No rapid rise of US beef exports to China expected as market opens
The first consignment of US beef to be imported by China in 14 years is just days away from arriving in the country following a trade deal reached between the two countries that once again puts the meat on Chinese tables.
On June 12, US beef was added to the list of products eligible for export to China after a meeting in Florida between Chinese president Xi Jinping and US president Donald Trump in April. It ended a long-standing ban on US beef imports by China following a 2003 case of mad cow disease in the United States.
However, although the news was received with excitement by China's cold chain industry and meat distributors who are expecting growing interest from consumers, the short-term demand as the market opens is not expected to be high.
“China is not good at cooking steak,” was how Zhang Taixi put it. The general manager of China’s largest meat processing company Shuanghui Group told the Global Cold Chain Summit in Dalian that a survey conducted by the company found that the country’s consumers had little appreciation for steak.
“It will take time to develop this market because usually the beef that is consumed goes into hotpots or cold dishes and the percentage of steak consumption is still low. Maybe in 10 years there will be an increase in consumption, but it will not be a rapid one.”
The largest markets for containerized US beef exports, which rose 5.9 percent year over year in the first five months of 2017 to 28,000 TEU, are Japan, South Korea, Hong Kong, and Taiwan, which together controlled 78.8 percent of the market in 2016, according to PIERS, a sister product of JOC.com. Total containerized US beef exports rose 12.8 percent year over year in 2016.
Most of the beef imported by China goes into the meat processing factories with just 20 percent consumed by the public. But the beef being imported from the United States is far more expensive than from Brazil or Australia, China’s main suppliers.
US Meat Export Federation president and CEO Philip Seng explained why. He said it was important to note that the market-opening agreement included requirements that would involve a period of adjustment for the US industry.
Those requirements include insistence from China’s General Administration of Quality Supervision Inspection and Quarantine that the US beef is from cattle younger than 30 months and that the animals must be traceable to their birth farm to ensure the safety and quality of the imported meat. The regulator said cattle should be born and raised in the United States, or born in Canada or Mexico and slaughtered in the United States, and should not be the offspring of those that were suspected of having mad cow disease.
“Meeting these requirements will add costs and this will mean that US beef is priced at a premium compared to other suppliers in the market,” Seng said. “With that said, China holds exciting potential for the US beef industry and for buyers in the market who have waited a very long time for the return of high-quality US beef.”
Yang Miao, director of Meat International Group, said US beef was labeled as high quality and a premium product and as a result was expensive, and Chinese consumers had higher expectations of quality and safety of the meat than they did for Brazilian or Australian products.
“With the US market opened there will be less smuggled beef entering China and that will help with food safety,” he said. “But in the short term, the demand for US beef imports will not be very high, although it will grow and China will in the future become a large procurer of beef,” he said.
US beef exporters can also benefit from rising Chinese wages, which on average rose 7 percent year over year in urban areas last year, according to IHS Markit data.
Frank Fang, senior director supply chain for Wal-Mart (China), said even though US beef cost more than meat imported from other countries, it would not slow a growing taste for steak among more affluent consumers.
“The beef is good quality and there is increasing demand from the high end of the market,” he said. “We may be a pork-eating nation but China is consuming more meat and beef consumption is increasing.”
Source: Joc.com. Date: 2017-07-14