chinese beef market

Chinese Beef Market Surging; U.S. Locked Out

The North American Meat Association (NAMA) reported this week that Canadian beef exports to China totaled 10,088 tons for the first half of this year. That’s triple the year-ago amount for Canada and illustrates how beef demand in China is booming.

Canada? How can that be? After all, the U.S. actually has a higher BSE designation (negligible risk) than Canada (controlled risk), but U.S. product isn’t allowed into China. In fact, Walmart now has more than 300 stores in China – but U.S. beef is not in the meat case

As the NAMA report points out, “Rising incomes and expanding urbanization are fueling the demand for beef while local production is not able to increase quickly enough.”

Keep in mind, however, that the tripling of Canada’s exports to China is based on a very low total from 2012, when Canada had just reentered the market. The huge growth in China’s beef imports have come from Australia and Uruguay – and, to some degree, New Zealand. And the potential continues to grow.

As Joel Haggard, senior vice president overseeing the Asia Pacific region for the U.S. Meat Export Federation (USMEF), pointed out in BEEF magazine last spring, “When China closed to U.S. beef as a result of the December 2003 BSE case, beef was still a minimal part of the Chinese diet. But this has changed dramatically in recent months.”

He was referring at that time to China’s year-over-year beef import volume of 2012, which exploded by 164% to 70,574 mt, while import value grew 150% to $281.4 million. More recently, however, the surge is even more impressive.

USMEF says that through August 2013, China imported 193,454 mt of beef valued at $820.6 million – more than 700% above the first eight months of 2012. To put this in perspective, right now China’s importers are purchasing about as much beef every month as they imported in the entire calendar year of 2011, says Joe Schuele, USMEF director of communications.

“Australia is the largest beneficiary of China’s booming beef demand. China’s imports of Australian beef through August increased nearly 1,100% in volume (92,680 mt) and 900% in value ($426 million) over last year’s pace, recently surpassing South Korea as the third-largest destination for Australia’s exports.”

Uruguay holds the No. 2 position in China, as imports through August totaled 52,866 mt valued at $197.3 million – increases of 570% and 668%, respectively, over 2012. China is now the No. 1 destination for Uruguayan beef, accounting for about one-third of its total export volume.

New Zealand is the only major beef exporter that has a free trade agreement with China, which lowered the import duties on New Zealand beef to 4%, compared to 12% paid by other suppliers. This preferential duty rate translates into a price advantage that has helped New Zealand achieve third place in the market, with imports through August totaling 30,745 mt, an increase of 637%) and a value of $134.2 million (a 730% increase).

Although Canada has only a limited number of its plants approved for export to China, Canadian beef holds the No. 4 position with China’s imports through August totaling 13,025 mt valued at $43.9 million.

Argentina also exports a small volume of beef to China – through August it totaled 4,117 mt valued at about $19 million.

“We are falling further and further behind as our competitors establish their brands and capitalize on a rapidly growing customer base,” Haggard says of the U.S. market position. “On a daily basis, USMEF staff members in China are asked when U.S. beef will be allowed into the market,” he says.

And it’s not for a lack of trying. Schuele says USMEF strives to “provide as much information as possible to our trade representatives, in support of their efforts to reopen the market. We cannot actively market U.S. beef in China, though many buyers there are familiar with the attributes of U.S. beef because of our strong presence in the region (Hong Kong, Taiwan, etc.).”

In addition, he says the U.S. government has raised the issue at very high levels in the Chinese government, emphasizing that the negligible risk designation for BSE of the U.S. should remove any remaining concerns that China may have about the safety of U.S. beef.

But the battle goes on, with the next opportunity to address the issue at high levels coming later this year at the meetings of the U.S.-China Joint Commission on Commerce and Trade.

“It’s extremely frustrating to know that China’s demand for high-quality beef is growing stronger every day, but U.S. cattle producers don’t have access to the fastest-growing and potentially largest beef market in the world,” Haggard says.

 

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