Rabobank points to beef opportunity in China
The report revealed that consumption of beef in China has increased steadily over the last few years, with demand driven by an increase in income, a shift in diet and urbanisation.
Yet local beef production is too weak to meet the demand and, as a result, the Chinese market offers global beef suppliers a “great opportunity”.
A slump in Chinese beef production began in 2006, which has been attributed to a low economic return compared to other agricultural activities. Rabobank said this was “intrinsically linked to a combination of high input costs (for example, labour and feed), poor genetics, reduced government support and difficult access to rural credit.”
Countries including Australia, New Zealand, India and potentially the US have been cited as suitable suppliers. However, the US’ suspension from the market, which was enforced in 2004 following a BSE outbreak, would need to be lifted.
Rabobank analyst Guilherme Melo said beef consumption in China was expected to rise by 24% in the next 10 years. “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 10 years as a result, the absolute volume will increase by roughly 25%, adjusted for population growth,” Melo said.
Beef is currently a nice food in China, the report claimed and accounts for only 8% per capita of meat consumption. Yet poultry counts for 22% and pork counts for 65%. The report also said beef is generally considered “more of a special occasion” item in China and not an everyday meal option.
Those consuming beef in China are more likely to do so out of home (60%), which will form part of a takeaway meal or a canteen meal at work. Yet there is a growing trend for beef to be consumed in ‘Western-style’ restaurants or fast food chains, such as McDonald’s.
Meanwhile, Rabobank has suggested that market imbalances will be corrected by the increase in imports over the coming years. It said: “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.”