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LMC: Russia and China Lead UK Demand Outlook

16 April 2013

GLOBAL - Thanks to a post-BSE import expansion in Russia and surging Chinese demand, British beef has growing opportunities, according to Livestock and Meat Commission Northern Ireland.

China's rapidly expanding population and the growth of its middle class has resulted in a rapidly increasing demand for beef in recent years, writes the Livestock and Meat Commission.

A total of 28,000 tonnes of beef (excluding offal) was imported into China in the first two months of 2013.

This is more than seven times the amount of beef imported during the same period in 2012 and is an indication that China will emerge as one of the largest global markets for beef.

China is currently the world’s second largest economy after the United States by Gross Domestic Product (GDP) and is the world’s fastest growing economy. A report released by the Asia Development Bank this week has forecasted China's GDP to grow by 8.2 per cent in 2013, up from last year's 7.8 per cent , due to strong consumption and fiscal spending.

China is the largest exporter in the world with exported goods and services accounting for 30 per cent of China’s GDP. The increasing wealth and purchasing power of the Chinese population in recent times has led to an increase in the level of imports with China now the second largest importer of goods and services in the world.

As the Chinese economy has prospered and the standard of living of its population has improved the demand for meat as a protein source in the diet has grown. Domestic production has been unable to keep pace with this growing demand, particularly for beef, and thus the increasing
opportunities for exporting countries to capitalise on this market.

Until recently however China’s official beef imports were relatively small with only 20,000 tonnes imported in 2011. A rapid increase in imports in the second half of 2012 pushed annual imports for 2012 to over 60,000 tonnes. At present there is no certification in place to allow the UK to export
beef to mainland China but with the rapid expansion in demand in China gaining this certification is certainly a priority.

Even without access, the increasing level of imports into China takes beef off the international markets and has the potential to put upward pressure on price Australia has quickly established itself as China’s top beef supplier with 12,490 tonne exported into China in the first two months of 2013, accounting for 45 per cent of all beef imports.

In the same period in 2012 less than 1,000 tonne of beef was imported from Australia. During the same period imports of beef from Uraguay increased to a total of 8,473 tonne, accounting for 30 per cent of imports while beef imports from New Zealand increased to 4,327 tonnes to account for 16 per cent of total beef imports.

Canada and Argentina were the only other two countries which exported into China during January and February this year, accounting for 7 per cent and 2 per cent of total imports respectively A recent report from the USDA’s Foreign Agricultural Service has indicated that favourable currency movements combined with an increasing demand for beef has fuelled the increase in imports.

The average import price in 2012 was nearly $4,150 per tonne compared to an average
domestic price of $7,188. With growing household incomes in China those who can afford it prefer to eat high quality beef cuts from both domestic and imported sources at high end hotels and restaurants.

However the demand for high quality beef for home preparation is showing growth potential. Despite this growing demand for beef in China domestic beef production has not grown as quickly
as the other meat sectors due to the proportionally higher costs of production and competing claims on grazing land.

Furthermore the lower food efficiency of beef cattle in feedlots compared to pigs for example has limited production growth, China has one fifth of the world’s population and is limited in terms of land and water supplies so relies more heavily on more efficient sources of animal proteins such as pork, poultry and farmed fish.

Russia

Access to the Russian beef market has recently been secured for UK red meat. This market had been closed to UK beef after the outbreak of BSE in 1996 and was kept in place until the 6
December 2012, despite the ban being lifted elsewhere in 2006.

A shortage of beef combined with an increase in domestic demand in Russia has provided the UK
with an important opportunity to export beef. The lifting of the ban will allow the UK to export boneless beef from cattle under 30 months of age, subject to the approval of processing plants in
the UK by the Russian authorities.

With the small Russian market for high end cuts of beef already well serviced through domestic
production and well established relationships with Australia the main opportunity for the UK will be
in meeting the growing demand for manufacturing beef.

While the first steps have been made in
accessing what could be a very important market for the UK, exporting beef to Russia has the
potential to be a complicated process. 

In recent weeks there have been a series of restrictions placed on purchases of animal products from EU member states with Russia currently preparing to suspend imports of chilled meat from Spain and the Netherlands

The Russian state veterinary service has stated that the Dutch authorities have failed to correct
problems highlighted by Russian inspectors during a visit to processing plants late in 2012. Similar
restrictions are to be imposed on Spain, a country which has previously escaped criticism from the
Russian authorities.

TheCattleSite News Desk

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