Statistical Revision Significantly Alter China's Livestock PS&D
China's State Statistical Bureau recently released livestock estimates for 1997 and revisions for 1996 that indicate China's animal inventories and meat production have been greatly over reported. According to China's revisions, total meat production in 1996 was overreported by more than 20 percent. The new information on the livestock sector provides a base from which to begin considering further revisions to the China PS&D.
China's beef, pork, mutton, and poultry production and consumption account for about 40 percent of the meat produced and consumed by the countries covered in the Livestock and Poultry: World Markets and Trade Circular. Also, over the last five years, China's gains in meat production and consumption account for most of the growth when examining the countries covered in the Circular in aggregate. However, questions have been raised about the reliability of China's official meat production statistics.
In the last few years, a consensus view has emerged among agricultural researchers in China and elsewhere that government statistics as reported by the State Statistical Bureau (SSB), China's official statistical agency, significantly overstate actual meat output. The degree of overreporting is not completely understood at this time, but is believed by many researchers to be significant.
In this issue of Livestock and Poultry: World Markets and Trade, China's livestock production, supply, and demand (PS&D) estimates are unchanged from the March 1998 issue, and no estimates are included for 1999. In mid-October, China's SSB released 1997 livestock estimates, including species detail, and revisions for 1996. However, the new estimates were not available in time to incorporate into a new China PS&D.
The unavailability of crucial data and the knowledge that significant revisions were forthcoming from China created a serious problem when trying to construct a current PS&D for China's livestock sector. One major problem was that not enough data were available to construct a PS&D before 1996, and presenting a discontinuous series could lead to misinterpretations of what happened in China's livestock sector between 1995 and 1996. Also, without knowing the results of China's agriculture census and the subsequent SSB revisions to the livestock statistics, knowing where to begin revising the China PS&D was difficult. The just released revisions now offer a baseline from which to build a revised Chinese PS&D. The SSB is also expected to issue historical revisions-possibly in five-year increments-but the release schedule is unknown at this time.
SSB Revisions and USDA Estimates
The 1997 livestock estimates and the 1996 revisions recently issued by China's SSB indicate that animal inventories and meat production are significantly lower than previously reported. The SSB revisions indicate that total meat production in 1996 was 45.9 million tons, almost 21 percent less than the 58.5 million tons previously reported. China's total meat production includes beef, pork, mutton, poultry meat, and rabbit meat. All meat production for 1996 was revised downward, with beef revised the most at about 28 percent less. Poultry meat production was not reported as a line item, but is estimated to be about 19 percent less than previously reported.
SSB estimates that in 1997 all Chinese meat production rose 12 percent to 51.5 million tons. The current USDA PS&D estimated 1997 production at 62 million tons. Initial reports for 1998 indicate that through the first half of the year, Chinese meat production rose 9 percent, but it is uncertain from what production number the gain is based on.
The Foreign Agricultural Service's 1998 Annual Livestock Report for China (CH8028), submitted by FAS Beijing, included PS&D estimates for 1997-1999 derived from a single, preliminary total meat production number that China released earlier this year. Total meat production was reported to be 53.34 million tons in 1997, an 8-percent increase over 1996, and no further details were released. Using this piece of information, Chinese meat production in 1996 would have been about 49.4 million tons. This was down sharply from the 59 million tons of meat production reported in China's 1997 State Statistical Yearbook.
SSB 1997 Estimates and 1996 Revisions
Compared with Current USDA PS&D
Current USDA PS&D
|Animal Inventories, 1,000 head|
|Sheep and goats||276,857||242,000||237,283||255,560||-14.3||5.6|
|Meat Production, 1,000 MT|
|The current PS&D is
from the March 1998 Circular. Revised estimates are SSB's
latest livestock data from the 1998 State Statistical
* Poultry derived from total meat production.
As pointed out in the annual report, there were large inconsistencies in the Chinese livestock statistics and major revisions were pending. The estimates provided a good indication of the magnitude of China's forthcoming revisions. The SSB's subsequent revision reduced the initial 1997 meat production estimate by an additional 2 million tons.
The Economic Research Service (ERS) of USDA is also working on a preliminary set of new estimates of China's meat production based on China's household consumption survey data. The methodology and findings are preliminary and are undergoing review. Except for poultry, for which China is the world's second largest importer, China imports very little meat or meat products. Therefore, nearly all of China's rising demand for meat is assumed to be met by increased domestic production. But China's household consumption survey data, which most researchers deem more scientifically sound and reliable than the administrative reporting system, indicate that China's official statistics overstated meat output beginning in 1990.
For example, China's official reported pork production for 1996 was over 40 million tons, while urban and rural per capita household consumption were 17.07 and 11.85 kilograms, respectively. Using a total population of 1.21 billion, the 40 million ton production figure implies that per capita consumption was nearly 33 kilograms in 1996. Even making the generous assumption that pork consumed outside of the home increases total consumption by one-third, China's official 1996 pork production data is still sharply higher than total production derived from the survey data. The statistics for beef, mutton, poultry meat, and eggs all exhibit a similar pattern, though to differing degrees.
Preliminary results from ERS's research based on the consumption data indicate that meat production in 1996 is over reported by about 30 percent. Pork production in 1996, the predominant meat produced in China, is estimated to be about 20 percent less than officially reported. Beef production, as indicated by consumption data, is the most seriously over reported meat, at nearly 60 percent less than current estimates. Note however, that the ERS results incorporate a number of important assumptions. The results are very sensitive to the assumptions made on the quantity of per capita out-of-home (restaurant, etc.) meat consumption and the conversion factor between carcass weight and retail meat weight.
How Did The Discrepancies Develop?
Close examination of China's meat production statistics, focusing in particular on the period since the beginning of economic reform in 1980, reveals two important and curious anomalies. First, through most of the decade of the 1980's, China's official meat production statistics are significantly lower than implied in official urban and rural household per capita survey consumption statistics. Second, and in sharp contrast to the first, the relationship abruptly shifts so that by the early 1990's, official statistics begin to sharply overstate the levels implied in the per capita consumption statistics.
The source of the large discrepancy between the two sets of official statistics is difficult to verify, though the limited anecdotal evidence available suggests a plausible explanation. First, as China's economic reforms progressed in the 1980's, livestock production became increasingly liberalized. The share of output from collectivized production units declined in favor of individual household and specialized household producers. Producers began to respond to the relative changes in input and output prices. Furthermore, livestock prices were the first consumer prices to be liberalized, leading to rapid increases in animal inventories and meat output.
However, the statistical collection system used to track livestock inventory numbers and meat output data continued to rely on the old comprehensive, highly centralized reporting system where, beginning at the village, each level of government collected data from the next-lowest administrative unit, aggregated it, and reported it upwards. This system became increasingly ineffectual as the collective system of agricultural production began to be dismantled in the late 1970's.
Underreporting of meat production occurred during the 1980's because of the gradual reduction in the role of the central government in meat procurement, distribution, and marketing. Farmers were encouraged to increase small private livestock raising activities in order to increase incomes and raise the national supply of meat products. At the same time, increasing amounts of meat circulated outside of the state marketing and retail network. The traditional comprehensive accounting system was not adjusted to handle the new environment, leading to consistent underreporting of meat production.
The tendency to underreport statistics, which is evident in the earlier years of reform, was transformed into over reporting by the end of 1980's because of two factors. First, there is double-counting of animals-counting of animals at individual farmsteads, specialized livestock household operations, and larger commercial operations at each village, town, or township; but some animals are counted a second time at slaughterhouses. In some areas, statistical officials reconcile these two counts. Other areas, however, do not, leading to growing overreporting of animal numbers, and therefore meat output.
The second factor is that local officials are rewarded for reporting inflated data. Such data are used as the criteria for evaluating the performance of the relevant government and party departments and officials. Local officials have a strong incentive to report significant gains in agricultural development because promotions are closely tied to progress in the local economy. Therefore, it is not surprising that reported meat production tends to inflate as statistics are passed upwards through the layers of government. The only check on this number occurs at the very lowest level-the village-where the tax paid on animals give some indication of the true inventory numbers. However, beyond this level there are no checks. Officials at each higher level have few incentives to report poor or even moderate results, but instead are inclined to report sustained, rapid development in the livestock sector whether or not that is actually the case.
The Work Begins...
Data reported in the China 1998 Livestock Annual Report and ERS's research are preliminary and must be used with caution. With China's release of 1996 and 1997 revisions, researchers have a starting point from which to further assess the Chinese livestock sector. As previously noted, China is expected to issue historical revisions but it could be some time before they are available. In the meantime, further research and estimates will be done to update the China PS&D in time for the next circular release in March 1999. The revised inventory estimates imply that other livestock products, such as cattle hides and tallow, will also have to be re-estimated to provide an accurate picture of China's livestock sector.
USDA and China's Ministry of Agriculture and State Statistical Bureau have been jointly cooperating on projects that are designed to advance the quality and accuracy of China's statistics. In the future, China's livestock sector could be better understood as China considers implementing survey-based statistics for its livestock sector.
This report was prepared by Hunter Colby, ERS, 202-694-5215 and Joel Greene, FAS, 202-720-6553.