‘We need the Chinese market just to maintain current cattle prices’ – Goodman
ABP Food Group today celebrated the signing of an exclusive agreement to supply beef to the Chinese market.
It has agreed terms of a contract with the Wowprime Corporation to supply beef to some of its restaurant brands.
However, the managing director of ABP International, Mark Goodman, wished to underline that this new market – while it is a positive – will not directly result in significant beef price increases in Ireland.
Speaking to AgriLand, he said: “The key message is that access to a market like China is an excellent hedge to the downside of Brexit and Mercosur – cheap imports from South America.
We need markets like China just to maintain the current cattle price, never mind talking about large price increases.
“We have a job of work to do as an industry to Brexit-proof ourselves.”
But Goodman added that the market has the potential to grow massively.
Continuing he said: “I think you just have to look at the sheer number of people here in the market. China has about 1.4 billion people and it is a net importer of one million tonnes of beef per year.
“So it’s huge; and then you look at the growth potential. They are consuming 4kg per capita per year versus 14kg at home.
So a 1kg increase in consumption here is three times Ireland’s exports; so that’s the size of the market.
“We entered the market in 2011; we opened an office in Shanghai and we put a Chinese person on the ground to do research. We have done years of leg work and we are very pleased to get the first contract,” he said.
Goodman explained that ABP is currently examining three different segments to expand operations in China.
“Firstly, foodservice – because our beef approval is for frozen beef. Frozen boneless works well for the Chinese. They can control the logistics in the supply chain, keep the beef in the restaurants and then cook it,” he stated.
As well as this, Goodman outlined that the second item on the agenda is to break into the e-commerce market in China and to be listed on a major online distributions platform.
The final strand being worked on is retail, he added
“This contract alone will be 5,000t over the three years, so that’s your €50 million. I think it’s too early to say what else will go; but I can say that there will certainly be a lot more volume on top of that,” he concluded.
Conor Finnerty reporting from China.