China’s Growing Appetite For Beef

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China’s Growing Appetite For Beef

China’s Growing Appetite For Beef
September 12
14:16 2013
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Beef consumption in China has risen steadily over the last few years. According to a new Rabobank report, rising incomes, dietary shift and urbanisation are driving the Chinese appetite for beef.

With local production unable to grow fast enough to meet increasing demand, the Chinese market provides a great opportunity for exporters from the key beef producing countries. These include exporters in Australia, New Zealand, Brazil, Uruguay, India and potentially the United States, if it’s suspension from the Chinese market in the aftermath of the 2004 BSE outbreak is lifted.

“The consumption of beef in China is expected to rise, on a per capita basis, by 24 percent in the coming decade,” explains Rabobank Analyst, Guilherme Melo. “This is actually below what it should be, as supply shortages and rising prices are restricting demand. Nonetheless, while market share will probably remain flat over the next ten years as a result, the absolute volume will increase by roughly 25 percent, adjusted for population growth.”

Beef is a niche product in China, accounting for only 8 percent of per capita meat consumption, in contrast to 22 percent for poultry and 65 percent for pork. It is generally considered more of a special occasion item, rather than an everyday meal option. Over an estimated 60 percent of total beef consumption takes place outside the home with the major options for eating away from home including ‘hot pot’, canteens at work, Western style restaurants and quick service restaurants (QSR) such as McDonald’s and KFC.

While demand has been growing at a reasonable pace, Chinese beef production has stagnated since 2006. This stagnation is mainly attributable to a low economic return for beef production compared to other agricultural activities, which in turn is intrinsically linked to a combination of high input costs (e.g. labour and feed), poor genetics, reduced government support and difficult access to rural credit.

To correct the market imbalance, imports will remain on the rise over the coming years. This will offer great opportunities for exporters from the key beef producing countries, most notably Australia, which is not only geographically closer, but is also well placed to supply a variety of beef products to meet different segments in China’s market. However, other important exporter countries are also likely to benefit, and no specific country is expected to dominate the market, given that China is expected to provide or increase access to more countries wishing to enter its beef market.

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