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China has dominated business news since the start of the new year through problems in its stock market. This issue now seems to recur every few months, yet the reality is that China is, and is going to be, a huge market for agri-food. Intermittent economic problems are part of its rapid economic development with the traditional communist governing style fitting uneasily with modern capitalist business. James O’Donnell is Bord Bia’s representative in Shanghai and at this week's Bord Bia meat seminar he highlighted how and why China is a market worth accessing.
Whatever the number is the economy continues to enjoy strong annual growth, maybe not the 10% to 12% of a few years ago but even at 6%, as it was last year, is good. It has a growing middle-class population, currently estimated to be in the region of 250m people who have the desire for and the means to afford high-value western consumer goods.
We have observed on many occasions how European and, in particular, UK consumers have strong nationalistic tendencies when it comes to food purchases and how this hits a net exporter such as Ireland. In China, it is the opposite tendency with serious mistrust of domestic produce and what is even more positive is that Ireland's exceptional quality and production standards are recognised and appreciated in China. This is particularly demonstrated through the huge volume of infant milk formula supplied by Irish companies to China, which has been the main plank of the exceptional growth in trade in recent years. China is now Ireland’s second largest customer after the UK for food. In 2010, it imported just over €100m worth of Irish food; by 2015, this increased sixfold to over €600m, €500m of which was dairy.
Pork
Beef is not yet a major part of the Chinese diet; pork is the preferred meat, accounting for 40% of all meat consumed in China. It has an estimated 420m pig heard and an annual consumption of 57m tonnes, 860,000 of which is expected to be imported in 2016. Beef represents just 5% of the protein market and the Chinese is forecast to produce 6.8m tonnes this year. Although still small, beef consumption is rising year on year and it is predicted that China will consume 7.4m tonnes, importing 600,000 tonnes of this, which will be a 20% increase on the previous year.
The main source of supply is South American, as well as New Zealand and Canada. Brazil secured approval in June 2015 with eight factories approved. Three more factories have since been added and this is expected to rise to 20 in the coming weeks. By November, China had become Brazil’s largest export destination.
Retail isn’t the dominant customer for meat in China, instead it is the food service and burger chain outlets. The type of beef used in China compliments Irish production particularly well as it tends to be the lower-value manufacturing beef and forequarter cuts. It is also a market that prefers bone in cuts of beef and when Ireland secures approval, it is likely that there will be a 30-month age limit on cattle. As explained elsewhere in the seminar, that approval process will take its next step shortly with a round of inspections, and while it is progressing, plenty of work remains to be done.
Bord Bia seminar: opening meat markets
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