Beef

China’s cattle herd has been increasing progressively and, according to USDA forecasts will reach 99.5m head this year.

China has the second largest cattle herd in the world, but is well behind Brazil which has 263.8m head, while the US is third on 92m head.

The USDA reports that cattle production is concentrated in small herds, with 90% of cattle slaughtered coming from herds of 10 cattle or less.

Production is encouraged by the Government at national and local level through low-cost credit and loans, as well as subsidies for inputs and management practices, eg manure management and insurance programmes.

Despite having 8m more cattle than the US, China will produce much less beef than the US in 2022 at 7mt carcase weight equivalent (cwe) compared with 12.3mt (t) cwe in the US

China is also expected to import around 375,000 cattle in 2022, the main suppliers being Australia, New Zealand, Chile, Uruguay and Laos.

Between 20% and 30% of these will be beef-bred cattle, some of these for finishing to supply the higher-end beef markets and the remainder for breeding.

Despite having 8m more cattle than the US, China will produce much less beef than the US in 2022 at 7mt carcase weight equivalent (cwe) compared with 12.3mt (t) cwe in the US.

This reflects the higher-yielding cattle breeds on US ranches and feeding regimes in US feedlots, meaning the US produces 5.3m more tonnes cwe of beef from 8m fewer head of cattle.

The fact that China will consume 10.3mt cwe in 2022, according to USDA forecasts, means the 3.3mt cwe gap will be filled by imports.

Up until 2011, Chinese beef consumption was fairly well aligned with production and just 61,391t product weight (pw) of beef was imported that year, according to Chinese customs import data. However, the volume of beef imports by China has exploded over the past decade, as well as domestic production increasing.

They had grown to 474,000t pw by 2015, more than doubled to reach over 1mt pw by 2018 and doubled again to hit 2.3mt pw by 2021.

Dairy

China is not a huge per-capita consuming country of dairy products and a falling birth rate has reduced demand for infant formula.

However, due to population size, it is still the world’s largest importer of dairy products with the OECD FAO outlook forecasting that China will import 22% of all WMP traded in 2030, 12% of SMP, 13% of butter and just over 4% of cheese.

China’s imports of liquid milk are forecast to increase to 1.5mt, a 7% increase on 2021, driven by demand for UHT milk

For 2022, the USDA is forecasting that China’s milk production will increase by 3% to 36.7mt, while consumption is forecast to increase to 38.1mt, increasing across all age groups.

China’s imports of liquid milk are forecast to increase to 1.5mt, a 7% increase on 2021, driven by demand for UHT milk.

The main suppliers are Germany with a 32% share of this market, followed by New Zealand on 27.5%, Poland on just under 13% and Australia with 9%.

Whole milk powder (WMP) production is estimated by the USDA at 970,000t for 2022 with a stock of 125,000t carried forward from last year.

New Zealand is the main supplier with 37% of the trade, followed by the EU with 18.1%, Australia on 13.8% and the US on 9.8% being the other main suppliers

With consumption predicted at 1.945mt, this suggests a fall in imports to 850,000t, 90% of which will be supplied by New Zealand.

Over 90% of skimmed milk powder (SMP) that is used in China is imported. Domestic production for 2022 is forecast at 24,000t but imports are forecast at 520,000t.

New Zealand is the main supplier with 37% of the trade, followed by the EU with 18.1%, Australia on 13.8% and the US on 9.8% being the other main suppliers.

China is also a small cheese producer relative to consumption, with a forecast of 19,000t but with demand for 239,000t, it means that 220,000t are imported.

Again, New Zealand is the dominant supplier with almost 58% of imports, followed by Australia on 14.2%, Denmark on 7.3% and the US on 4.1%.

Butter production is forecast at 12,000t, with 170,000t imported, 80% of which comes from New Zealand.

Irish dairy exports to China in 2021 were 103,447t (Bord Bia) of which 31,711t was infant formula, 28,041t whey, 15,528t SMP and 16,600t of milk and cream.

Pigmeat

Just under half of the world’s pigmeat is produced and consumed in China, with the USDA forecasting that of the almost 110mt cwe produced globally in 2022, 49.5mt cwe of this will be produced in China.

As Chinese consumption is forecast at 53.6mt, imports will supply the deficit, meaning that 40% of the 11.5mt cwe of pigmeat traded in 2022 will be imported by China.

African swine fever

The Chinese pig industry was decimated by an outbreak of African swine fever (ASF) in 2018, which spread uncontrollably through the backyard-based Chinese pig farming model.

Output collapsed from 54mt cwe of pigmeat produced in 2018 to just 36mt cwe in 2020, a drop of 18m cwe tonnes. Imports surged from 1.5mt cwe in 2018 to 5.3mt cwe in 2020. In 2021, China was Ireland’s main export market taking 124,866t.

With the total amount of pigmeat traded globally around 11m to 12mt cwe, if every single kilo went to China, it was still 6mt less than what was lost in Chinese production. With supply so far below demand, the value of pigmeat increased dramatically.

Unfortunately, as Irish pig farmers know, it was a shortlived boom

Live pig prices in China reached RMB37/kg (€5.34kg) in the summer of 2020 and this meant a boom in pigmeat prices, not just in China but in the countries that supplied its imports as well.

Unfortunately, as Irish pig farmers know, it was a shortlived boom and prices have collapsed to RMB12.61/kg (€1.82/kg) at present, less than a third of the peak value.

New production model

China’s pigmeat production has bounced back from the 36mt cwe low of 2020 to a USDA-forecasted 49.5mt this year, still below the 54mt cwe in 2018 but a substantial increase all the same. This has been driven by the development of new high-volume production units with high levels of biosecurity replacing the micro family-based units with just a few pigs each.

Grain

China is a major importer of grains and oilseeds but it is also a huge producer with nearly 420mt of wheat and coarse grains combined. Add to this a further 150mt of rice and 19mt of soya beans.

The USDA forecasts that China will be the world’s largest importer of coarse grains in 2021/22, taking 47.3mt, or 19.5% of all coarse grains traded on world markets this year.

China’s coarse grain production is estimated at 280.9mt for 2021/2022

This is down on last year’s exceptional high of 50.6mt, but still dramatically above the 17.5mt in 2019/20. China’s coarse grain production is estimated at 280.9mt for 2021/2022.

China is estimated to import 26mt of the 192.6mt of corn [maize] that is traded on global markets this year and 10mt of the 34.7mt of globally traded barley. It is also the main importer of all sorghum traded globally, with the USDA forecasting China to import 10.5mt, or 83% of the global trade in 2021/22.

For wheat, flour and products, China is forecast by the USDA to import 9.5m tonnes of the 204.8mt traded this year and 350,000t or 15%.

Sheepmeat

China is the world’s largest sheepmeat producer with a national flock of approximately 316m in 2021, according to Meat and Livestock Australia (MLA,) producing just over 5mt cwe of sheepmeat.

However, with consumer demand for close to 5.5mt, this means that 400,000t was imported in 2021, the highest ever volume of sheepmeat imports.

The pattern with sheepmeat imports has been similar to beef though with lower volumes.

The 350,000t line was crossed for the first time in 2018/19

In the 2011/12 season, China imported 75,000t of sheepmeat but this surged to almost 200,000t in 2013/14 and came close to 300,000t the following year.

The 350,000t line was crossed for the first time in 2018/19.

New Zealand and Australia supply 97% of Chinese sheepmeat imports.

Ireland is in the advanced stages of securing approval to export sheepmeat to China.

Comment: Relevance to Irish farmers

The ASF outbreak of 2018 has led to a major rethink for the pig industry.

Aided by government support, it is now moving to a more large-scale structure with much higher levels of biosecurity.

In time, as productivity increases, the dependence on imports will likely decline further, back to 2018 levels or even lower. As this is now Ireland’s main export market, taking 405 of Irish exports in 2021, it is worrying that it may decline further in the years ahead. China has been an increasing importer of grains and oilseeds and this too will continue in future.

China is the missed opportunity for Irish beef exports, particularly when we observe the impact the US has made over the past two years.

China’s demand for beef imports won’t grow at the speed of the last decade but it is expected that there will be incremental growth in the years ahead.

Sheepmeat trends have followed beef in lower volumes and even when Ireland completes the approval process, Australia and New Zealand will remain the main suppliers. It has been a useful market for dairy, particularly infant formula, which has declined over the past couple of years.

Chinese dairy processors have upped their game of late with industry rumours circulating they are in the market to purchase some of the European infant formula brands on sale.