China’s wine consumption growing in tandem with ageing millennials
As the older generation lives longer, and as people’s health awareness increases, more wine is expected to be consumed in China, according to a new report from Goldman Sachs and Gao Hua Securities.
Current wine consumption is skewed towards younger drinkers, but that market should expand as the millennial population grows older, as has already been seen in developed nations, according to the research led by analysts Liao Xufa and Lincoln Kong.
They predict total consumption volume of grape-based wine, rather than rice wine, in China will increase at a compound annual growth rate of about 6 per cent over the next decade as a result, with the former considered the healthier tipple by among millennials.
The report expects China’s alcohol industry to be worth some 1,300 billion yuan (US$192 billion) by 2025, a 5 per cent compound annual growth from 2016, mainly driven by rising average prices.
And thanks to the move towards more expensive premium products and improved margins, the report suggests wine industry profits to outgrow white spirits, at an 8 per cent compound annual growth to 200 billion yuan by the same year.
The report underlined how Chinese alcohol preference is very much related to age group.
According to an Institute of Alcohol Studies study conducted in the UK, Amercian company Gallup’s study conducted in the US and the Australian Institute of Health and Welfare study conducted in Australia, older people tend to drink more wine in these three countries.
That’s pretty much in line with western economies, which gave highlighted too recently that older people tend to drink more wine in those countries.
Elderly drinkers in China are still traditionalists, opting for Chinese white spirits, or baijiu liquor which is made from grain, while young people are turning their attention to Western wine and spirit brands, particularly wine.
Just over half (53 per cent) of frequent consumers of Chinese white spirits are now 45-years-old or above, compared with 30 per cent for beer, and 27 per cent for wine.
“We expect wine industry profits to grow relatively slower compared with beer and spirits on
tougher competition and pricing pressure,” according to the report.
But it expects consumption volumes to grow faster for wine than the other two, up 72 per cent from 2016 to 2025.
The report expects, too, imported wine brands to take more market share, as domestic Chinese labels have failed as yet to take share from more recognised and established international vineyards, which have stronger brand image and are considered higher quality.
“Future wine industry revenue growth in China will be mainly driven by imported wine, a 145 per cent rise from 2016 to 2025, as they work harder on branding to ensure they convince buyers of their higher quality. That will be helped too by lower import tariffs,” the report added. “Imported wine revenue share will increase from 40 per cent in 2016 to 63 per cent by 2025.”
The report expects the Chinese population aged over 55 in 2025 will be a quarter larger than in 2015.
Source: South China Morning Post. Date: 2017-08-08
India, IRRI partner to boost South Asia's rice sector
The government of India and the International Rice Research Institute (IRRI) recently furthered their partnership for food and nutrition security and capacity development in the South Asian region.
A Memorandum of Agreement (MOA) was signed on Aug. 2 in Krishi Bhawan, New Delhi, by IRRI Director General Matthew Morell and Secretary S.K. Pattanayak of the Indian Department of Agriculture, Cooperation and Farmers Welfare. The MOA signing precedes the July 12 approval of the Union Cabinet, which is chaired by Prime Minister Shri Narendra Modi, for the establishment of the IRRI South Asia Regional Center (ISARC) at Varanasi, Uttar Pradesh.
“While IRRI has historically helped India to meet its overall food security needs through the green revolution with high-yielding rice varieties such as IR8, the challenge now is to deliver increased livelihoods for farmers through increasing the value of rice, and increasing the well-being of farmers and consumers through enhanced nutrition outcomes,” said Morrell. “This agreement opens up more exciting collaborative activities in developing higher-yielding and more nutritious rice varieties that also meet the eating preferences of consumers. It is important that new and improved rice varieties also possess superior grain quality that add value through meeting domestic and export market expectations to further improve the lives of farmers who rely on rice for their livelihood and sustenance.”
In an official statement by the Indian Press Information Bureau, ISARC will be the first international center in eastern India. The center will drive initiatives that focus holistically on the rice value chain in the country.
ISARC is designed to provide a regional facility that supports research collaboration, training, and service provision to institutions, scientists, and other stakeholders from India and other South Asian and African nations. The center will house a modern research facility that aims to develop higher-yielding and more nutritious rice varieties that also meet the eating preferences of consumers.
The center will be managed by IRRI and work commences immediately with the objective of commissioning the center within 6 months.
Source: World-Grain.com. Date: 2017-08-08
Plan for management of antibiotic use in Vietnamese farming
The Ministry of Agriculture and Rural Development on Wednesday launched the Vietnam National Action Plan for management of antibiotic use and control of antibiotic resistance in livestock production and aquaculture in the 2017-20 period.
With financial support from the United States Agency for International Development, this plan was developed in collaboration with the Food and Agriculture Organisation of the United Nations (FAO) to guide the actions of the agriculture sector and complement the Ministry of Health’s national action plan on combating drug resistance in the 2013-20 period
The implementation of the plan is expected to help mitigate the public health risk arising from antibiotic usage in livestock production and aquaculture in Việt Nam.
The action plan establishes five specific objectives, including review, revise and enforce policy implementation and governance related to antibiotic use (AMU) and antibiotic resistance (AMR) in livestock production and aquaculture.
It also, as expected, helps to increase awareness on AMU and the risk of AMR occurrence among food and agriculture professionals, producers and consumers or implement good practices in animal treatment, animal feed production, livestock husbandry and aquaculture.
Deputy Minister of Agriculture Vũ Văn Tám said the popular use of antibiotics in livestock production and aquaculture had led to the presence of antibiotic resistant bacteria in cattle, poultry and aquaculture.
Tám said it was important to have cooperation and technical and financial assistance from agencies, international organisations, research institutes and the private sector to reduce antibiotic use and mitigate antibiotic resistant threats.
“Together we are stronger against antibiotic use,” Tám said.
Jong Ha Bae, FAO’s representative, said “Antibiotic resistance threatens the health and livelihoods of the people in Việt Nam, the sustainability of food and agriculture production systems and the environment. Farmers, veterinarians and animal drug sellers should share responsibility by using antibiotic agents more responsibly and find alternative ways to maintain animal health and productivity such as improving bio-security and farming practices.”
Antibiotics can kill or inhibit the growth of micro-organisms such as bacteria, fungi or protozoa. They have been extensively used in recent decades and led to extraordinary improvements in human and veterinary medicine. Being an essential tool to control infectious diseases, they have also contributed to the improvement of food security, food safety and animal welfare.
However, the efficacy of antibiotics has been hampered by the development of resistance in bacteria originating from humans, animals, food and the environment. Infections due to antibiotic-resistant bacteria have led to treatment failures, poor clinical outcomes and deaths.
Source: VNS. Date: 2017-08-07
Texas rice farmers hope China deal brings more than a grain of relief
Ray Stoesser rumbled around his fields in an SUV, noting the minute gradations of the land, which is subtly terraced to allow water to flow downhill, irrigating the fields in slow succession.
“We’re going uphill, believe it or not,” Stoesser said.
After more than a half-century of farming, he knows what each field needs and when, harvest after harvest.
“Just like taking care of your backyard,” he said.
If Stoesser’s land hasn’t changed, the economic conditions have.
Rice prices have declined for several years, averaging about 10 cents a pound last year, because of competition from huge rice producers such as Vietnam and Thailand as well as increases in agricultural productivity that have boosted supplies.
Over the past few decades, hundreds of rice farmers in Southeast Texas have given up the crop entirely.
But in mid-July, the Texas rice industry — which is worth about $100 million per year to farmers — was granted a reprieve: a deal to allow U.S. rice sales to China.
The industry estimates that China soon could buy 250,000 tons of U.S. rice per year, out of the 9 million tons it produces, which could boost prices significantly.
Although trade between the two countries had been liberalized when China entered the World Trade Organization in 2001, trade in rice remained off the table.
An agreement to allow exports has been in the making for nearly a decade, with talks launched by George W. Bush, continued under Barack Obama and ultimately concluded under Donald Trump.
The deal sets complex safety standards to prevent pests from entering China with rice imported from America, which, if met, opens a market of more than 1 billion rice eaters to U.S. farmers.
The agreement comes at a critical time as the Trump administration prepares to renegotiate the North American Free Trade Agreement, potentially threatening agricultural exports to the rice industry’s biggest customer, Mexico.
For the Stoesser farm, selling to China could mean a slightly bigger financial cushion in a business that can see a year’s income decimated by floods or drought or both.
“If we could get to 16 cents instead of 10 cents a pound, it would take a lot of risk out,” Stoesser said. “Trade is the answer to our problems.”
Family business
The past few decades have left the Stoessers feeling isolated.
The flat, humid counties east of Houston used to be full of rice fields — in 1968, 70 square miles of Liberty County were planted with the crop. Growing up in the area, Ray’s son, Neal, always saw the rice business as his future, and he didn’t finish college.
“I went to the University of Rice Farming, I guess,” he said.
The Stoessers have owned land since Neal’s great-grandfather came to the area from Germany in the late 1800s, and Neal has been driving a combine since he was old enough to climb up into the cab, as his 8- and 4-year-old sons do now.
Over that time, the Stoesser farm has grown to cover several thousand acres as the family bought out surrounding farms.
The rest of Texas’ rice industry, however, has shrunk to 187,000 acres from more than 600,000 in the 1950s. In Liberty County, the 70 square miles of rice fields now is 8.
“I hate to say it, but when I was in high school, there were 70 farmers,” Neal said.
Now there are just three in Liberty County — Neal, his father and his brother, Grant.
Several reasons are behind the decline, including the encroachment of suburban housing developments, which raised land prices to the point where it made more sense to sell than keep farming. Today, Texas accounts for about 6 percent of U.S. rice production, far behind the leader, Arkansas, which accounts for about half.
But Texas rice farmers have a few things working in their favor. New seed varieties allowed them to nearly double the yield per acre, with the assistance of experts from Texas A&M’s field offices.
Also, federal crop subsidy programs have kept them afloat through thin years, paying out $1.8 billion to Texas rice farmers between 1995 and 2014, according to a database maintained by the Environmental Working Group, an advocacy organization that opposes farm subsidies.
Meanwhile, the rice industry has tried to expand its market by boosting Americans’ rice consumption. Stoesser runs the Texas Rice Council, which collects payments from the state’s rice farmers for joint marketing efforts, such as one that produced a bumper sticker on his Yukon SUV. “Eat Rice,” it reads. “Potatoes make your butt big.”
In one regard, they’ve made progress. Americans now eat 26 pounds of rice per year on average, which is nearly triple their consumption in the 1970s. But that increase is driven largely by immigrant communities that favor jasmine and basmati varieties, mostly imported from Thailand, India and Pakistan, over American medium and long grain rice.
‘Ice to Eskimos’
Back in 2005, Greg Yielding took a trip to China.
Nothing terribly official for the executive director of the Arkansas Rice Growers Association — just a few visits with people like the U.S. Department of Agriculture’s representative in China and the office of COFCO, China’s state-owned food importer.
At that point, the prospect of selling rice to China seemed like a hopeless quest — “The ultimate example of selling ice to the Eskimos,” as one California official put it.
But Yielding heard differently. Chinese supermarket executives, he said, thought they could market American rice as a high-end, safer alternative to their own crops, which had suffered waves of contamination.
On successive visits, funded by grants from the USDA, Yielding engaged a market research company to have young women hand out samples of U.S. rice at luxury supermarkets in big cities.
“I couldn’t tell you that there was something better about it, but they tried it, they liked the taste of it, they liked the cooking quality,” said Yielding, who soon started working for the U.S. Rice Producers Association. “I just kept making contacts and finding out that the Chinese wanted to buy U.S. rice.”
And at the time, China was about to undergo a much larger shift.
For decades, in the name of national security, China had maintained a goal of producing 95 percent of its grain domestically. About 2012, rocked by food safety scandals, China backed off that target, allowing it to slip to 85 percent. The U.S. went from exporting about $100 million in grain and feed in 2007 to a peak of $4.9 billion in 2015.
“That 10 percent is big for agricultural exporters,” said Luis Ribera, an agricultural trade expert at Texas A&M.
Rice, however, still was barred entirely, since the two countries hadn’t agreed on a common food safety protocol. So, a few years ago, the USDA started facilitating trips by Chinese scientists to visit U.S. farms and rice mills. Ray Stoesser helped shepherd them around in Arkansas.
“The Chinese were optimistic about what they saw,” he said, extolling the quality and sanitation of U.S. facilities.
The Rice Producers Association, of which Stoesser is a member, wasn’t the only group working for market access — the U.S.A. Rice Federation, a coalition of farmers and millers, was sponsoring exchanges as well.
Rice mills remove the tough husk from rice grains to make it edible. The millers were particularly keen on the Chinese market, since all the rice going there would be milled in the U.S., in contrast to the largely unmilled “rough” rice that goes to Mexico and South America.
Two years ago, USA Rice’s executive director, Betsy Ward, said she thought U.S. negotiators had a deal with China. But they never could get it signed by the Chinese, which Ward thinks may have had to do with the Obama administration having other trade priorities — such as the massive Trans Pacific Partnership, which pointedly didn’t include China.
After Trump’s agriculture secretary, Sonny Perdue, took office, Ward said her group met with him four times about getting the rice agreement done. Only a few weeks after Perdue visited China to celebrate a deal allowing exports of beef, the rice deal finally was signed.
Source: San Antonio Express News. Date: 2017-08-07
Fonterra partner Beingmate plans to sell off dairy farms as it forecasts big loss
Fonterra's Chinese investment partner Beingmate has forecast a hefty loss of $70 million for the first six months of the year and announced a sell-off of dairy farm assets.
The company had earlier forecast a profit. Its shares have fallen 10 per cent and been indefinitely suspended from trading, and charges have been made the company has been involved in insider trading.
In 2015 Fonterra invested $700 million for an 18.8 per cent stake in Beingmate, which it said would give access to the lucrative Chinese market for its infant formula and other products.
Dr Andrew Zhu of Trace, a consumer research company based in Auckland, said he believed the investment was questionable.
"There's a big mismatch between Fonterra and Beingmate. The key thing is the Chinese consumer doesn't have confidence in this brand."
"In May I went to China to do a study on infant formula and no-one mentioned it. For people in the first and second tier cities, it's not a brand they consider. It's aimed at the lower end of the market," Zhu said.
Fonterra acknowledged the difficulties of the Chinese infant formula market. A spokesman said the infant formula industry continued to operate "under challenging conditions" during the transition to infant formula registration, which had taken longer than indicated at first.
Beingmate was operating in a highly fragmented and uncertain infant formula market. Registrations for its five factories were "all on track".
"Our investment in Beingmate is part of a long-term, strategic plan to grow in the China infant formula market. We remain committed to the integrated China strategy and will continue to build on the success of our business in China," the spokesman said.
He said the partnership had created a direct line from Fonterra into the China infant formula market and given it access to an "extensive distribution and sales network".
"As a result our Anmum range is now in more than 170 cities in China, compared to around 60 in 2015."
Zhu said that just because the product was available in a greater range of cities, it was not necessarily value added.
Labour primary industries spokesman Damien O'Connor said senior Fonterra executive should be held responsible.
"The board approved a wasted investment of $700m of New Zealand farmer money. There's no excuse for not doing due diligence," he said.
Beingmate is not alone in experiencing difficulties in China. Last month Chinese authorities suspended the export licence of Australian dairy company Bellamys.
Fonterra manufactures Bellamy's organic baby powder range at its Darnum, Victoria plant under a five-year, multi-million deal, but the suspension does not impact the sale of these products.
Fonterra Australia also uses the Darnum plant to manufacture nutritional base powders for Beingmate, which are now being shipped to China.
Last week Beingmate told the Shenzhen Stock Exchange it would spin off a subsidiary that runs dairy farms in China's Heilongjiang province to improve earnings.
The subsidiary - Beingmate Anda Dairy Company - has lost money in the last year as global raw milk prices remained low, although they have since picked up.
The Caixin news website said Beingmate chairman Wang Zhentai had denied the claims of insider trading, but the Shenzhen Stock Exchange had ordered the company to disclose any stock transactions made by executives over the past three months.
In the last year the vice-chairman, chief financial officer and deputy general manager have resigned from Beingmate.
Source: NZFarmer. Date: 2017-08-07
U.S. Beef Is Back on China's Shelves—But China Doesn't Care
At the Sam’s Club store in Beijing’s Shijingshan district, the chilled beef on offer is so dominated by Australian cuts -- marbled rib eye steaks to fatty oxtail chunks -- that many customers are oblivious to the few packs of U.S. meat available.
“I haven’t noticed the U.S. beef here,” said Hui Xue, who was shopping for steaks that he cooks once a week. Even if he had spotted the produce, it probably wouldn’t have gone into his cart. The American meat -- back in China after 14 years as part of a trade deal hailed by the Donald Trump administration -- was only available in little strips meant to be stir-fried rather than in larger hunks that can be sizzled on a cast-iron skillet.
Viveca Zhang, another shopper at the store, also bypassed the American supply. “I would like to try the U.S. beef, but there are only a few options to choose from,” she said.
Their reticence emphasizes the barriers that U.S. beef faces on its reentry into the world’s second-biggest consumer after being barred in 2003 due to concerns over mad cow disease. While the return prompted fanfare from the Trump administration and promises that shiploads of meat would start arriving at China’s shores, producers may have to endure a long slog back into the market. That’s because rivals from nations including Australia and Brazil rushed in to dominate sales when the Americans were shut out.
“Trade will grow gradually, but I don’t think it will increase to the extent that would affect China’s beef market, because of its limited supply,” Chenjun Pan, an analyst at Rabobank International, said of the U.S. meat.
China, the world’s largest pork producer and consumer, has seen beef demand climb as incomes increase, prompting people to spend on new and varied types of food. Imports are predicted to climb to 950,000 metric tons this year from 26,000 tons in 2003, according to the U.S. Department of Agriculture.
The amount of American supplies entering China currently is relatively small because “the U.S. produces beef differently from other countries like Australia and Brazil, which do not use some feed additives that are banned by the Chinese government,” said Rabobank’s Pan.
That sentiment is in sharp contrast to the unbridled optimism expressed by U.S. officials and industry representatives at a ceremony in Beijing on June 30 celebrating the return of U.S. beef.
“Beef is a big deal in China and I’m convinced that when the Chinese people get a taste of U.S. beef, they’re going to want more of it,” Sonny Perdue, U.S. Secretary of Agriculture, said while promoting the bilateral deal in Beijing. “These products coming into China are safe, wholesome and very delicious.”
President Trump even re-tweeted a story last month to express his enthusiasm: “After 14 years, U.S. beef hits Chinese market. Trade deal an exciting opportunity for agriculture.”
China banned U.S. beef exports in December 2003 after a cow in Washington state tested positive for mad cow disease. According to the U.S. Department of Agriculture, the diagnosed dairy cow had been imported from Canada.
There won’t be a “significant amount” of U.S. beef entering the Chinese market in the near term, according to Jake Parker, vice president at the U.S.-China Business Council in Beijing. The American product still faces strict Chinese government rules, with the beef that does qualify being priced for the premium market, he said.
Limited Volumes
“Current volumes are limited due to export requirements,” Caroline Ahn, a spokeswoman for U.S. meat giant Tyson Foods Inc., said in an email. “Any increase in demand from China is great news for our business, as well as the independent cattle producers who supply us.”
Out of 600,000 head of cattle slaughtered in the U.S. each week, only about 1,600 can meet Chinese specifications, said Zhifeng Cai, a manager at the fresh produce department of Womai.com, the online retail platform of China’s state-owned food giant Cofco Corp., which first imported American beef into the country.
U.S. Secretary of Agriculture Sonny Perdue meets Chinese counterpart Han Changfu in Beijing on June 30.Photographer: Jason Lee/AFP via Getty Images
Part of Cofco’s first batch of American beef was offered on Womai.com and sold out within two days, said Yun Yuan, public relations manager for the site, without providing details on the volume that was sold. Of the more than 50 items currently offered on the website’s imported beef section, less than 5 were from the U.S.
Sam’s Club, a membership store operated by Wal-Mart Stores Inc., sold its first U.S. beef in China in late June. However, the retailing giant doesn’t have immediate plans to sell American beef at its less-expensive Supercenters, Wendy Li, a spokeswoman for Walmart China, said in an email.
Chilled, Frozen
China’s imported beef market is divided into chilled and frozen beef. Brazil, Uruguay and Australia account for more than half of the less-expensive frozen beef market, Chinese customs data show. For premium chilled beef, the biggest competition for U.S. meat is from Australia, from which the Asian nation imported 6,833 tons of the variety last year, the data show. Inbound volumes including frozen beef from Australia were 110,758 tons.
China imported a total of 11.1 tons of chilled and frozen beef combined from the U.S. in June, compared with shipments totaling 9,502 tons from Australia, according to the customs data.
Coleen Feng, another shopper at Sam’s Club who also ignored the American meat on offer, said eating Australian beef “has become a habit.”
Source: Bloomberg. Date: 2017-08-04
China is an emerging wine nation
When we think of wine countries, France and Italy may be the first to come to mind.
But in the new age it is not a stretch to suggest that the most important wine nation in the world may well be China. When you consider the size of China's emerging consumer demand, the exponential growth in vineyard plantings in new wine regions, and the purchase of key winery properties around the world, there is little doubt that China will play a significant role in the future of wine.
So is that a good thing? Well, it depends upon who you are.
A LOT OF PEOPLE
If you are a Western Australian wine exporter, it is a very good thing indeed. Last year, exports of Australian wine saw a 10 percent increase with much of that growth attributable to the Chinese marketplace. This at a time when the U.S. market is starting to re-emerge after a long downturn. Daily, there are deals being made between Aussie winemakers and Chinese business alliances that call for both sales and partnerships in Chinese-based vineyards.
This past spring, in London at VinExpo, predictions were made that, if current trends continued, China would be on pace to become be the world's number two wine market in 36 months. By 2020, the country is expected to trail just the United States in overall sales volumes for wine and become the leader in the consumption of non-sparkling wines. This is a country that ranks 36th in per capita consumption.
Of course, there is a lot of capita in China. Nearly one out of every five people on the planet live in China. According to the latest United Nations estimates, as of July 27, China's population was 1,388,640,178 people. Give or take a birth or two. That is a lot of drinkers and satiating their ever-growing thirst for wine will take some doing.
If you are grower or winemaker, you have to be pretty happy about the numbers. That is, if you have the capacity and infrastructure to sell and export your product to the Chinese market.
A LOT OF MONEY
The growing affinity for wine by the Chinese is also a good thing if you happen to be an "Agent Immobilier," or real estate agent, in France, particularly one who represents the wine growing Chateaux's of Bordeaux. Last month, a wine estate and 15th century Chateau, called Chateau Fauchey, in Cadillac Cotes de Bordeaux, sold to a group of Chinese investors, called Profitsun Holdings. Their strategy for the property calls for the production of Bordeaux branded wines that can be brought back to high-end luxury clubs and hotels they own in China.
This is just the latest in a continuing string of purchases made over the past decade. Over 100 properties in Bordeaux, many of them on the fringes of the grand cru vineyards but none-the-less outstanding properties, have been sold to Chinese investors. Many not only see the purchases as good investments, but also enjoy the prestige associated with owning the spectacularly beautiful properties.
A LOT OF GRAPES
But the real growth area for the future for China is in wines that are grown and produced within its borders. China is now the number two nation in the world, trailing just Spain in terms of area planted to vines. Though it still lags behind Spain, Italy, France and the U.S. in terms of wine production, it is just a matter of time before their overall production ramps up.
In an indication of just how serious the Chinese wine industry is about their future, they have begun the process of "classification" of their wines. This is much like the way that the United States uses the AVA system, or France, the AOC, to designate certain wines and certain regions as being of higher quality. An understandable classification system can allow consumers to differentiate between various wines and also establish tiers of pricing for those wines designated as superior.
A TALL PIONEER
Perhaps the most famous face and name in Chinese wine belongs to a man who stands tall in any vineyard. Yao Ming, who found fortune and fame as an NBA star for seven years, has created a Napa Valley wine label, called Yao Family Wines, that focuses on the production of Cabernet Sauvignon from fruit sourced in a series of Napa Vineyards.
Ming's success on the court was unprecedented for a Chinese-born hoopster, and now his success in wines is also approaching that pinnacle. Highly regarded and always sold out, about a third of the wineries production goes to China, Yao Ming may one day be regarded as the Chinese Mondavi, or Antinori.
Time will tell.
China's taste for US pistachios pumps up California's exports
When Judy Hirigoyen travels to China on business, she is "delighted and shocked" to see bowls of California pistachios on the tables of tea houses in Chengdu.
Hirigoyen, the vice-president of global marketing for the American Pistachio Growers (APG), a trade association in Fresno, California, proudly represents the booming US pistachio industry.
Just a year ago, the industry was hampered by a lack of favorable "chill hours" in California (temperatures below 40 degrees), along with a West Coast port strike.
With better weather conditions and a settled strike, the US pistachio industry is booming.
As acreage grew across the West - almost 250,000 acres in California alone - pistachio nut production in 2016 rose to a record 903 million pounds, a year removed from crop failure and almost double the yields from 2010 through 2014.
And China is gobbling up a good chunk of those green nuts, consuming about half of total US pistachio exports so far this year. Year-to-date exports are near a record at more than 350 million pounds, said Richard Matoian, executive director of APG.
The pistachio nut, a member of the cashew family, is grown on a small tree originating in Central Asia and the Middle East. The word pistachio comes from medieval Italian.
Pistachio trees typically alternate each year in their output levels.
"Every other year, the plant pushes out its fruit. After it pushes out so much fruit, it has to take a whole year to get its energy back," Hirigoyen told China Daily. "This is an alternating crop."
So while this would technically be a slower year, "we could have over 600 million pounds (this growing season). It would still be bigger than many of our past years," she said. "There are so many acres that have been planted."
As a drought-tolerant crop, pistachios can survive on little water, which was the situation during California's drought in 2015.
The Golden State is the pistachio kingpin, accounting for 99 percent of US production. Pistachios also are grown in Arizona and New Mexico.
A key selling point for US pistachios, aside from California's "health halo", as Hirigoyen joked, is their safe harvesting method.
"They want safe food," in China, she said.
"In the United States, when pistachios are harvested, they're harvested by shaking the tree," she explained. "This machine attaches to the trunk of the tree and shakes it, and it shakes the nuts into this big catcher, and then they go from that catcher directly into the truck to the roasting facility, so they never touch the ground. The ground is where you see most any contamination in nature."
There are health benefits, too. Pistachios have a low glycemic index, are high in fiber, healthy fats, antioxidants and anti-inflammatory phytonutrients.
Interim results of a spring study (co-funded by APG and the US Department of Agriculture) in China among pregnant women with gestational diabetes showed that eating pistachios resulted in a significantly lower rise in blood sugar levels than when they ate whole wheat bread.
Data from the study were presented at the 10th Oriental Congress of Endocrinology and Diabetes in April in Shanghai and at the Chinese Nutrition Annual Conference in May in Beijing.
"Our study is the first to show that eating pistachios may help women with gestational diabetes control blood sugar levels after eating," said Dr Ge Sheng, lead investigator and director, Department of Clinical Nutrition, Sixth People's Hospital, Jiao Tong University.
Twenty-five pregnant women with gestational diabetes ate a breakfast of either 42 grams of pistachios (one third of a cup) or 100 grams of whole wheat bread (three slices) after an overnight fast.
Blood sugar levels were significantly lower after they consumed pistachios than the bread.
"Elevated blood sugar during pregnancy not only impacts the mother's health, but it may also increase the baby's risk of developing diabetes," said Dr Zhaoping Li, study investigator and professor of medicine, chief of the Division of Clinical Nutrition at UCLA.
Source: China Daily. Date: 2017-08-04
CHINA’S FOREIGN FOOD & AG ACQUISITIONS SET TO INCREASE
After a series of high-profile acquisitions and more likely on the way, China is poised to have a much larger footprint in the global food supply chain in the near future, according to a new report from Rabobank. The report highlights six acquisitions from the last six years that demonstrate China’s agricultural priorities and perhaps predict the role the world’s most populous country is seeking on the global agriculture stage.
The sense of urgency around feeding China’s 1.4 billion people has been leading to deals both private and public for the last several years. In April, Alex Zhang, cofounder and management partner of Beijing Hosen Investment Management (Hosen Capital), who has invested $300 million in food and agribusiness-related companies that are either located in China or are directly involved in meeting Chinese demand, told AgFunderNews, “The whole industry is modernizing at a speed we haven’t seen in Chinese food industry history, and if we follow a similar pattern in the way the U.S. food industry evolved in the past, we are now at the stage that we will see more and more sector consolidation. We will see more trade sales and large Chinese food companies will continue to go global,” said Zhang. “Our food industry will evolve in a similar fashion to our internet industry where four of the world’s top 10 companies are Chinese; we will probably see something similar in 10 years’ time in the food industry.”
The Rabobank report posits that China’s acquisitions are not simply meant to give the country more global superiority in terms of food production and ag-related holdings, but also to meet specific goals within the nation’s own food supply.
RAMPING UP EFFICIENCY
According to the report, China’s crop yields have a way to go. Yields for corn, soybeans, and wheat in China are growing at a slower rate than producers globally. For example, the report forecasts that Chinese corn production will reach 6.37 tonnes per hectare by 2026 while the U.S. will reach 10 tonnes per hectare.
The report names ChemChina’s acquisition of Syngenta as a leading sign of this focus. In China’s largest foreign takeover to date, ChemChina announced the intended buyout of Syngenta, with the blessing of shareholders, in February 2016 and finished obtaining 98% of the company just this month, in a deal totaling $43 billion. A few more legal hurdles remain such as canceling the remaining 2% in stock and delisting the company from the Swiss Exchange, but the massive takeover is essentially done.
“The combination of ChemChina’s acquisition of Syngenta’s seeds and agrochemical assets, and China’s own germplasm base, traits, and related technology makes for an excellent foundation to achieve this goal,” said the report.
The most recent major agricultural acquisition by a Chinese company further supports the goal of upping yields. In July, CITIC Agri Fund purchased Dow’s Brazilian corn seed operation including seed processing plants and research centers, a copy of Dow AgroSciences’ Brazilian corn germplasm bank, the Morgan seed brand, and a temporary license for the use of the Dow seed.
SOLID SOURCE OF FEED
In addition to souping up China’s commodity production, the country is looking to support another key part of its domestic food supply; China may be able to meet the majority of its demand for meat through domestic production, but its animal feed is largely imported.
As in most developing nations, meat consumption is up, and this relies on a feed crop that China is not quite as skilled at producing: soybeans. The government has expressed a desire to increase soybean acreage by more than 30% by 2026, and several acquisitions have made this appear more likely.
The report details three of these: COFCO’s acquisition of Noble Agri, a Singaporean supplier of agricultural and energy products, and Nidera, a Dutch grain trader, both with an eye toward trading. Also major Chinese meat processor Shuanghui purchased U.S. pork giant Smithfield in 2013 — along with 146,000 acres of U.S. farmland — for $4.7 billion, which the report argues is to further supplement animal protein supply.
The report further says that future investments will likely focus on “technology that improves livestock productivity.”
ARBITRAGE
The report also gives a nod to China’s amassed capability for arbitrage — buying and selling products at the same time to turn a profit. Not only may China be able to secure its domestic food production through these acquisitions, but it may also be in a position to play a global role in the pricing and supply of agricultural products and inputs.
Plus, through the sheer force of its power as an importer, logistics and even food safety are also at the country’s fingertips. Case in point: After the Trump administration successfully convinced China to lift the ban on beef imports from the U.S., it has become clear that Chinese restrictions on common cattle feed additives will either require a costly conversion by U.S. ranchers or keep the U.S.-China beef trade in niche territory. The U.S. poultry industry is currently seeking the same opportunity.
Source: Ag Funder. Date; 2017-08-04
Latent risks as Aussie meat beefs up VN market share
As the demand for imported beef soars, Australian exporters are strengthening their market share in Vietnam, but the situation is fraught with risk, experts say.
A Dau tu (Investment Review) newspaper report says Vietnam has become one of the largest importers of Australian cattle. In 2016, it ranked fourth among 32 countries importing Australian cattle.
The report quoted Tong Xuan Chinh, deputy head of the Ministry of Agriculture and Rural Development’s Animal Husbandry Department, as saying Vietnam began importing Australian cattle in 2010.
In 2012, the country had just four enterprises importing Australian cows but by 2015, the number had risen to several dozen with a total of 360,000 heads of cattle imported.
Vietnamese businesses are now rushing to import Australian cows and fattening them for sale to slaughterhouses. As a result, inventories of live cattle have swelled significantly.
The inventory of Australian live cattle in 2015 was estimated at 100,000 heads due to oversupply, Chinh told Dau tu, adding that in 2016, imports of cattle from Australia to Vietnam slowed dramatically as feedlot operators moved to lower their inventories.
Before 2010, Australian cattle exporters were not aware of the attractive Vietnamese market. Their main partner at the time was Indonesia, importing nearly 1 million cows from Australia per year, said Luong Minh Tung, Chairman of Yen Phu Beef and Dairy Cattle Breeding JSC in Ninh Binh province.
In 2011, the Australian government issued a ban on cow exports to Indonesia after reports surfaced about inhumane slaughter in some of its abattoirs, Tung said, adding that Australia also lost their strategic partner after the decision.
This was the context that Australian businesses, urgently looking for new partners, found Vietnamese ones, Tung said.
The import of Australian cattle for fattening had been expected to open up a new direction for the fed-cattle industry. However, Tung said, there were always latent risks in imports.
He said there were too many businesses involved in importing Australian cattle, which could lead to supply exceeding demand.
Instead of importing culled beef of large weights, Vietnamese firms preferred to import calves in order to fatten and sell to slaughterhouses, which offers greater profits, Tung said.
However, as Vietnam didn’t have favorable conditions like Australia to breed cows, local importers have to invest a lot in infrastructure to support the influx of Australian cattle, meeting strict importing-related requirements.
According to Hoang Dung, Director of the Hai Phong Investment and Animal Poultry Products Import Export JSC., or Animex Haiphong, Australia requires all slaughterhouses in importing countries to have modern equipment and comply with ECAS (exporter supply chain assurance system) needs.
Businesses whose abattoirs are not in line with ECAS will be banned from purchasing Australian cows.
Such bans could cause huge losses to many Vietnamese slaughterhouses, Dung said, adding that although there were thousands of standard slaughterhouses, only 100 units or so had been approved by the Australian side.
Dung also said many small and medium-scale cattle breeders were facing severe competition from large rivals, like the Hoang Anh Gia Lai Agriculture International JSC (HNG), which has poured trillions of dong into importing Australian cattle to Vietnam for fattening and selling.
"Small businesses usually import several thousand heads of cattle each time and will purchase more only after they have already sold them out. Meanwhile, HNG buys 30,000 to 40,000 heads of cattle each time," Dung said.
The Da utu report said that at the end of 2016, the Viet Eco Farm JSC. launched a beef store chain called “Healthy beef” in Can Tho city, providing fresh, high quality Australian beef products in large quantities.
In the short term, the company aims to supply beef for the Mekong Delta region, but plans to expand its market in other parts of the country, establishing new distribution channels.
Viet Eco Farm also imports Australian calves to fatten and sells mature cows to abattoirs at thousands of heads per time. The company has invested a lot in breeding facilities and modern slaughter lines, and set up 450ha of pasture land to raise cattle.
Chairman of the Vietnam Livestock Association Nguyen Dang Quang said the amount of imported Australian cattle was increasing rapidly, being sold at reasonable prices, enjoying preferential tariffs and becoming more popular with Vietnamese consumers.
Australian beef is "dominating” the Vietnamese market, Quang said, adding that the more fierce rivalry between Vietnamese firms, the more benefits Australia exporters could enjoy.
Quang said it is imperative the country imposes technical barriers on Australian beef so as to protect the domestic cattle industry.
Source: VNA. Date: 2017-08-03