Na­tion tack­les meaty mat­ter of beef, mut­ton

A grow­ing ur­ban pop­u­la­tion and chang­ing di­ets are caus­ing short sup­plies of the sta­ples and push­ing up con­sumers’ costs, Zheng Yangpeng re­ports

China Daily (Canada) - - BUSINESS -

At the year- end con­fer­ence of t he Nat i ona l De­vel­op­ment and Re­form Com­mis­sion, Chair­man Xu Shaoshi was talk­ing about en­sur­ing sta­ble prices when he sud­denly switched to the topic of meat.

“Th e most ur­gent short­ages in­volve beef and mut­ton. Prices are ris­ing quickly, and in some ar­eas, you can’t buy these meats, no mat­ter what you’re will­ing to pay,” he said.

He said that the NDRC, the na­tion’s top eco­nomic plan­ner, had spo­ken with the Min­istry of Com­merce about ar­rang­ing emer­gency im­ports of 200,000 met­ric tons of meat.

In Septem­ber, the NDRC said it would in­vest 1.7 bil­lion yuan ($278 mil­lion) to de­velop large do­mes­tic beef and mut­ton pro­duc­ers.

Start­ing from about 2006, the cost of rais­ing cat­tle soared and squeezed farm­ers’ profit mar­gins. Cat­tle yards be­gan to cull their cows and seek al­ter­na­tives, such as rais­ing pigs.

Since then, beef has been in short sup­ply in China. Ris­ing do­mes­tic prices of beef and mut­ton have pushed the coun­try to seek them abroad.

Ac­cord­ing to the US Meat Ex­port Fed­er­a­tion, China’s beef im­ports in the first 10 months of 2013 to­taled 253,196 tons, com­pared with just 38,251 tons in 2012.

In the first 11 months of 2013, China im­ported 282,400 tons of beef, val­ued at $1.19 bil­lion, ris­ing 413.5 per­cent and 446.8 per­cent year- on- year re­spec­tively; and im­ported 237,800 tons of mut­ton, val­ued at $ 874 mil­lion, in­creas­ing 112.1 per­cent and 127.6 per­cent year-onyear re­spec­tively. And the pro­por­tion of im­ported beef and mut­ton ac­counted for about 5 per­cent of the to­tal con­sump­tion in the coun­try, ac­cord­ing to sta­tis­tics re­leased by the Min­istry of Com­merce on Thurs­day.

But ex­perts said last year’s spike was spe­cial and wasn’t likely to per­sist.

Pan Chen­jun, an an­a­lyst with Rabobank In­ter­na­tional, said that in 2013, the govern­ment eased re­stric­tions on some pre­vi­ously banned meat im­ports. As a re­sult, pre­vi­ously “il­le­gal” im­ports moved into the col­umns of of­fi­cial data. Pan said that was the main rea­son for the surge.

China has banned US beef since a mad cow dis­ease scare in 2003, al­though US beef still showed up on Chi­nese ta­bles be­cause of smug­gling or im­ports via third coun­tries.

At tech­ni­cal trade talks

1.19

the value of the coun­try’s beef im­ports in the first

11 months of last year

5

the pro­por­tion of im­ported

beef and mut­ton in the coun­try’s to­tal con­sump­tion in Bei­jing on Dec 23, Chi­nese of­fi­cials promised to ease re­stric­tions on US beef, without a def­i­nite timetable.

Pan said China’s beef im­ports are likely to rise 30 per­cent an­nu­ally in the next few years. Im­ports could dou­ble by 2018, and that, she said, is the “most con­ser­va­tive es­ti­mate”.

Two ma­jor fac tor s are driv­ing China’s beef im­ports: ur­ban­iza­tion and a chang­ing diet struc­ture, ex­perts said.

For ex­am­ple, in 2010, the Chi­nese con­sumed an av­er­age of 4.87 kilo­grams of beef and 3.01 kg of mut­ton, both up 12 per­cent from 2005, ac­cord­ing to the NDRC. The agency fore­cast that by 2015, the num­bers will rise to 5.19 kg and 3.23 kg, re­spec­tively.

Av­er­age an­nual per capita beef con­sump­tion in de­vel­oped coun­tries is 50 kg. The strik­ing gap sig­nals huge po­ten­tial.

Ad­di­tion­ally, a grow­ing num­ber of mid­dle- class and af­flu­ent Chi­nese are buy­ing im­ported meat on­line, partly due to grow­ing con­cern over the coun­try’s food safety.

E-com­merce com­pany Yhd, which is ma­jor­i­ty­owned by Wal-Mart Stores Inc, told China Daily it now sells beef and mut­ton un­der its own brand, as well as cuts from other sup­pli­ers.

Un­der its own brand, it sells beef from Aus­tralia and New Zealand to con­sumers in Bei­jing and Shang­hai. Sales have been grow­ing 100 to 150 per­cent each month. For other sup­pli­ers, monthly sales have been grow­ing about 220 per­cent, it said.

Sf­best, an on­line food su­per­mar­ket owned by SF Ex­press (Group) Co, told China Daily that it sold 114,075 pack­ages of Aus­tralian beef and mut­ton in Novem­ber, up 71 per­cent from Oc­to­ber.

How­ever, Pan said that buy­ing im­ported beef and mut­ton isn’t a mass-mar­ket trend. Most or­di­nary con­sumers still pre­fer to buy meat at lo­cal mar­kets, where prices are lower.

Do­mes­tic beef and mut­ton prices have great sway over con­sumers’ meat-buy­ing decisions, and the ris­ing lo­cal prices have re­pressed con­sumer de­mand, she added.

As­sum­ing that’s true, it means pentup de­mand for beef and mut­ton will be un­leashed once cheap prod­ucts are avail­able. And that means last­ing op­por­tu­ni­ties for Aus­tralia, Uruguay, New Zealand, Canada and Ar­gentina, the five big­gest beef ex­porters to China.

For Aus­tralia, China is al­ready its third­largest ex­port des­ti­na­tion af­ter the US and Ja­pan.

Coun­tries that are still on China’s im­port ban list have high hopes as re­stric­tions are scrapped.

Joel Hag­gard, se­nior vice-pres­i­dent of the Asia-Pa­cific re­gion for the United States Meat Ex­port Fed­er­a­tion, wrote in a De­cem­ber ar­ti­cle: “The United States is well-suited to pro­duce and ship large vol­umes of spe­cific cuts that will form the core of China’s high-qual­ity beef de­mand.

“On the other hand, the ab­sence of US prod­uct from the mar­ket cre­ates hur­dles for re-en­try.

“But the re­wards should be large, if these chal­lenges can be over­come. With un­fet­tered ac­cess, China is poised to gain a place in the top five US beef ex­port des­ti­na­tions, along with Ja­pan, South Korea, Mex­ico and Canada.”

An­a­lysts said lured by the prospect, more merg­ers and ac­qui­si­tions among Chi­nese and for­eign pro­ces­sors will take place.

For ex­am­ple, Chi­nese pork giant Shuanghui In­ter­na­tional Hold­ings Ltd (now known as WH Group Ltd) last year bought US-based Smith­field Foods Inc for $4.7 bil­lion. Jack Freifelder in New York contributed to this story. Con­tact the writer at zhengyang­peng@ chi­nadaily.com.cn

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