NEW YORK – A declining cattle herd and beef production challenges are pushing China increase beef imports, according to a new report from Rabobank Food & Agribusiness Research.

Rabobank expects five years of 15 percent to 20 percent annual growth in China's beef imports — and smuggled beef — spurred by a structural supply deficit.

“China became a huge importer of beef in 2013,” noted Chenjun Pan, Rabobank analyst. “According to official statistics, China’s beef cattle stock has been in continual decline since 2004, due to a lack of government support, low productivity, and the lack of farmers willing to invest in beef production, deterred by high costs and a shortage of labor.”

China lags behind all major beef-producing countries in genetics, breeding, productivity, farm management, grassland and feed resources and other key aspects, according to the report. The Chinese government has raised its support of the beef industry, but not enough to narrow the gap between China and other beef-producing countries. China needs to ensure some beef supplies to the country’s Muslim population.

Signs of China's changing attitude towards opening its markets to beef imports include lifting a ban on Australian fresh and chilled beef imports, Rabobank reported. Also, China is likely to allow imports of beef from Brazil and the US by the end of 2014.