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China presents opportunity, challenges for beef trade

vichie81/Getty Images Close-up of a hotpot where meats are sliced thin and cooked at the table
KEY MARKET: In China, a popular use for beef is hot pot where short plate cuts of meat are sliced thin and cooked at the table. This is just one opportunity for more U.S. beef exports to the country.
The country has an appetite for more beef but is throwing up new trade roadblocks.

China has long been known as a strong market for U.S. pork, which has grown considering massive herd losses due to African swine fever. In 2017, the country finally reopened to U.S. beef imports, but the door to trade hasn’t swung wide just yet.

“[The country] continues to bog down trade, blaming frozen food imports for the spread of COVID,” said Erin Borror, economist, U.S. Meat Export Federation (USMEF).

Speaking to the 2021 International Livestock Forum, sponsored by Colorado State University and the Western Stock Show, Borror explained that China’s move to inspect frozen imports for the presence of COVID-19 is a unique trade challenge. “China is the only market … testing and disinfecting frozen product,” she added.

This move slows incoming trade, but Borror also said that news of this concern impacts consumer demand for imported products. And since the pandemic started, the Chinese market for food and information has evolved.

“The line between social networks vs. shopping networks is nonexistent,” she said. “It’s amazing what’s happening, and how you can reach consumers through their smartphones.”

She said in China the amount of retail space per person is much lower than in the United States. This has driven food retailers to reach consumers in new ways. USMEF is leveraging that use of technology to reach influencers in them market.

Add in that China is one of only a few countries that experienced economic growth in 2020, and it’s clear this is a market worth pursuing. “There are more wealthy households in China than in the U.S.,” Borror said. In China, about 120 million households classify as wealthy. In the U.S., the number is 114 million. And China is expected to add an additional 50 million by 2025.

Beef demand picture

China represents a major opportunity for beef. Today, about 50% of exported beef goes into restaurants in the country. While the market shifted to delivery services at the height of the pandemic, in-restaurant dining has resumed. At the same time, customers have increased their use of takeaway, which has served that market well.

And this is a diverse sector using a range of beef cuts for dishes like yakiniku (meat on a stick), hotpot and others.

China does have rules for beef imports requiring cattle not be treated with hormones and be free of ractopamine. When the beef ban was lifted in 2017 — it had been in place since the Christmas surprise in 2003 — there were strict rules about what beef could enter the country. By December 2019, U.S. beef imports to China hit only 9,000 metric tons. By the end of 2020, that rose to 100,000 metric tons.

Currently, Australia is the lead source of grain-fed beef to the Chinese market. The U.S. is another source; otherwise, most beef imported is grass-fed from locations including Brazil. Australia is rebuilding its beef herd after a three-year drought that cut herd numbers drastically.

“China uses many different types of beef products, and there is a greater potential for China to take more beef,” Borror said.

She added that there’s greater opportunity for exports across all of Asia and the staff at USMEF to meet that need. China will be competing for the same cuts as the lead importer of U.S. beef in the region — Japan.

China presents a solid opportunity to grow more U.S. exports for that consumer in 2021, Borror said.

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