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Agricultural News


Just How Important would Market Access to China be for US Beef Exports and the Global Markets?

Mon, 17 Apr 2017 11:12:24 CDT

Just How Important would Market Access to China be for US Beef Exports and the Global Markets? Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Dr. Glenn Selk. Today, Dr. Peel examines just how important access to China's market might be for U.S. beef exports, as hinted to by China's government recently.


"In the fall of 2016, the Chinese government indicated a willingness to open China to U.S. beef. Although talks have been ongoing, no agreement has been reached on protocols for U.S. beef to move into the Chinese market. The Trump administration recently reaffirmed that talks will continue under the new U.S. administration. There is no indication of when such access might be realized or what conditions or restrictions will be attached to that access. Questions of traceability and use of beta agonists and other technologies are likely to factor into U.S. access to Chinese beef markets. Just how important might China be for U.S. beef exports?



"China has been the fourth largest beef producing country for at least the last twenty years. For most of those years, China was also the fourth largest beef consuming country although it moved up to be the third largest beef consuming country in 2016 and is projected to be the second largest in 2017. Per capita beef consumption of beef in China is relatively low but has increased by about 20 percent in the last six years to a projected 2017 level of 5.77 kilograms (12.7 pounds). Growing per capita consumption multiplied by an estimated 2017 population of 1.39 billion people is pushing total beef consumption in China ahead of the European Union and second only to the U.S. Economic growth is the principal driver of beef demand with an emerging middle class and rapid urbanization dramatically impacting beef demand in the country. Population growth in China is slow, less than 0.5 percent per year, but still adds several million additional consumers each year.



"The role of China in global beef markets has evolved rapidly in recent years. Despite being a large beef producing and consuming nation for many years, China has never been a player in global beef markets until recently. For many years China neither imported nor exported much beef. However, since 2012, growing beef consumption has resulted in a rapid increase in beef imports as consumption outpaced beef production in China. China emerged as the second largest beef importing country in 2016. Major beef suppliers to China in 2016 were Brazil (29 percent of total Chinese imports); Uruguay (27 percent); Australia (19 percent); New Zealand (12 percent) and Argentina (9 percent). In 2017, Chinese beef imports are projected at 950 thousand metric tons, up 17 percent from 2016.



"The U.S. has not had access to China for beef exports since 2003, though some U.S. beef reaches China unofficially through Hong Kong and Vietnam. The rapid growth in Chinese beef imports recently provides significant export market potential for U.S. beef. The long run potential of beef exports to China is likely larger and more certain while short term prospects may be more modest as U.S. beef establishes market share and official shipments displace unofficial shipments. Still, if U.S. access to China happens rather quickly, 2017 U.S. beef exports could be boosted by an additional one to three percent this year in addition to the currently projected six to seven percent year over year increase in beef exports.



"Prior to 2012, China represented less than 0.5 percent of total global beef imports. Projected 2017 beef imports in China will exceed 12 percent of global beef imports. It seems clear that China will continue to increase as a major factor in global beef markets. Prompt U.S. access to the Chinese beef market is perhaps the most important component of expanded U.S. beef export potential in the coming years."



   

 

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