Rabobank in business

10-7-2008 | Other news

Although China remains largely self-sufficient in its food staples, a number of opportunities exist in the Chinese food market ‘sweet spot’ for Australian-produced beef, grain and to a lesser extent pork, according to a visiting authority on Chinese food and agribusiness.

“This sweet spot is where you see the intersection of three conditions – the point where strong demand potential, insufficient supply or resources and access to market all coincide,” said Chenjun Pan, an analyst in Rabobank Australia’s Visiting Experts Program.

“Overall, meat demand is driven by rising affluence, population growth and urbanisation,” she said. “Moreover, with rising income level, food safety, nutrition and other value-adds are increasingly important considerations for meat consumption.” 

Beef 
“It is expected however that when beef meat becomes affordable again, there will be great potential for the market to expand and that, going forward, China will become a net beef importer given the big supply gap in the local market,” Pan said. 

 “Because of marketing efforts in the past few years, Australian beef is highly recognised by Chinese consumers. It is mainly consumed in hotels and high-end restaurants,” she said. “Beef is not a traditional meat for Chinese people and many do not know how to cook it at home, so it is a popular dish for dining out.” 

Pork 
Pork is still the dominant meat in China and is experiencing faster consumption growth than poultry, beef and mutton. China is the largest pork producer in the world with Chinese production accounting for half of the world total.

“Our view is that China will continue to increase its pork imports in the short-term. In the long-term though it will depend on whether China can find sufficient substitute feed for corn to produce enough pork to maintain self-sufficiency,” Pan said. “But it is a very likely scenario that China will increase imports for both meat and grain to meet domestic pork demand.” 

Grain 
The great challenge for grain supply will be whether China will have enough feed grain for large-scale livestock production in the future, particularly pork, said Pan. While grain production has grown overall in past years, this has been due to technology improvements and increased investment by farmers, not on expansion of cropping area. 

“China is currently self-sufficient in its corn supply, but there is a big question mark over whether China can have enough corn supply to meet feed demand in the next three to five years,” Pan said.

“We believe that China will become a small importer of meat and corn to feed the rising demand in meat consumption in the coming years, but will keep 95 per cent self-sufficiency,” Pan said.