Nick McIlroy, Shanghai Office, Bord Bia-Irish Food Board

A new report released by Rabobank forecasts Chinese beef imports to grow by 15% to 20% annually over the next five years.

This increase is expected to make up a growing shortfall in domestic production, which Rabobank suggests has arisen from a number of factors, including a relative lack of government support for the beef sector, a lagging behind in productivity and an unwillingness on the part of farmers to invest in beef farming, with its comparatively longer production cycle and higher capital requirements. This is reflected in cattle numbers, which from 2006 to 2012, witnessed a 12% drop (14 million head) on the previous 10-year period.

Government Response

This growing shortage in domestic beef, coupled with growing demand from Chinese consumers as urban incomes rise, has led to massive growth in imports. In 2013, imported beef volumes reached 297,000 tonnes, representing growth of 3.79 times the annual volume for 2012. Beef prices too have witnessed unprecedented growth, rising five-fold since 2000. The Chinese Government response to the limited supply has been the launch of its ‘Guideline for Beef Industry Development Towards 2020,’ which will provide supports to raise domestic production from the current 6.3 million tonnes to 7.86 million tonnes by 2020.

Australian Success

According to China Customs Statistics, Australia is the biggest source for imported beef in China with 45% market share, followed by Uruguay and New Zealand. China manager of Meat and Livestock Australia, Joy Tang, recently indicated that market access had allowed Australia good market success, with countries such as Brazil and the United States blocked from selling beef in China. Ms. Tang indicated that two of the main challenges in the Chinese market are smuggled beef, which is anecdotally reported at up to 1 million tonnes in 2013, and the ban on chilled meat. Ms. Tang stated, “It’s not just Australia; every country that exports meat to China must ship it as frozen meat, but we are working on that to get a result.”

The most recent edition of the USDA Livestock and Products Semi-annual report indicates that China’s average 2013 beef import price was US$4,313 per tonne, a substantial 55% discount from its average domestic price (from January to November) of US$9,585.