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LMC: Economics Workshop Shows Growth in Chinese Beef Demand

20 August 2013

IRELAND - A key message from the IMS Economics Workshop recently held in Co Kilkenny was the increasingly important role of China on the global meat market,with particular emphasis placed on its importance on the global beef industry, write market analysts at the Livestock and Meat Commission.

The workshop is an annual event organised at different locations across the world aimed at economists, analysts and other professionals with expertise in the meat and livestock sector.

Beef production in China is widely spread across the country but with the two most important beef production regions being the North and Northeast. The Chinese beef industry experienced strong growth between 1978 and 2006 and this was followed by a period of contraction and falling beef production from 2006 to 2012.

This fall in production was driven by a lack of profitability in small scale backyard beef production which had been the major source of cattle for the Chinese beef industry.

This decline in production occurred despite beef being the most expensive of the major meats. Other important factors in the decline in beef production were high grain prices and concerns about the over grazing of grasslands.

These factors encouraged movements away from beef production towards dairy production and where conditions allowed the production of other crops. Consumption of beef in China has shown a gradual increase since 2011 with demand for beef products increasing as the Chinese population becomes increasingly affluent. After a period of decline in beef production between 2006 and 2011 the levels of beef production in China have remained fairly constant between 2011 and 2013.

With a growing demand for beef and no increase in domestic production China has become reliant on imports to meet demand. The demand for beef has grown further in China on the back of safety scares in pork and poultry production.

This increased consumer demand and high beef prices have led to a renewed interest in beef production in recent times in China butin the form of larger scale, more efficient production systems.

Australia currently dominates the beef import market in China with 20,000 tonnes of frozen beef imported into China in 2011. There are however signs of Uruguay increasing their share of this lucrative market. Imports are primarily high quality cuts of beef to meet China’s growing demand for beef muscle cuts with imported beef tending to be the best quality of beef available on the Chinese market.

These high value imports can compete against domestic produce due to tight supplies and the high domestic beef price.

With a rapidly growing Chinese population that reached 1.4 billion people in 2012 and with beef consumption reaching 4.9kg/person/year any domestic growth in beef production will be unable to meet the growing consumer demand for beef in China. Increasing demand led to imports of beef increasing from 26.7 thousand tonne in 2011 to 70.6 thousand tonne in 2012 and can be expected to grow further in the future as demand outstrips domestic supply.

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