'Huge amounts' of beef going to China despite ban: U.S. official

By P.J. Huffstutter and Krista Hughes

CHICAGO and WASHINGTON D.C. (Reuters) - "Huge amounts" of American beef are bypassing China's import bans, a top U.S. trade official said this week, even as the Chinese government cracks down on agricultural smuggling.

The meat enters through Hong Kong, Deputy U.S. Trade Representative Robert Holleyman said at the National Lieutenant Governors Association conference on Wednesday.

U.S. beef is currently barred from mainland China because of previous cases of bovine spongiform encephalopathy, also known as mad cow disease. U.S. trade officials have been trying to get China to lift the ban, but with little success.

Holleyman said U.S. officials had told their Chinese counterparts: "You need an agreement like Hong Kong. And that's what we have been negotiating."

How much U.S. beef is being transhipped through Hong Kong into China is not known, trade officials said. But the volume that comes in from the United States alone is more than all the beef consumed in Hong Kong, they said.

The U.S. exported more than 154,500 tonnes of beef and beef products to Hong Kong last year, up nearly 19 percent over the previous year, according to USDA data.

Industry sources estimated last year that hundreds of thousands of tonnes of beef from countries such as Brazil and India are smuggled into China through Hong Kong and Vietnam.

The unofficial trade reflects China's hunger for beef, as the growing middle class demands more high-protein food.

Last month, Chinese customs officials arrested 33 people suspected of smuggling 6,000 tonnes of beef into the country from the United States, according to the China Daily website. The beef was worth about $32.6 million, the news report said.

U.S. restaurant company McDonald's Corp said it does not source beef for its Chinese restaurants from Hong Kong. About half of the beef it uses in China is local, the company told Reuters on Thursday. The rest comes from New Zealand, Australia and Uruguay.

Beef supplies from Australia could get tighter this year, helping to push up prices, analysts said. Ranchers in the world's third-biggest beef supplier are culling fewer cows as heavy rains revive pastures scorched by a prolonged drought.

A slower slaughter rate could boost Australian cattle prices to record highs and ramp up costs for key consumers.

(Reporting By P.J. Huffstutter in Chicago and Krista Hughes in Washington D.C. Additional reporting by Dominique Patton in Beijing and Lisa Baertlein in Los Angeles. Editing by Andre Grenon)