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
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
the value of the country’s beef imports in the first
11 months of last year
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