(Yicai) June 3 -- The price of beef has fallen sharply recently in China as the market is flooded with the fresh meat due to a supply glut driven by inexpensive imports, a downturn in the dairy sector that has resulted in the slaughter of more cows and weaker-than-expected demand.

The average wholesale price of beef plunged 18.4 percent in the last week of May from the same period last year to CNY61.96 (USD8.60) per kilogram, according to a weekly price report released by the Ministry of Agriculture and Rural Affairs of China.

Beef prices are tumbling because of abundant supply due to cheap imports, the slaughter of cows by dairy farmers who are struggling to make ends meet, and weak demand, Song Liang, an independent dairy analyst, told Yicai.

The price of imported beef sank 21 percent last year from the year before to USD5,195 per ton, making it significantly cheaper than local produce. As a result, imports climbed 2 percent over the period to 2.7 million tons, while China’s beef output jumped 4.8 percent to 7.5 million tons, according to the China Cattle Industry Association.

On top of this, prolonged low milk prices are forcing dairy farmers to slaughter their cows, resulting in a glut of beef on the market.

The price of a dairy cow for slaughter has halved to CNY12 (USD1.66) from the middle of last year, a dairy farmer in northern Hebei province told Yicai. And fresh beef is now selling for only between CNY36 and CNY40 a kg.

The oversupply in the dairy sector should bottom out next year, which will mean fewer dairy cows will be culled, at which point the adverse impact on the beef market should ease, Song said.

Beef prices are likely to stay low this year, the cattle association added.

Editor: Kim Taylor