China’s soaring demand for beef imports creates opportunities

When we think of China and meat, our first thoughts are of pork.

After all, pork consumption in China is about 54 million tonnes, according to the U.S. Department of Agriculture. Beef consumption is only one-tenth of that, at 5.7 million tonnes.

However, a Reuters news agency story says the growing number of affluent Chinese is developing a taste for beef. Restaurants featuring hot pots, Korean barbecue and hamburgers are springing up across the country.

The demand increased beef prices by one-third last year. Imported beef is now more affordable than domestic product. It is also seen as a safer alternative to the domestic meat industry, which has been rocked by a series of scandals, including thousand of pig carcasses floating in the Huangpu River flowing through Shanghai, pork tainted with banned feed additives and, in late May, a fire that killed 120 workers in a chicken processing plant.

Beef consumption in China has not grown and has varied for a decade between 5.5 million and six million tonnes. However, beef imports are soaring.

They are still second to pork imports, but the growth is more impressive, moving from almost nothing in the mid-2000s to 175,000 tonnes projected for this year, about double the amount imported last year. Hong Kong is a major gateway for meat into China, and its beef import numbers are also soaring, jumping from 79,000 tonnes 10 years ago to 325,000 tonnes expected this year.

Combined China and Hong Kong beef imports this year are forecast at 500,000 tonnes, up from 181,000 tonnes in 2011.

The high for combined China and Hong Kong pork imports was set in 2011 at 1.19 million tonnes and has declined to a projected 1.12 tonnes this year.

Beef imports could surpass pork imports in two years if they continue this impressive growth.

Chinese companies, eager to lock in stable food supplies, have been investing in foreign farms and food processing companies for the past few years.

Shuanghui International’s $4.7 billion bid late last month for top U.S. pork producer Smithfield Foods is seen as the Chinese company’s effort to access technology and quality pork.

The Reuters story notes several Chinese companies have invested in cattle breeding in Australia.

It quotes industry watchers as saying that the next step could be investment in beef processing plants, likely in Australia or New Zealand.

Chinese companies have spent a lot of money in recent years building modern hog production barns and processing plants, but little money has gone into the domestic beef industry.

The beef industry in China is not profitable and the land needed for cattle is in short supply.

South America and Australia have dominated the Chinese beef trade, but four Canadian firms were recently approved to export beef to China.

China has gradually been opening its market to Canadian beef since June 2011, when it agreed to allow imports of deboned beef from animals younger than 30 months, making Canada the first BSE-affected country to resume beef trade with China.

Western Canadian cattle producers have long complained about the lack of choice in the region’s packing industry, dominated by two players.

Perhaps down the road, if China’s taste for imported beef continues to grow, there could be an opportunity to attract Chinese investment into another packing plant.

Australia might be closer to China, but Canada’s beef industry, with its access to a wide open clean environment and its cattle tracking system, also has desirable attributes.

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