CONFIDENTIAL
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On the other hand, confirming the long's monopoly of livestock imports and extending it to marketing, slaughtering and delivery might arouse public concern over the need to protect the consumer against possible price hikes in fresh meat.
3.
it
To view the whole exercise in proper perspective, is necessary to explain the crucial factors in the present day
situation.
The implications to the consumer of the present system
4.
Under the present system, animals for slaughter are never owned by the abattoir operator, who merely provides a service to the animal owner. Animals are initially owned by the importer (or the farmer in the case of Hong Kong reared pigs), and they are sold as live animals to the meat retailer before admission for slaughter. The abattoir operator must accept an animal submitted for slaughter by a registered retailer (subject to statutory rules as to fees and time etc. being met); no-one other than a registered retailer may submit an animal for slaughter (except in certain specified emergency situations). The abattoir operator, therefore, is never in direct, formal contact with the importer or farmer: by the time the animal is presented to the operator it is always already the property of the retailer.
5.
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The price paid by the consumer for fresh meat consists of three components. Firstly, there is the price paid for the live animal by the retailer to the importer or farmer; secondly, the price paid to the abattoir operator by the retailer for slaughter; and thirdly, the retailer's costs and profits. Therefore, the Urban Council, as abattoir operator, has control only of the second of these components. Currently, (November-December 1986 figures) of the $13 paid by the consumer for a catty of good quality fresh boneless pork, $6.5 (50%) represents the price paid to the importer or farmer, $5 (38%) the retailer's costs and profits, and $1.5 (12%) the payment to the abattoir operator. It is clear that, under the existing system, the abattoir operator has no significant influence on the ultimate price paid by the consumer and that it is the price set by the importer or farmer which is, as of today, by far the most significant component of the consumer's costs. Since 80% of pigs slaughtered, and 99% of cattle, are imported by the Ng Fung Hong, all wholesale prices for animals are dependent on the wholesale prices set by the Hong, and effectively, so also is the cost of meat to the consumer. must be stressed that in the current situation Government and the Urban Council have no control on the retail price of fresh meat other than the controls in emergency legislation. The Hong has been keeping the price of meat stable, of its Own volition and accord, for the past 25 years.
6.
It
The provision of abattoirs in Hong Kong has always been on
on a no-competition base. Abattoirs are very expensive to build and run, and are only cost effective if run at close to their maximum throughput. Currently, the Kennedy Town Abattoir
CONFIDENTIAL
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