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The announcement on Monday that China has approved another 14 factories to export boned frozen beef is of huge significance.
With seven beef exporting factories already doing business there, the Irish beef industry is now in a position to export three times as much beef with the addition of these extra factories.
How much beef could be exported to China?
Ireland is currently approved to export frozen boneless beef cuts from cattle under 30 months of age.
In August, according to CSO export figures, the seven approved factories exported just over 800t of boneless frozen beef.
If the extra 14 approved factories were supplying China with a similar amount, it would mean that Irish monthly exports could increase to 2,400t and if this was multiplied by 12 months, it would suggest that 28,800t annually is a realistic target.
Looking at CSO export volumes for beef and offal for 2018, only the UK, France and the Netherlands took over 30,000t of Irish beef.
Therefore, it is clear that China is likely to become one of Ireland’s top five export markets for beef almost immediately.
It is also a real possibility that it will become Ireland’s second-most important market after the UK in the not too distant future.
Who are the competition?
China’s beef imports have increased dramatically over the past five years.
In the year ending August 2019, it imported almost 1.4m tonnes of beef, a year-on-year increase of 59%.
Five countries dominate this supply, with Brazil, Argentina and Uruguay each having over 20% of the market, while Australia has 17.3% and New Zealand has 14.9% (source: Bord Bia China office).
A decade ago, China imported a negligible amount of beef and as recent as 2014 it imported under 300,000t, one quarter of its current annual imports.
This is because as the country has prospered economically with a big growth in a middle class population, the diet is becoming more westernised.
In addition, the demand for beef and all meat imports is being driven by the impact of African swine fever (ASF) on the pig herd.
More suppliers
China has been approving more suppliers outside of Ireland. In addition to the 14 extra Irish factories approved on Monday, four have been announced for the UK, including one for the North.
In September, China approved 33 extra factories, 30 of which were from South America. This is expected to double Brazil’s export capacity and, at some future point, this could impact on the value of the market.
What will they buy?
Chinese customers have been buying a range of cuts from the forequarter and while it is unlikely to be a big buyer of steak meat, it can still have an impact on the carcase value, as there is no better market currently for many forequarter cuts than China.
With the UK securing approval for four factories, this means that there will be a real impact on the value of forequarter manufacturing beef, which has been depressed in the EU for much of the past year.
Will this help the price of beef?
There is no short answer to this, because the UK and EU will remain top in volume and value markets, even if China was to take 30,000t of beef per year.
However, there is no better new market that we could get access to in terms of volume and the value for the cuts it will import.
It will give an option not previously available for manufacturing forequarter beef and if the approval can be extended to include bone in beef and offal, then the market can grow even further.
Farmgate price is determined by the performance of all markets the individual cuts of the carcase are sold in and having China as an option will have a positive effect.
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