How important could the Chinese market be for Irish beef going forward?

The importance of the Chinese market to the Irish agri-food sector is much more complex than the country having a large population, according to Bord Bia’s Conor O’Sullivan.

O’Sullivan – who is based in Bord Bia’s Shanghai office – addressed the organisation’s Meat Marketing Seminar today on the opportunities that lie in China for Irish beef.

“The real reason that there is an opportunity for exporters is because China can’t produce the food it needs. It has a fifth of the world’s population, but only 9% of arable land – 20% of that land is heavily polluted.

“The main agricultural food producing regions; they have already suffered from water scarcity. On top of that, 40% of water in China is polluted.

Not only is China struggling to produce its food, but what it does produce isn’t really trusted by the domestic market; that’s why there is a big opportunity for exporters.

He explained that the Chinese government has prioritised the production of “food for the masses” – which includes rice, wheat and pork.

“As long as they can keep the prices for these stable and the supply secure, they’re happy; if they don’t, people get angry.

“The one thing to remember about China is that social stability is often at the core of any decision that the government makes; that’s the case here.

“The good thing for beef is that it is not considered so important for social stability. It tends to be something that people trade up to as they get more money,” he said.

As a result of this, the government is more comfortable not supporting this industry as much and leave it to private companies – who are struggling to keep pace with the rate of growth of consumption, O’Sullivan added.

Consumption

“That means there is a widening gap of imports every year. Already, China imports 15% (1.2 million tonnes) of the beef it eats; in three years, that could be 20% and that’s really just the start of it – because, even today, China is not a big beef eater,” he said.

Image source: Bord Bia

O’Sullivan pointed out that it is realistic to say that Chinese beef consumption, over the next few years, will at least grow to similar levels seen in Japan and South Korea.

That’s really important; because, for every extra kilogram that the Chinese are eating, that means they need to find 1.4 million tonnes of beef. That’s twice Ireland’s production.

“That’s going to have a massive impact on global beef markets,” he added.

The Chinese market doesn’t just take volume, it also adds value, O’Sullivan explained. The Chinese market will take heads, offal, trotters and hocks; and they will pay good prices for them, he added.

Market access

O’Sullivan continued: “Getting access to China is very valuable; but, they don’t make it easy. It’s taking time, but it’s taking everybody else time as well.

“If you look today, there are only 13 markets with access and realistically only five of them are doing any volume of significance.”

Countries which have access to the Chinese market. Image source: Bord Bia

Going forward, O’Sullivan believes that Ireland will play a big part in growing the EU’s share of Chinese beef imports – once market access is granted.