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Informa Economics


A Multi-Client Study Proposal
China's Growing Appetite for Meats:  Implications for World Meat Trade
April 2012

Introduction

China is by far the world’s largest producer and consumer of meats. Historically, this situation did not have a large impact on the rest of the world, as China, for the most part, maintained self sufficiency in meats. However, since 2007 the situation has changed dramatically. China has gradually turned into a net importer of meats.

Now, the question becomes: Are China’s meat imports a short-term phenomenon due to a temporary supply disruption or the start of a long-term trend? China’s growing meat demand has the potential to change global meat and feed balances fundamentally. This study, undertaken in partnership with National Grain and Oils Information Center of China (NGOIC), will carefully and thoroughly evaluate all aspects of the outlook for China’s meat supply and demand.

Key Questions

How will urbanization progress in China, and how will meat consumption patterns evolve along with urbanization?

With strong economic growth, China’s urbanization has been occurring at a much faster pace than commonly understood. By the end of 2011, the urban population for the first time exceeded the rural population, reaching 51.3 percent of the total population. If rural migrants working in urban areas are included, the population working and living in urban areas accounted for about 70 percent of the total population. Urbanization and rising purchasing power have led to a dietary pattern change from traditional food grain products to more meat.

Will commercial livestock production expand fast enough to compensate for declining backyard production and growing demand, or will China have to rely on imports to meet its meat demands?

As most rural residents in their 20s through 40s migrated into urban areas looking for betterpaying jobs, only grandparents and grandchildren stayed in their rural homes to manage livestock production. With the migrants sending more money home, the incentives for increasing livestock production declined, and many backyard operations ceased to exist.

With limited land and water resources, can China continue to maintain its self-sufficiency in grains and meat production over the next decade?

China is using 7 percent of global arable land and 6 percent of global water resources to feed about 20 percent of the world’s population. Feed consumption has been growing rapidly over the past decade.

Is China’s actual meat output overstated in government statistics, or is feed grain output underestimated?

Many people are puzzled by the imbalance between China’s feed grain supply and total meat output. It appears as though China’s feed grain output cannot support the total meat output reported by the Chinese government.

With commercial operations quickly displacing backyard operations in China, will this add more stress to China’s already very tight feed grain supplies and meat production?

Traditional livestock and poultry backyard operations utilized a huge amount of feed ingredients other than grains, such as table scraps, brans, stems, leaves, vines and other products unsuitable for human consumption. This was done to raise animals at low cost. It is estimated that these non-grain feed ingredients accounted for about 60 million metric tons of feed grain equivalent in livestock and poultry usage. Since commercial production emphasizes greater feeding efficiency, most commercial livestock and poultry operations only use feed grains and protein meal.

How is China’s cold storage chain developing, and will it be able to accommodate large meat imports?

Previously, China’s dominant meat marketing channel was the wet markets, which typically do not have cold storage systems and mainly sell fresh meat. However, due to environmental and food safety concerns, in recent years the Chinese government has been pushing to deploy cold chain systems in large metropolitan areas to market chilled or frozen meat to residents. The consolidation of the meatpacking industry also calls for the quick development of the cold chain system. The study will provide an overview of the existing cold chain system and the industry’s plans for future development.

What policies will shape China’s future meat complex import program?

This study will thoroughly examine the Chinese government’s past policies and their impacts on meat supply and trade; profile government branches and agencies that regulate the industry; and discuss new policy initiatives and their implications. China’s Growing Appetite for Meats: Implications for World Meat Trade April 2012

Will the state rely more on the domestic market or imports for its reserves program in the future?

 After 2007, the government realized the importance of building strategic meat reserves and established a small meat reserve program. It is expected that the Chinese government will increase the state reserve’s capability by intervening in China’s meat market in the future.

With the increasing demand for meats and constrained supply of feed ingredients, will the Chinese government be more open to importing feed ingredients in order to maintain selfsufficiency in meats, or will it allow greater meat imports to reduce its reliance on feed ingredient imports?

Within the context of the Chinese economy, this trade-off (i.e., import meat or import feed grains) will largely be a policy decision. On the one hand, China has a demonstrated bias toward supporting employment levels. The development of the domestic soy-crushing industry is a good example, as China has gone to a system of importing the raw materials (soybeans) instead of the finished products (meal and oil). On the other hand, recent levels of meat imports suggest that there is a comfort level with importing semi-finished goods that are ready for immediate consumption. The answer to this trade-off question will have major implications for the global food economy.

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