World Beef Suppliers Line up to Sell China

China’s voracious appetite for beef was evident at the Food and Hotel China trade exhibition in Shanghai earlier this month. The annual show, expanding in scope each year with China’s growing agricultural imports, attracts commodity and food exporters from around the world, as well as importers and distributors from all of China.

Given China’s continued ban on U.S. beef and lamb imports (due to lingering concerns about BSE and scrapie), USMEF is restricted to exhibiting U.S. pork products, which it did with support from the USDA Market Access Program (MAP) and Pork Checkoff.

“Interest in U.S. pork is strong and show attendees were attracted to our products,” said Joel Haggard, USMEF-Asia/Pacific senior vice president. “However, almost every Chinese meat buyer we met asked when U.S. beef will return to the market.”

Interest in beef imports this year has been exceptionally strong, and Argentina, Canada and Australia manned prominent beef-centered exhibition booths at Food and Hotel China in addition to a number of private exporters and China-based distributors. Average Chinese domestic beef prices hit a record last week, surpassing the RMB 50/kg. mark for the first time in history and rising 28 percent compared to last year ($3.63/lb. retail basis for lean boneless cuts).

Official customs statistics indicate that China’s beef imports (including variety meat) for the first 10 months of the year are up 80 percent from a year ago. Suppliers – in order of greatest tonnage shipped – include Australia, Uruguay, New Zealand, Brazil, Canada and Argentina. Australia set a monthly record for its beef exports to China in September, eclipsing its previous monthly high by more than 50 percent, and then set another record in October with exports of 6,158 metric tons (13.6 million pounds).

“Our competitors’ beef booths were super busy,” said Steve Mo, USMEF-China marketing consultant. “Chinese customers were lining up to try and source supplies.”

China allows beef imports from seven countries, including Costa Rica which was approved about a month ago. Countries wanting to supply beef and other meat and poultry to China must first complete a veterinary agreement, after which China inspects and approves facilities plant-by-plant. Under a 1999 agreement, all FSIS-inspected red meat and poultry facilities are allowed access to China, but negotiators from both countries have been unable to conclude a beef agreement to end U.S. beef’s 10-year absence from the market. China unilaterally announced access for U.S. boneless beef muscle cuts from animals under 30 months of age in 2007, but lack of a formal agreement has prevented shipments.

China’s market for beef has changed considerably since U.S. beef’s exit a decade ago. Unlike pork and poultry production, which has grown due to an influx of private investment and government subsidies, the Chinese beef industry has languished. Domestic production has fallen 10 percent over the past 5 years, from 6.13 million metric tons (13.5 billion pounds) in 2007 and 2008 to an estimated 5.54 million metric tons (12.2 billion pounds) this year, according to USDA statistics.

In the meantime, demand for beef has soared, especially with year-on-year double-digit growth in the foodservice industry and the Westernization of food retailing, particularly in urban areas. The growth in the QSR (quick-serve restaurant) sector and other chain restaurants has dramatically expanded the demand for steady supplies of beef cuts with standardized specifications.

“Chinese beef demand consists of lower-priced stewing cuts and well-marbled beef for both Western and Chinese beef-specific restaurant concepts, such as steak, Korean-style BBQ and hotpot,” said Haggard. “Demand for both types of product is growing fast.”