China’s protein demand continues to play catch-up

The success of the Chinese economy in shifting from a reliance on agrarian traditions to a global superpower is truly amazing, lifting around 400 million people out of impoverished economic conditions between 1981 & 2002. This rapid lift in China has had a significant impact on the global food supply & demand, which we will look at in today’s article.

While there are the current trade tensions that are front of mind, Chinese consumer demand, in the end, will drive pragmatic trade flow decisions.

Meat & Livestock Australia (MLA) report that “In 2019 China had 19.0 million households with an annual income of over $35,000 USD. This is expected to grow to 38.8 million households by 2023.”  

The US$35k threshold is significant, as MLA research has shown that this household income level has signalled strong and sustained demand for red meat.

Initially this concept was little understood, but the improving prospects of countries, as they lift GDP output via manufacturing output, has resulted in increased household expenditure.

The first outcome of growing demand from China was increased imports to China. There are however “knock-on” effects as other markets find that this demand and competition disrupt traditional markets and supply lines.

The initial impact of African Swine Fever (ASF) saw domestic pork prices double which resulted in an unprecedented surge in pork, beef & chicken imports. While this surge was significant, the growing trend of increased imports was well-entrenched before the ASF outbreak in China.

For beef & pork, China’s consumption is growing much faster than domestic production. From 2013 to 2017 (pre-ASF) beef production in China grew by 215,300 tonnes to 6,346,200 tonnes at a compound annual growth rate (CAGR) of 0.9%, while beef imports grew at a CAGR of 24% over the same period.

So while the higher red meat prices may be the result of ASF, with around 25% of global pig numbers euthanised; it could be that ASF was just the “petrol on the fire” of an already increasing demand for red meat.

The ASF outbreak also impacted on Chinese food inflation & their food self-sufficiency objective. Chinese authorities are well aware they need to keep inflation under control as the growing affluent class will expect a reliable supply of red meat to be maintained, and at reasonable prices.

This will warrant that the import necessity for all protein sources including red meat are continued into the future, with the demands of its citizens likely to trump any geo-political issues ensuring trade continues.

Click here to read the full report- China’s protein demand transformation

Commodity Conversations

What does it mean?

The reputation of Australian red meat will support demand; the affluent Chinese consumer (and the target market for our red meat), understands and values the safety, quality, traceability and animal welfare oversite that is attached to Australian products.

Like most governments, the Chinese regime will first ensure that it places the needs of its citizens first. For this reason, we can look forward with some confidence that the “dining boom” in China will continue.

Have any questions or comments?

We love to hear from you!

Print This Post

Key Points

  • Developing countries, including, have accounted for most of the rise in global meat consumption over the last 20 years,
  • Despite current political tensions, China’s appetite for Australian meat, especially beef, should continue to be strong.  
  • China is the biggest beef importer in the world. Brazil, Uruguay, Argentina and Australia are the top four suppliers to China.

Click on figure to expand

Click on figure to expand

Click on figure to expand

Data sources: BMI Research, MLA, Mecardo, WorldBank, OECD, USDA FAS

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services

Have any questions or comments?

We love to hear from you!
Chicago stock exchange 1850
Insights

Sources of long term data

Mecardo was contacted recently about data for Australian commodities for the second half of the nineteenth century. The comment was made that finding historical data

Read More »
Percentiles with a background image of hay bales
Insights

Percentiles – April 2021

Mecardo’s Percentiles update for April 2021. Click below to view the latest report Grains Oilseeds Sheep and lambs Cattle Wool Dairy Fuel Percentiles are an important

Read More »
Clouds in sky
Insights

Regional Rainfall Update March 2021

Mecardo’s regional rainfall update for March 2021. Click here to view the latest update This report highlights: Current season’s monthly rainfall trend  Last season’s monthly

Read More »

Don’t have an account with us? Join free.

You can have full premium access to all of our content with a monthly or annual subscription. 

Alternatively, create a free account to access our Insights blog and two free premium article a month!

Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
Listen to the podcast

Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.

Photo of a farmer surrounded by Merino sheep in dusty yards
Research: Analysis of the Australian sheep flock

In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making. 

Image of harvested grain pouring into a chaser bin
SERVICES AND CAPABILITIES STATEMENT BROCHURE

We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.