Ng Fung Hong 'will not resist' end to live cattle import monopoly
Live cattle import monopoly tipped to end as Ng Fung Hong indicates it is happy to see more competition and government talks to ministry
The city's sole supplier of live cattle says it does not object to opening up the market to more importers of mainland beef, lawmakers learned at a panel meeting yesterday.
The monopoly held by Ng Fung Hong may be coming to an end as the government signalled its intention to expand the market, telling legislators it was discussing arrangements with the Ministry of Commerce.
Lawmakers, beef wholesalers and retailers have been calling for the change to curb rising prices.
Hong Kong-listed Ng Fung Hong is the only export agent endorsed by the ministry to bring in live cattle from the mainland. It raised the wholesale price of fresh beef six times last year.
"We hold an open attitude towards the opening up of the live cattle market and will not resist it," Ng Fung Hong wrote in a letter to the Legislative Council panel on food safety and environmental hygiene.
It warned, however, that an increase in suppliers might lead to a lack of co-ordination, resulting in unstable supply. The company denied making huge profits, saying the high prices were due to rising costs of cattle feed and workers' wages and an increasing demand for beef on the mainland.
Its gross profit margin fell from 13.4 per cent in 2006 to 6.5 per cent last year, with gross profit of about HK$25 million.
Retailers and wholesalers who attended the panel meeting all urged the government to allow more importers of mainland beef. Some said the high prices had made it very difficult for them to continue business.
They said the city slaughtered 50 to 60 cattle daily in the past two years, a fall from about 130 a day in 2007, but did not know the reason behind the decrease.
Food and Health Bureau undersecretary Professor Sophia Chan Siu-chee said introducing competition would, in theory, benefit market development.
But, the government was concerned whether having more distributors would help, if the prices were driven up by tight supply and high demand, she said.
If that were the case, new entrants to the market might have to operate on a smaller scale, which would mean higher costs.
Democratic Party lawmaker James To Kun-sun said this should not be a worry as any aspiring suppliers should ensure they could compete with Ng Fung Hong before entering the market.The panel passed a motion urging the government to have a timetable for opening up the imported live cattle market.
Consumption of fresh beef in relation to all types of beef fell from 22 per cent in 2006 to 6 per cent last year.