No end in sight for China’s cattle shortage

By Simone Baroke, contributing analyst with Euromonitor

- Last updated on GMT

Baroke says there is not enough cattle being raised domestically in China to satisfy demand
Baroke says there is not enough cattle being raised domestically in China to satisfy demand
On the face of it, things are looking rather rosy for beef in China. Growth is dynamic – at least within the context of fresh food – driven by consumer demand for higher-quality meat. Once you chip the surface, however, a major predicament soon becomes evident. There is just not enough cattle being raised domestically to satisfy demand. As prices spiral upwards, there is real danger of excluding a large number of Chinese consumers from buying beef on a regular basis.

High growth, high status

Beef and veal emerged as China’s star fresh meat performers in 2013, achieving volume growth of over 5% and clearly driving the vast country’s fresh meat market, which registered a 3% rise overall. According to Euromonitor, over the 2008-2013 review period beef and veal also led the growth charts, with a 30% volume gain, which was double that of pork and nine percentage points ahead of poultry.

Beef’s popularity in China is being fuelled by a number of factors. First of all, Chinese middle-class consumers aspire to trade up to more “prestigious”​ meats, and beef fits the bill nicely. It is regarded as higher in quality than pork – which currently still exceeds beef consumption eight-fold – and also as being ‘healthier’ and lower in fat. The fact that pork and poultry feature frequently in food safety scandals and disease outbreaks has undoubtedly helped beef to solidify its high desirability status.

Cattle numbers contract as farmers abandon the land

Consumption levels are not all that has risen, however. According to China’s Ministry of Agriculture, beef wholesale prices doubled between 2008 and 2013. And prices are unlikely to come down anytime soon considering that China’s domestic cattle herd has been registering a disconcerting steady decline.

Our data show that the cattle head count fell from almost 83 million in 2008 to just over 75 million in 2013, while domestic beef and veal production rose from six million tonnes to seven million tonnes over the same period. This trend hardly seems sustainable and, currently, China relies heavily on imports.

China is a country in transition as far as agriculture and livestock production are concerned. Previously, family farms kept only a small number of cattle, primarily as draught animals. According to industry sources, an estimated 95% of China’s farmers who engage in cattle breeding and farming keep fewer than 10 animals, and the long-term trend of rural inhabitants abandoning their farms for jobs in the city is not exactly helping to re-build herd numbers.

Is China being over-optimistic?

Considering this trend, China’s only hope for ramping up domestic beef production is to switch to large-scale operations. The challenges, however, despite growing government support, are formidable.

For instance, in late April 2014, the Chinese government announced that it was to expand sheep and cattle breeding operations in the country’s north-western region, including the provinces of Inner Mongolia, Shanxi and Xinjiang. The major stumbling block is the region’s aridity, and it is as yet unclear how its already sparse water supplies are going to stretch to support large-scale cattle production.

Feed shortages have long been a palpable constraint on China’s livestock production in general. Cattle, with its excruciatingly low feed-to-muscle tissue feed conversion rate, is far from the ideal type of livestock to be reared en masse in a densely populated and largely arid country like China, even if other pressing issues, such as poor genetics/stock quality, were to be resolved.

The country’s optimism in the face of all this adversity is surprising, however, as illustrated by an announcement this April regarding the construction of a 50,000-head capacity beef lot and slaughtering facility in Hubei, a province located centre-east of the country. Industry insiders have already raised serious doubts over whether the facility will even get close to its operating capacity in the medium term.

Beef still has a long way to go until it hits the threshold required to be able to call itself China’s most popular meat. In 2013, beef and veal accounted for just 8% of Chinese annual per capita fresh meat consumption, while pork claimed a whopping 64% share.

Most Chinese consumers would probably swap a significant proportion of their pork intake for beef in a heartbeat if price points were not so prohibitive. With no foreseeable end to the country’s chronic cattle shortage, it could be a very long time indeed before all this pent-up demand can finally be released.

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1 comment

Opportunity for pork products in China

Posted by Charles Baughan,

The Chinese eat 39kg of pork per head per year (and there are 1.36 billion of them). In the UK we eat 25kg. They love sausages, the Danish have had approval to export pork products since Nov 2013, we are still in low level talks. I just wish we Brits could actually force our way to the front of the queue in these matters rather than wait patiently in line. Faint hearts never win fair ladies etc.....

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