China’s velvet antler value chain analysis : a case study in Jilin Province, China : School of Agriculture and Environment, Massey University, Palmerston North, New Zealand

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In China, the velvet antler industry not only provides a large number of employment opportunities but also becomes the pillar industry of the breeding area. Deer are precious and economically valuable livestock in China, and the velvet antler produced by male deer each year is considered an extremely high-quality medicinal material by traditional Chinese medicine and the major source of income for Chinese deer farmers. However, the velvet antler industry also experienced some challenges such as insufficient production capacity, unstable quality, and small breeding scale. For example, domestic deer were classified as wildlife in past policies and were managed by multiple departments. Therefore, the breeding of deer and the processing and sales of deer products like velvet antlers were under many restrictions due to policies. This has harmed the development of the entire industry. In a state where the overall development prospects of the industry were not optimistic, the attraction of investment, and the formulation of standards and policy had also been adversely affected. However, the sudden outbreak of COVID-19 at the end of 2019 brought changes to China's velvet antler industry. Since domestic deer were classified as wildlife, the comprehensive ban on wildlife products introduced in the early stages of the epidemic was equally effective for the deer industry. Due to uncertainty about whether domestic deer farming would still be legal in the future, the entire industry was in a state of panic at that time, and the development of the whole industry suffered arrested development. To protect the domestic velvet antler industry and the rights of the practitioners, the new policy was introduced in the middle of 2020. By classifying the domestic deer as livestock, the velvet antler industry no longer needs to face the policy resection like before. This no doubt had brought opportunity to this industry. However, problems such as increasing breeding costs and transaction costs caused by the epidemic have inevitably harmed this industry. Other than the challenges brought by the epidemic, the future of this industry also faces challenges from other aspects. Under the premise of long-term constraints in the past, what is the current status of China’s velvet antler value chain and how will it face the policy changes? What opportunities and challenges does it face? How should it seize the opportunities and respond to the challenges? These are the main objectives of this study. A qualitative method was adopted in this study. Secondary data was collected through relevant journals, government publications, and other means. The primary data was collected via semi-structured face-to-face interviews with 19 different respondents from velvet antler value chain actors from the study area, Jilin province. Through these data, this study identified the current situation of the local velvet antler value chain and the opportunities and challenges it faces. Based on information such as product quality, final price, target consumer groups, and economic strength of practitioners, four types of velvet antler value chains were found in the research: low-income value chain, middle-income value chain, high-income value chain, and e-commerce value chain. For example, low-income value chains mostly exist in areas closer to the production area, the products in these value chains are mostly unprocessed primary agricultural products with low prices. Medium-income value chains are more common and offer a wider range of products, but due to the limited scale of most actors in the value chain, the prices they receive are not ideal. The high-income value chain is more profitable for value chain actors, but due to the high requirements for entering this value chain, most of the actors are unable to meet the standards. In the research, many challenges faced by the industry were found. Financial challenges caused by insufficient funds, limited production capacity, and rising costs; Technical challenges caused by lack of professional knowledge and variety degradation; Market challenges brought by international competitors and domestic peers; And policy challenges caused by the previous policies. But there are also opportunities, such as the expansion of the market size of velvet antler products; the introduction of positive policies for the deer industry; The widespread application of advanced technology in the agricultural field; And the improvement of product standards and traceability systems. Based on opportunities and challenges, if policymakers can introduce targeted assistance policies, such as increasing investment in the deer industry and improving loan mechanisms or formulating comprehensive standards, then, China's velvet antler industry will be able to seize the opportunity brought by the macroeconomic policy change, improve the shortcomings of the industry, achieve industry specialization, increase the profits, and further expand the market scale of China's velvet antler industry.
Figure 3-3 is reused under a Creative Commons BY-NC-SA 4.0 license & Figure 3-5 under a Creative Commons BY-NC-ND 3.0 license.