry over other meat.

Southeast Asian countries, with the exception of Brunei (and Singapore, as data is unavailable), have been consuming less bovine meat than the world average. Despite the three-fold increase in the consumption of bovine meat since 1963 in Malaysia, per capita consumption of bovine meat in 2013 was about half the world average—6.52 kg/capita/year versus 12.15 kg/capita/year. Nevertheless, Malaysian per capita consumption of bovine meat was still among the highest in the SEA region.

Bovine Meat Production

The United States, Brazil and China are the largest bovine meat producers. Indonesia is the largest producer in Southeast Asia, followed by Myanmar and Vietnam.

Malaysia’s meat-producing cattle and buffalo and bovine meat production increased by 32% and 20% respectively from 1967 to 2017. These increments are still smaller than the growth registered by other countries. Malaysia remains one of the smaller producers of bovine meat in the SEA region. The country’s bovine meat self-sufficiency level increased from 18% in 2004 to 30% in 2010, before dropping to 22% in 2018.

Generally, the share of buffalo meat in overall bovine meat production declined in most SEA countries except Myanmar and the Philippines. In 1961, buffalo meat comprised 61% of total bovine meat production in Malaysia, and by 2001, the share fell to 13%. This phenomenon can be explained by the substitution of buffaloes as draft animals with farm machinery in the 1980s. In most countries, the cattle population increased relative to the declining buffalo population with economic transformation, resulting in greater bovine meat production. However, this was not the case in Thailand, where the declining buffalo population was not fully compensated by growth in the cattle population, significantly lowering bovine meat production.

Bovine Meat Price

Common complaints about the soaring price of bovine meat are not without grounds. The price of local beef rose by 82% from 2008 to 2018. In 2008, consumers had to pay RM18.70 for one kg of local bovine meat, whereas in 2018, the price was RM33.95. Worse, the price of the cheaper option, imported bovine meat, more than doubled over the same period. In comparison, the price of processed chicken increased by 20% —by less than RM2/kg. The gap in prices between chicken and bovine meat has been widening over the years, explaining the increasing consumption of chicken relative to bovine meat.

The price of bovine meat does not seasonally vary much within a year and have not increased sharply during festive seasons, probably because bovine meat prices are controlled by the government during festive seasons.

Further analysis is necessary to understand the rapid price increases over the years. MyCC’s report suggests several possible reasons. According to MyCC, the hike in the price of local ‘beef’ reflects the increasing import value of live cattle and the shift in the country source from Thailand to Australia in 2012. However, there are some doubts about this reasoning. First, the unit import value of live cattle in 2018 was only 27% higher than in 2013, whereas the price of local beef increased by 46% over the same period. Second, the shift of import source from Thailand to Australia in 2012 cannot explain the continued domestic price increase in the following years.

To explain the rising price of imported bovine meat in Malaysia, the MyCC report notes the presence of dominant players in the import trade, which may have oligopolistic control over prices. Although there are about 80 importers of bovine meat into Malaysia, two main importers collectively account for about 40-50% of imports in the past few years. MyCC identifies potential anti-competitive practices among the dominant players which include: exclusive agreements/ preferential treatment between key importers and overseas exporters attributed to long-standing relationships, and the imposition of tying (bundling) requirement where distributors and retailers are forced to purchase less favourable cuts from importers in order to buy the parts they want.

Bovine Meat Trade

Bovine meat is mostly imported in frozen form. In 2018, 150 thousand MT (USD498 million) of frozen bovine meat was imported. India was, by far, the largest exporter of frozen bovine meat to Malaysia (78% share in value terms), followed by Australia (12%) and New Zealand (5%).

In the same year, two thousand MT (USD20 million) of fresh or chilled bovine meat were imported, of which 91% (in value terms) was from Australia, followed by New Zealand (4%), the United States (3%) and Japan (2%). India’s exports of fresh or chilled bovine meat to Malaysia, on the other hand, are almost negligible. This has been attributed to the limited logistics capabilities of Indian exporters compared to exporters from developed countries like Australia.

Conclusion

Malaysia’s per capita bovine meat consumption is among the highest in Southeast Asia despite the country being one of the smallest producers of bovine meat in the region, with only 22% self-sufficiency. To support domestic consumption, Malaysia imports bovine meat, mainly from India (frozen) and Australia (fresh or chilled).

The price of local bovine meat has risen by 82% from the year 2008 to 2018. On the other hand, the price of processed chicken only increased by 20%. This perhaps explains the increasing consumption of chicken relative to bovine meat, and the common complaint of bovine meat becoming less affordable. The rising price of imported bovine meat could be attributed to the presence of dominant players in the import trade, which may have oligopolistic control over prices.