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Agricultural News

China's Growing Beef Appetite Creates Opportunities for Key Suppliers

Thu, 29 Aug 2013 15:22:11 CDT

China’s Growing Beef Appetite Creates Opportunities for Key Suppliers
Beef consumption in China has risen steadily over the last few years. According to a new report from the Rabobank Food & Agribusiness (FAR) Research and Advisory group, rising incomes, dietary shift and urbanization are driving the increasing Chinese appetite for beef. The report, "The Dragon's Appetite for Beef: Rising Opportunity for Key Beef Suppliers," finds that 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," says Rabobank Food & Agribusiness (FAR) Research and Advisory group 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. More than 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. labor 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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