Summary of Key Points
Brazil, as China's largest source of imported beef (accounting for over 50% of the total import value), is about to exhaust its export quotas for China in 2026 (expected to be used up by September), with an additional 55% tariff imposed on any excess imports. This change has triggered a chain reaction throughout the industry: upstream processing companies are stockpiling goods in anticipation of the quota restrictions, while downstream food service businesses are urgently seeking alternative sources from countries like Uruguay and New Zealand. Although ordinary consumers may not directly feel the increase in beef prices, they could experience subtle changes such as reduced portions or decreased discounts when dining out. Additionally, due to previous losses in domestic cattle farming, the number of breeding cows has decreased, which will lead to even tighter supply of domestic beef in 2027, and it is likely that beef prices will not be lower than this year.
I. Brazilian Beef: The Mainstay of China's Beef Imports
Brazil is a crucial supplier for China, accounting for 562.9 billion yuan (over 53%) of the total 105.8 billion yuan in beef imports in 2025, three times more than Australia, which ranked second at 155.5 billion yuan. The annual import quota allocated to Brazil is 1.106 million tons, and as of July, 80% of this quota has been used, with the remaining amount expected to be consumed by September.
What does the exhaustion of the quota mean? Simply put, it will lead to a surge in import costs—any beef imported in excess of the quota will be subject to an additional 55% tariff on top of the existing tariffs. For example, beef that previously cost 100 yuan per kilogram could end up costing 155 yuan after the tax increase, making it less attractive for importers and resulting in a significant reduction in the volume of Brazilian beef entering China.
II. The Panicked Industry Chain
- Upstream Processing Companies: Stockpiling Quotas
Companies like Delis have started stockpiling goods as early as the first quarter of 2026, with inventory increasing by 43% by the end of March compared to the beginning of the year. This is because they anticipate price increases and want to secure a supply before the tariffs take effect.
- Downstream Food Service Businesses: Seeking Alternative Sources
Many restaurants that previously used Australian beef switched to Uruguayan and New Zealand beef after Australia's quotas were exhausted and tariffs were imposed last June. With Brazil's quota also about to be used up, businesses are even more anxious to find alternative suppliers. For instance, barbecue and hot pot restaurants in Beijing are now looking for other countries' beef products to avoid higher costs.
III. Consumers May Not Notice Price Increases Directly, but Subtle Changes Are Expected
Imported frozen beef is mainly sold to the food service and processing industries, while fresh beef purchased by households (such as brisket and tendon from supermarkets) is affected by domestic production. Therefore, you may not see direct price increases at the supermarket, but you could notice the following changes when eating out:
- Reduced Portions: For example, beef rolls might be cut from 200 grams to 180 grams, with the price remaining the same but the actual amount of meat decreasing.
- Decreased Discounts: Beef packages that used to cost 99 yuan may no longer offer discounts, or cheaper cuts (such as chest meat) may be used in place of more expensive parts.
- Higher Prices for Processed Foods: Products like beefballs and marinated beef rely on imported frozen beef, and with increased costs, manufacturers might raise prices quietly.
Why is this? Brazilian beef has been a major component of affordable food options, especially in budget-friendly hot pots and barbecues. Alternative sources from other countries either have limited supply or higher prices, making it difficult to fully replace Brazilian beef.
IV. Can Domestic Beef Fill the Gap?
The government's introduction of import quotas and tariffs is aimed at supporting domestic cattle farming. However, between 2023 and 2024, domestic cattle farmers suffered significant losses, leading many to sell their breeding cows, which caused live cattle prices to drop to a decade-low level. As a result, the number of breeding cows has decreased, and fewer calves will be born in 2027, further tightening the supply of domestic beef. If domestic farming efficiency does not improve (for example, by reducing breeding times or increasing meat yield), businesses are likely to continue to prefer cheaper imported beef, making it challenging for domestic beef to fill the gap.
V. Beef Prices in 2027: Likely Not Lower Than This Year
Considering both import and domestic factors:
- Import Side: With the exhaustion of Brazilian quotas, import volumes will decrease, and if traders compete for remaining quotas next quarter, prices are expected to remain high.
- Domestic Side: The reduction in breeding cows will lead to a smaller supply of beef in 2027, potentially driving up prices.
- Seasonal Demand: The fourth quarter is a peak season for beef consumption (such as before the Spring Festival), and with reduced supply, prices are likely to rise further.
In summary, the exhaustion of Brazilian beef quotas is a significant event that affects the entire beef industry chain, impacting traders, restaurants, and ultimately consumers. The tight supply of domestic beef will also make it more difficult for prices to decrease in the future.