According to a report by the International Food Policy Research Institute (IFPRI), low prices are of foremost importance to China’s beef consumers. This benefits China’s consumers but only at the expense of health and safety standards, which are costly. Thus, global food prices – and beef in China up 50% year-on-year in 2007 – soaring to new highs may create an easily overlooked silver lining for China’s government to take advantage of.
Traditionally in China, where increasing awareness of substandard food is growing and rising incomes are combining to stimulate demand for certified high-quality food, realizing safety improvements has been difficult. Imposing tough, costly quality standards on China’s hundreds of millions of tiny producer families (which produce up 90% of China’s beef output) might have put them out of business while the state-run General Food Company wasn’t able to produce safe beef profitably. Yet soaring prices – although discounted due to rising feed costs – might in the long-run drive prices higher, allowing producers to implement quality controls without losing market share. China’s government has taken a number of health and safety steps in the past year and, despite the hit to their wallets, consumers could benefit in previously unexpected ways.
