Hormel organic pork goes up against local-breed champions

By Mark Godfrey

- Last updated on GMT

Related tags Organic food Organic farming China Pork

Hormel organic pork goes up against local-breed champions in China
US-based meat major Hormel is seeking to lure China’s upper-crust customers with a range of certified organic pork sold through high-end supermarkets.

The firm is selling fresh, packed streaky belly strips beloved of Chinese diners at RMB165/kg, with knuckle selling for RMB99/kg, the same price charged per kilo of organic Hormel pork chops ‘from the back of the pig’ according to labelling. That is pricey considering fresh pork prices in Beijing wet markets visited for this article range from RMB32/kg (belly meat) to RMB41/kg (ribs). 

Hormel is clear about its targeting in launching the range: a familiar name on shop shelves across China’s major cities, the company has limited the organic roll-out to boutique stores like CityShop, which target China’s wealthy elite. In Chinese-language promotional material for its organic pork, Hormel promises would-be purchasers a "pure fragrant taste"​ and health benefits such as low cholesterol. Hormel also tells customers its pigs grow up in "fresh vegetation, natural water, a daily bath and two hours of play time every day".​ Also, its organic-farmed pigs are killed after a 276-day cycle, "three months longer than normal",​ according to Hormel.

Similar claims – and similar pricing – are however being matched by a new wave of producers of local-breed Chinese pigs. Located downstairs from a large Starbucks store – another hit with middle-class Chinese – the CityShop outlet in Beijing’s Liangmaqiao area also stocks its own-label offerings of what it terms ‘hilly black pig’. While not organic-certified the hilly black pig pork is pricier than Hormel’s range, with packets of belly fat cuts selling for RMB197/kg and filets selling for a hefty RMB361/kg.

Hairier and smaller than western breeds, the Changbai Shan black pig is one of China’s native breeds back in favour: pork medallions of the breed sell at RMB200/kg with belly fat at RMB152 and feet at RMB108.80 at an outlet of Japanese retailer Ito Yokado, located on the downtown Gongti Lu street. Own-brand medallions in the same store sell for RMB96/kg. A salesperson at Jing Qi Shen Co, the supplier of the Changbai Shan (a famous Chinese mountain near North Korea) black pig, explained by phone that the firm’s pigs are reared outdoors, enjoy "play-time",​ a "diet of acorns"​ and an "antibiotics-free life".

Also in the speciality breed market, a pork breeder-processor in Heilongjiang province, Sheng Ye Boar has built up a distribution of organic pork, using a hairy local breed. The brand has priced pork cuts at a premium, RMB142/kg at outlets of Chinese supermarket chain BHG, which charges RMB77.60 for comparable non-organic, own-label cuts.

In recent years, China’s meat producers and agricultural officials have sought to differentiate meat on a regional level, drawing attention to domestic breeds. These include the Shanxi Qinshui black goat and the Jianli pig breed in the central Chinese province of Hubei.

Yet it is not just pork breeders/processors/packagers getting in on the act. Organic labelling is proving a price boon for some of China’s largest poultry players. Based in Beijing, Beijing Bainian Liyuan Eco-agriculture Co (using the label Bainian Liyuan), has targeted a range of frozen whole-round ‘fatty’ chickens at China’s supermarket shoppers. The price tag, at RMB103.80/1kg is pricey compared to the non-organic offering: RMB66.80/1kg. It is also a significantly higher yield than non-organic offerings by peer firms. Tian Xian Mu sells a 1.2kg frozen chicken at outlets of retailer Hualian for RMB92.20.

While the organic label is clearly a price-booster, it is not necessarily easy to secure. China’s organic labelling rules were tightened in 2012 to clamp down on much-maligned mislabelling and fraudulent use of organic labels by domestic food producers and retailers. Thus, while entry to the organic segment has been tightened, vendors of organic food have been able to enjoy pricing 50%-200% higher than non-organic produce, according to Zhou Zejiang, Asia representative of the International Federation of Organic Agriculture Movements (IFOAM) and an advisor to China’s government-run Organic Food Development Centre.

According to Zhou, many small players were wiped out when the Certification and Accreditation Administration of China in 2012 enforced a rule requiring traceable electronic codes for each user of official national organic certification. However, China appears to have also effectively locked out foreign players by demanding that food producers go through the Chinese certification system, even if they have acquired an internationally recognised organic certification. "This takes a lot of time and effort, so some foreign food producers have been discouraged,"​ explains Zhou.

Yet some have secured Chinese organic certification. Would-be foreign suppliers of organic meat have to be prepared for several years of approval processes. Chinese certifiers made numerous visits to the facilities of Australian organic beef supplier Arcadian Organic and Natural Meat Co, which has secured Chinese certification to distribute its meat with Beijing-based Organic & Beyond Corp, a firm focused on the home delivery food segment of China’s food market.

China’s organic market clearly has potential, judging by the interest shown by investors. Bainian Liyuan, purveyor of organic fatty chicken, counts among its investors respected Chinese venture capital outfit Tiantu Capital. Well-funded, Bainian has been building out its distribution chain in outlets and online. Aside from supermarkets, much of China’s organic sales have been happening on food-focused online portals such as yihaodian and too too, as well as generalist virtual stores like Tmall.

Meanwhile, a curious clash appears in the offing between Chinese policy-makers and proponents of organic farming. In particular local governments across China have been keen to back major agri-business firms, seen as generators of jobs and taxes – particularly in poorer rural areas. Yet at the same time as it is paid subsidies to encourage a shift to larger, more intensive pig farms, central government has also pledged to "promote green agriculture"​ – a phrase often repeated in the official ‘Farmer’s Daily’ national newspaper published by government.

Major producers like Shuanghui/WH Group tend to have the influence to block restraints on the livestock sector, according to Jeff Zhou, China representative at Compassion in World Farming. His organisation is seeking to promote organic pig farming in China. Officials have nonetheless teamed with Beijing-based meat producer Beijing Sheng Yu Da Ya Biotech Co, which sells organic pork in the north China market under the ‘Tian Kang’ (rough translates as ‘add health’) brand. The firm collaborates with the Feed Industry Centre of the agricultural ministry, as well as the China Agriculture University. The over-use of antibiotics by China’s pig producers "has been dangerous to human health and has also blocked the export potential of Chinese pork,"​ according to company founder/manager Yang Yuxi.

Sheng Yu Da Ya has secured Chinese as well as USDA and EU organic certification, he points out. "We have always operated to EU standards in breeding and feeding." The company’s pork sells in outlets of Lohao City, a chain of stores specialised in organic and health foods, at RMB106/kg of belly and RMB90/kg back rib cuts. The firm also supplies high volume customers in the corporate and government catering sectors, according to Yang.

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