GF Securities: Implementing a quota system for beef imports and additional tariffs, optimistic about the upward trend in beef cattle price cycles

The Zhitong Finance App learned that in 2026, China's total beef import quota was 2.688 million tons, of which Brazil's share was 1.106 million tons, Argentina's 511,000 tons, Uruguay 324,000 tons, and Australia 205,000 tons, according to a research report. With the effects of reducing beef production capacity in the early stages, beef cattle prices have now entered an upward channel. At the same time, the implementation of a quota system for imported beef products will effectively ease supply pressure on the import side. It is expected that domestic beef cattle prices will continue to rise cyclically in '26, increasing the flexibility of animal husbandry companies' performance. In addition, stocks of large packs of powder in the raw milk industry are gradually being eliminated, and supply and demand in the industry are gradually being balanced. Currently, the supply of raw milk has reached an inflection point, and we are also optimistic that the 2026-27 raw milk cycle will rise.

The main views of GF Securities are as follows:

Incident: On December 31, the Ministry of Commerce issued a notice ruling that the increase in imported beef has caused serious damage to China's domestic industry. It decided to adopt safeguard measures for imported beef in the form of “national quotas and additional tariffs” from January 1, 2026. The implementation period of the safeguard measures is 3 years, and an additional 55% tariff will be imposed on imported beef that exceeds the quota, and the quota will increase year by year.

Imported beef accounts for 27% of total supply in 2024, and the implementation of a quota system mitigates the impact on imports

According to data from the General Administration of Customs and the National Bureau of Statistics, in 2024, China's beef imports were 2.87 million tons, up 5.0% year on year. Among them, Brazil, Argentina, Uruguay and Australia imported 1.34 million tons, 590,000 tons, 240,000 tons, and 210,000 tons respectively, accounting for 46.6%, 20.6%, 8.4%, and 7.4% respectively; domestic beef production was 7.79 million tons, and imported beef products accounted for 27% of China's total beef supply, of which imports from Brazil, Argentina and Uruguay accounted for about 12.6%, 5.6%, and 2.3% respectively.

With the implementation of the quota system for imported beef, the total import quota for beef in '26 accounted for 93.5% of total imports in '24; in terms of tax rates, in Brazil and Argentina, beef imported within the quota is subject to tariffs at the current rate of 12%, and 55% tariffs will be added to the portion above the quota, bringing the total tariff rate to 67%. The purpose of implementing safeguard measures for imported beef is to mitigate the impact of imported beef on the domestic beef cattle industry, which is expected to ease the pressure on domestic beef supply.

Beef cattle price cycle recovery, seize joint investment opportunities between beef cows and dairy cows

Due to deep losses in early beef cattle breeding and loss of production capacity, beef cattle supply has entered a contraction channel since 25 years ago, and beef cattle prices have rebounded in cycles. According to data from the National Bureau of Statistics, the number of cows in stock in the country at the end of the 3rd quarter of '25 was 99.32 million heads, down 0.6% from quarter to quarter and 2.4% year on year. According to estimates of the farming growth cycle, it is expected that beef prices will continue to rise cyclically in '26. The rise in beef cattle prices will cause animal husbandry companies to eliminate cows and reduce losses, and are highly elastic to animal husbandry companies' profits.

Aspect of the target

It is recommended to focus on joint investment opportunities between beef cattle and dairy cows, and focus on Youran Animal Husbandry (09858) and Modern Animal Husbandry (01117) as targets.

Risk Alerts

Agricultural product price fluctuation risk, animal disease risk, policy risk, food safety, etc.