China to overtake the US as the largest dairy market by 2022
China is set to overtake the US as the world largest dairy market by 2022, according to new research on dairy markets by Euromonitor.
The database outlines that by 2022, China’s dairy market will be worth an estimated US$68.8bn, overtaking the US market which is forecast to be valued at US$67.7bn by 2022.
Currently, the US has the largest dairy market valued at US$64bn. China is currently second with their market valued at US$55bn.
Pinar Hosafci, senior food analyst at Euromonitor International, believes consumer trends are changing towards milk product in the largest producing states.
“Americans are drinking less milk and are becoming wary of flavoured milk drinks, which they perceive to be unhealthy due to their high sugar content. China’s growing appetite for yoghurt on the other hand will result in it overtaking the US as largest dairy market by 2022,” he said.
“For overall yoghurt sales in China, driving yoghurt is a key growth driver. This is largely due to major players expanding their reach with ambient drinking yoghurt,’’ he continued.
India
Also surging is the Indian dairy market. By 2022, its forecasted dairy sector will be at an estimated US$26bn, rising to the fourth highest globally. Currently, the southeast Asian country is eighth with a market size of US$17bn.
Hosafci also identified hygiene and changing consumer preferences as affecting India’s market valuation for dairy.
“[In] India, the growing health and hygiene awareness combined with urban consumers shifting from unpackaged milk to packaged milk, will see the country switch places with Japan by 2021,” he said.
Brazil’s market is forecast to grow from US$25bn in 2017 to US$27.3bn in 2022, remaining as the third largest global market by value.
Japan, Russia and Germany have the fourth, fifth and sixth largest dairy markets by value, respectively, in 2017.
Total global dairy market size (US$) over the next five years
2017: US$473bn.
2018: US$483bn.
2019: US$495bn.
2020: US$507bn.
2021: US$519bn.
2022: US$532bn.
Source: Irish Farmers Journal. Date: 2017-08-23
China considers reviewing Namibian beef deal to ease restrictions
China is considering reviewing a beef import agreement with Namibia, the country's ambassador to Namibia Zhang Yiming said on Tuesday, raising the possibility that restrictions could be eased.
A 2015 import agreement between Windhoek and Beijing stipulates that beef from Namibia must come from areas that are free of disease, including bovine pleuropneumonia (lung sickness), Lumpy Skin Disease (LSD) and bovine spongiform encephalopathy (BSE), commonly known as mad cow disease.
Namibia had expected to start exporting bone-in beef to China last year, making it the only African country allowed to export beef to the country, but an outbreak of LSD in July last year halted that.
Local media reports suggested last year that Windhoek might have blundered by agreeing to China’s conditions regarding LSD as the country might never be able to meet that requirement since it suffers from sporadic outbreaks of the disease.
Zhang told reporters in Windhoek on Tuesday that his country was prepared to renegotiate the text of the agreement.
"Our embassy has already sent a report back to Beijing requesting a technical team to come to Namibia so that we can renegotiate this agreement to make it more flexible," the Ambassador said.
LSD is transmitted through insect bites and can take up to six months to heal.
Exports to China can only start after a 12 month disease-free period.
Namibia currently exports its beef to many countries, including the European Union and Norway.
Source: Reuters. Date: 2017-08-23
Danish Crown targets China growth through Alibaba deal
Pork giant Danish Crown has signed a memorandum of understanding with Tmall, one of Chinese e-commerce firm Alibaba's business-to-consumer marketplaces.
The cooperative, the world's largest pork exporter, will now see its products made available to the 466m annual active consumers on Alibaba's e-marketplaces.
As part of the agreement, the meat of 1,001 Danish pigs - the number is based on the title of a well-known fairy tale - from one of Danish Crown's cooperative members on the island of Langeland will be reserved for sale to Chinese consumers, ready for Chinese New Year in February 2018.
But in less than two years' time, pork for the Chinese market will be processed at a new Danish Crown plant near Shanghai.
Danish Crown CEO Jais Valeur said: "Partnering with Tmall has enormous potential for Danish Crown. Chinese consumers are buying much more of their food online than anywhere else in the world.
"By selling our products through Alibaba's e-marketplace, we get access to a vast sales platform and ensure that Danish Crown can become a pork provider of choice for the growing Chinese middle-class."
David Lloyd, managing director of Alibaba's operations in the UK, Ireland and Nordic markets, said: "Danish produce enjoys an excellent reputation in China and I am pleased to announce this agreement with Danish Crown today.
"Chinese consumers increasingly want reassurance that the meat they consume is of outstanding quality and reared to high-standards, and we look forward to working closely with Danish Crown to enable the 466m annual active consumers on our e-marketplaces to buy quality Danish meat products on Tmall Fresh to enjoy at home."
Tmall will be running an online marketing campaign aimed at Chinese consumers on their platform from 24 August for three days, which will heavily promote Danish food and products, including the Danish Crown brand.
Danish Crown started exporting pork to China in 1998. In 2016, more than one full container load of pork was shipped every hour, every day, all year round. The majority of it is sold to Chinese distributors.
Last year Danish Crown exported more than 260,000 tons of pork to China representing a turnover at approximately EUR600m (US$705.1m).
The Danish Crown product range for Tmall will be picked, processed and packed at the Danish Crown facility in Ringsted, Denmark. In spring 2019, the production will move to a newly established Danish Crown factory in Pinghu, close to Shanghai.
Source: Just-Food. Date: 2017-08-23
Mexichem acquires world's largest irrigation company, Netafim
Mexichem, S.A.B. de C.V. announced on 7 August that it has reached a definitive agreement to acquire an 80 per cent stake in Netafim, Ltd, an Israeli private company, from a company backed by the Permira Funds and other minority shareholders.
Kibbutz Hatzerim, the founder, will retain the remaining 20 per cent stake of Netafim’s share capital. The total enterprise value of the transaction is US$1.895bn.
Netafim is the world’s largest irrigation company. In the past few years it has achieved strong financial performance, with top line growth and improving profitability, reaching total sales of US$855mn for the year ended 31 December 2016. Mexichem will fund the acquisition with a combination of cash and debt.
“This is a transformational acquisition that advances Mexichem’s drive into specialty products and solutions and establishes us as a leading innovator in the high growth, micro-irrigation market. At the same time, Netafim positions us to become a leading developer of solutions to address food and water shortages, and respond to the need of increase crop yields and meet higher sustainability standards for fertilisation. Netafim has a long history of being at the forefront of creating smart solutions for the irrigation market. This acquisition will give Mexichem access to this smart technology which can be applied to heating and cooling, water management, Datacom, and other sectors, providing a platform from which to create smart industrial solutions around our existing product lines that serve the infrastructure, housing and Datacom markets,” said Antonio Carrillo Rule, Mexichem’s Chief Executive Officer.
Netafim is a global leader in developing, manufacturing and distributing advanced drip and micro-irrigation solutions, with local presence in more than 30 countries, 17 manufacturing plants, more than 4,300 employees and sales in more than 110 countries worldwide. Netafim’s advanced technologies and end-to-end solutions help growers across the world achieve higher and better crop yields while reducing usage of water and other inputs, such as manpower, nutrients and crop protection.
“By combining our current irrigation portfolio with Netafim’s business, we will create a formidable growth platform to drive synergies. With sales of almost US$1bn in the aggregate, this new business unit will have access to the resources, sales channels, and customer base of Mexichem’s global business. Additionally, we expect to leverage Netafim’s resources and expertise to create innovative new solutions across Mexichem’s specialty products. We also see substantial operating efficiencies over time in raw material procurement, logistics, and the sharing of production processes and technology know-how,” continued Mr Carrillo.
Commenting on the acquisition, Ran Maidan, Netafim’s Chief Executive Officer noted, “We are proud to have won the trust of a leading company such as Mexichem, and believe that together we will have an improved cost position and broader portfolio to support continued profitable growth and to extend our reach to new customers and geographies. We also will be able to apply our R&D and technical expertise in developing end-to-end innovative solutions that Mexichem can offer to its industrial customer base.”
Torsten Vogt, a Permira Partner and Co-Head of Industrials, commented, “Netafim is an outstanding business and we are proud to have supported the company’s growth and its critical mission of conserving and protecting water resources. Over the course of our partnership with Netafim’s management, Kibbutz Hatzerim and Kibbutz Magal, the company was transformed into a best-in-class global leader, with an enhanced focus on innovation and new product development, and an expanded footprint and resources. It has been a pleasure working with the Netafim team and we wish them continued success as part of Mexichem.”
The transaction is subject to approval by Mexichem’s shareholders meeting and regulatory approvals and is expected to close during the fourth quarter of 2017. Once the transaction is completed, Mexichem will consolidate Netafim under its Fluent Business Group for accounting purposes. Netafim will continue to operate under its current management and with its existing brand portfolio.
Source: Far Eastern Agriculture. Date: 2017-08-23
The international scramble for China’s massive online beef market
You searched for ‘beef.’ Did you mean ‘beer?’” That was the suggestion the Costco Online website helpfully offered when we tapped in “beef” in the search bar. In total, we only hit on 11 items: six Kobe beef products, one vegan meat substitute, three dog foods, and an emergency food kit. For the Kobe beef, prices ranged from C$329 for 10 steaks to C$89.99 for 48 Kobe Classic Beef Mini Burgers. Deliveries are promised within five days.
Does it matter to Canadian beef producers that a major online seller in Canada has only six specialty unprocessed beef products that are going to be delivered next week? Probably not. The danger is that we assume that our key global markets work that way. Three hundred million Chinese have begun to shop online, ushering in a commercial era where speed and price dominate everything. In this new “lazy person’s economy,” consumers can reasonably expect to order it in the morning and get it in the afternoon. “Tmall supermarket,” an online food seller and part of the Tmall online platform owned by Alibaba, has been growing at 300 per cent per year. In 2015, the platform did 10 billion yuan (C$1.9 billion) in sales and expects to do 100 billion in 2017. “JD.com supermarket” (chaoshi.jd.com) not only expects to reach 100 billion in sales, it wants to help at least 10 brands do over 10 billion yuan (C$1.9 billion) in sales and to help another 100 brands do over 100 million (C$19 million). Our competitors are already selling significant amounts of country-branded beef on these e-commerce platforms in China. And this article is only talking about China; the online opportunities are truly global in scope.
So let’s speculate about the potential size of China’s online retail market for beef. Beef is marketed in China as a nutritious high-protein, low-fat and low-cholesterol food. In 2016, Chinese consumed 5.9 million tons of beef and veal (Euromonitor numbers; some Chinese statistics put this number over seven million tons), a 24 per cent increase over the past five years. Consumption of retail beef was less, 1.9 million tons in 2016, but that number too represented an astronomical 24 per cent increase over the past five years. Let’s imagine that retail beef consumption continues to grow yearly at five per cent (as it did in 2016) until 2020, giving us consumption of about 2.4 million tons of store-sold beef. By 2020, online sales will likely account for 20 per cent of retail sales according to some projections. If online sales of fresh food continue apace with everything else, Chinese will be buying almost 500,000 tons of beef online in only a few years’ time. If on average a frozen kilogram of Canadian meat exported to China last year was $7.50, we are talking about a potential export market of almost four billion dollars.
So how does it all work? At the present, there are three main established channels on the Internet to market quality Canadian beef to Chinese consumers. “Comprehensive” business-to-customer platforms like Tmall.com and JD.com allow businesses to deal directly with customers; they use third-party logistics companies for shipping. Next, online wholesale companies like 1688.com import overseas products and then sell to distributors. Companies like yhd.com and womai.com employ a “vertical” model and focus on fresh and frozen foods. These companies have their own distribution networks. Chinese consumers want access to high-quality beef imported directly from local production regions. Taken together, the three platforms are giving consumers the choice they demand.
It is no surprise that competition for this wave of savvy, internationally oriented Chinese consumers has picked up. How is Canada doing? The authors of this article chose to investigate beef sales on Tmall.com, the largest business-to-customer e-commerce platform. Inputting “country name” and “beef,” we found the following monthly country-specific sales figures for May 2017. The numbers are not encouraging.
The Canadian government has taken this challenge very seriously. In November 2014, Stephen Harper met with Jack Ma, owner of Alibaba and parent company of Tmall in China. Harper’s visit, perfectly timed for November 11, China’s “Double Eleven” deep discount day, helped sell 90,000 Nova Scotia lobsters in one day. On June 11, 2015, Agriculture and Agri-Food Canada signed a memorandum with yhd.com to establish a Canada pavilion on the site. In September 2016, Prime Minister Justin Trudeau visited Alibaba’s Xixi campus, met with Ma amidst great media fanfare, and announced the establishment of a Canadian pavilion on the Tmall website. The AAFC and the commercial section at the China mission are already dedicating staff to e-commerce markets for Canadian food products. But it would be a grave mistake to wait for our government to establish virtual Canadian pavilions on well-established e-commerce platforms so we can add our beef products to maple syrup, ice wine, and frozen lobster offerings already there. Instead, firms have to actively anticipate where the online beef market is going.
So how do we move ourselves up the rankings? First of all, when Canadians sell their products into the Chinese market, they must remember that online supermarkets like Tmall.com and JD.com have already begun to displace and radically alter the way their brick-and-mortar counterparts do business. Prices at online supermarkets are more transparent than in their offline counterparts. Online brand loyalty for quality food products is high. Online supermarket customers are now exploring augmented reality features, visiting kiosks, writing on experience walls, and interacting with each other. Social showrooming is supplementing the offline supermarket experience with online activities and social media campaigns. Future beef brands that somehow exploit, say, health claims about iron, the pristine natural environment, or the specific tastes of the female demographic, will have to engage online supermarket consumers too. Just because online sales are somewhere between 10 and 20 per cent does not mean we only need to spend 10 per cent of our energy on online strategy.
Canadian firms selling beef will have to develop robust online relationships with young, discerning Chinese consumers via micro-blogging site Weibo, instant messaging app Wechat and other social media. Firms must learn to develop rich, original content about their products. In other words, they must gather, create, refine and disseminate information about nutrition, traceability and production conditions, then create events and activities where customers will interact with what they see.
Firms are going to find it is hard to do it all on their own. Effective firms will partner with social media platforms, engage thought leaders, and participate in virtual marketing campaigns like the country pavilion. In this information-rich environment, the Canada brand and the maple leaf symbol do not provide the kick they once did. Uruguay’s traceability system, Australia’s “grass-fed sustainability,” or even the Brazilian “bauru” sandwich all provide consumers with competing narratives that have to be countered with careful, thoughtful online brand development activities.
Meanwhile, Chinese consumers now buy beef products direct from overseas producer regions: information technology and improved logistical infrastructure have drastically reduced middleman segments of the supply chain. So “Farm–Cross-border e-commerce platform–consumer” transactions are now a reality through “Tmall International” and “JD.com Global.” These direct-to-consumer platforms may inspire us to look at our competitors and wonder “Who is getting online in China first?” “Whose government has managed to reduce the most Chinese red tape?” This would be a dangerous way to measure our success. The Chinese author of this article, director of an e-commerce research centre in a Chinese university, has provided training to Chinese farmers about how to directly market their agricultural products online to urban consumers. Chinese consumers increasingly expect to be able to deal directly with agriculture-producing regions, both domestic and international. We have to meet the expectations of Chinese consumers or someone else will.
“If you miss out on China, if you miss out on developing countries in Asia, if you miss out on e-commerce, you are missing out on the future.” That is what Jack Ma, executive chairman of the Alibaba Group, told 3,000 owners of small- and medium-sized business owners in the U.S. in June 2017. Ma went on to provide some statistics that stunned his audience. Each year, China consumes 600 million pigs and seven billion chickens. An online platform can sell 90,000 Canadian lobsters in a single day. And he added, “Those lobsters can be delivered from Canada to Chinese homes in 72 hours.”
Access to e-commerce markets in China may not be the only thing that the Canadian beef industry has to worry about. But the future of the world’s largest online market for food is certainly worth some thought.
Source: Canadian Cattlemen. Date: 2017-08-22
US seeks WTO dispute panel on China's grain import quotas
The United States has requested a World Trade Organization panel be set up to investigate Chinese tariff-rate quotas (TRQ) for agricultural products, the WTO said on Monday, setting up a showdown between the two largest economies.
The row, which includes tariffs for wheat, rice, and corn, was initiated under the Obama administration which sought consultations on Dec. 15, but now the Trump administration has moved ahead with a formal request.
The item appears on the formal agenda of the WTO's Dispute Settlement Body (DSB) meeting set for Aug. 31, issued on Monday. China can block this first formal request, but upon a second request at a later DSB, the panel will be set up unless all WTO members agree to block it.
In December, the U.S. Trade Representative (USTR) said that China's administration of the programme breached its WTO commitments and hurt U.S. farm exports.
The USTR said global prices for the three commodities were lower than China's domestic prices, yet the country did not maximize its use of TRQs, which offer lower duties on a certain volume of imported grains every year. The USTR said that limited market access for shipments from the United States, the world's largest grain exporter, and other countries.
Since then, Australia, the European Union, Canada and Thailand have joined the dispute as third parties.
The United States said that China had failed to administer its tariff rate quotas on a "transparent", predictable", or "fair" basis.
Last Friday, USTR announced it was launching an investigation into China's alleged theft of U.S. intellectual property - the administration's first direct measure against Chinese trade practices - which Beijing on Monday rejected as "irresponsible".
Source: ABS CBN News. Date: 2017-08-22
Across China: Young urbanites enticed by customized farm produce
In spring, Li Mingtong, a university student in Changchun, capital of the northeast China's Jilin Province, paid 500 yuan (75 U.S. dollars) to have a pomegranate tree organically cultivated. In fall, she received boxes containing the fruit from her tree, located thousands of kilometers away in southwest China's Yunnan Province.
"Though the pomegranates were very expensive, they are safe and taste good," she said. Li organized the customized service through an online shop earlier this year. She now plans to buy customized vegetables grown in the suburbs of Changchun.
As Chinese pay more attention to food safety, customized farm produce, grown without using pesticides or fertilizers, is attracting growing interest from well-off urban consumers, especially the young.
The Internet is assisting supply-side reform in agriculture. Customers can rent a piece of land online and choose which varieties of vegetables they want to have grown there. Many farms have cameras so that customers can monitor the growth of their produce on their mobile phones or computers.
"This not only ensures green food, but also offers an opportunity for our family to enjoy pastoral scenery during our free time," said Xu Li, another Changchun resident.
"Our fruit and vegetables are all organic. We adopted a membership model for the sale and delivery of produce to our clients," Chen Zhao, general manager of Chunjiangyan farm in Nongan County, Changchun, said at the 16th China Changchun International Agriculture and Food Fair, which closed Sunday.
The farm has 47 vegetable and fruit greenhouses and 1,000 members. Each day, more than 100 Changchun residents receive vegetables delivered from the farm, according to Chen.
"Our capacity is insufficient. For example, when our cantaloupes were ready for sale, we could only meet half the demand from our customers," he said.
The Chinese government has required deepening of supply-side structural reform in agriculture, improving of the sector's structure, promoting of green production and innovation, and extending of the sector's industrial and value chain.
According to a report released last year by Ali Research Institute affiliated to e-commerce giant Alibaba, China had 65 million "online green consumers" in 2015, 15 times as many as in 2011.
Green products include organic and additive-free food and environmentally-friendly household commodities such as furniture and clothes. Green consumption has spread most rapidly among young people aged from 23 to 28, according to the research.
"Our pigs have serial numbers. We have cameras in their pens so that our customers can check their condition at any time on their mobile phones," Pei Feng, from an agricultural cooperative in Siping, said at the Changchun agriculture fair.
The pigs are fed corn and bean pulp. The cooperative does not use any antibiotics or hormones, according to Pei, who added their services are expanding.
The green model for customized agri-products has been piloted in many other places, such as Beijing and northwestern China's Xinjiang Uygur Autonomous Region.
China has more than 10,000 accredited green food companies producing more than 26,000 types of products, according to statistics from the China Green Food Development Center, which oversees the country's organic food standards.
Despite the huge potential for customized produce, there are some concerns about whether the products are organic.
Technology such as cameras can record the cultivation methods to some extent, but the certification of organic products requires a large investment, said a farm worker in Jilin.
Some green farm produce does not have organic certification.
"Consumers pay high prices for customized produce to ensure safety. But the industry is still in the beginning stages. There are both good and bad producers," said Zhao Yumin, secretary-general of Jilin Specialty Products Processing Association.
It is difficult for consumers to confirm if their products are organic or not, therefore certification by professional agencies is necessary to boost reliability, said Zhao.
Liu Yuansheng with Jilin University of Finance and Economics, said the key to selling customized agri-products lucratively lies in the application of a traceability system, which is currently a weak link.
Source: Xinhua. Date: 2017-08-22
APEC seek ways to enhance agricultural technical co-operation
The APEC Agricultural Technical Cooperation Working Group held its annual meeting on the third day of the 2017 APEC Food Security Week underway in Cần Thơ, seeking ways to strengthen technical co-operation in agriculture between member economies.
He underlined the importance of the meeting, saying it was a chance for ATCWG to review and reshape its orientation and co-operation mechanisms.
Trần Kim Long, director general of the Ministry of Agriculture and Rural Development’s international co-operation department, said the Mekong Delta is a great example to highlight the importance of the work of APEC-ATCWG and draw up joint vision and mission of food security and sustainable agricultural development.
"The Mekong Delta has seen tremendous progress over the last few decades in providing food for our economy and income for our people. Technological progress has played a key role in the successful development of the rice sector here, and we have strongly benefited from co-operation with our partners in the region."
However, it is set to face many challenges like urbanisation, climate change and overuse of natural resources, according to Long.
The challenges are not confined to Việt Nam, but are shared by its partners in APEC.
"We should treat these challenges as opportunities to formulate a common and collaborative response," he said.
The ATCWG is composed of government officials and experts from academia.
The objective of the working group is to enhance the contribution of agriculture to the bloc’s economic growth and social well-being by promoting technical co-operation between its members.
This year ATCWG will continue to promote agricultural information sharing and co-operation with regard to farm technology, and strengthen communications and capacity building in agricultural technology.
During the APEC Food Security Week held in Cần Thơ, the working group will organise a training course on mycotoxin prevention and control in food and feed items.
Source: VNS. Date: 2017-08-21
China launches probe into Brazilian broiler chicken imports
China has launched an anti-dumping investigation into imports of Brazilian broiler chickens after a complaint from the domestic industry that the South American country has been selling its chicken below market value.
Any move to penalize imports, which are worth more than $1 billion a year, would be a major blow to Brazil's meat industry following a food safety scandal that threatened to tarnish the country's powerhouse protein industry.
ABPA, a group representing Brazilian chicken producers and exporters, denied they sell products below market prices, association president Francisco Turra told Reuters on Friday.
"We are very competitive and it is hard for the Chinese producer to understand," Turra said, reflecting on the surge of imports since the Chinese market opened to Brazilian poultry in 2009. "Such complaints are normal and we can defend ourselves."
Brazil faced similar claims from South Africa and Ukraine and won the cases, he said. Brazilian government officials did not immediately respond to requests for comment.
Shares of Brazil's BRF SA, the world's largest chicken exporter, fell 1pc on Friday as the benchmark Bovespa stock index gained 0.2pc.
A BRF representative declined to comment.
Brazil replaced the US as the top chicken supplier after China slapped anti-dumping duties on US broiler chicken products in 2010.
China is the biggest national consumer of Brazilian meat.
China relies on imports for its supply of white feather broiler chickens, which are favored by fast-food chains like KFC and McDonalds for their more rapid development and plumper meat. Yellow-feathered birds, which are native to China, are generally sold at retail.
The investigation comes just months after Beijing slapped hefty penalties on sugar imports from top growers such as Brazil and Thailand after lobbying by domestic mills.
In 2016, Brazil accounted for 85pc of China's frozen chicken imports - almost 600,000 tonnes valued at as much as $1.23 billion, according to customs data.
The push by China's domestic industry for an anti-dumping probe came as poultry farmers and processors recover from the nation's worst outbreak of bird flu in years and struggle with falling demand.
"This is good news for the domestic chicken market," said a chicken farmer in northern China who gave his surname as Tan.
"The chicken market has been not so good since the second half of last year. Brazil is selling a lot to China at a cheap price while China has ample supplies itself."
In 2017, demand and output are expected to hit their lowest since 2006, according to US government estimates. Domestic supplies are being hurt by low availability of grandparent breeder stock needed to produce more meat.
Worries about the deadly virus hurt demand for chicken meat and sent some regional prices to more than decade old lows in February.
Live broiler chicken prices in Shandong province, one of the nation's major producing areas, have since more than doubled, and were around 7.7 yuan ($1.15) on Friday, as the crisis passed and concerns about infection eased.
Import prices from Brazil have remained low in comparison, making it hard for the local industry to compete, analysts said.
Still, any curb on foreign supplies would likely boost domestic prices further, potentially denting demand for chicken as a cheap alternative to pork, the nation's favorite meat.
Broiler chicken sells for 14 yuan ($2.10) per kg, according to government data, almost one-third less than pork and more than 70pc cheaper than beef and lamb.
Source: Reuters. Date: 2017-08-21
Chinese demands are industry challenge
China will continue to be a lucrative market for Australian grain, but the local industry will have to adapt to increasingly stringent biosecurity and quality standards.
“Since 2013 there has been a move away from attempting to be self-sufficient in food production to strengthening food stability, which has implications for grain imports,” Mr Ek said.
The key change in this space has been a winding back of domestic prices for farmers, which have been way above international parity.
Australia has been a beneficiary of increased demand but Mr Ek warned of a tightening of import standards, particularly in regards to phytosanitary requirements.
He pointed to levels of diseases such as ergot as potential flash points.
There have been Chinese media reports of Australian wheat not being accepted at a Chinese port due to new regulations regarding levels of the fungal disease ergot, although there is no official confirmation from either Chinese or Australian administrators of such a case.
Sources from the Australian grains industry strenuously deny there have been any ergot issues, but acknowledge there will be strict scrutiny on bio-security in China.
The increased focus on quality and environmental concerns are spin-offs from China’s attempts to reposition itself in the manufacturing sector as a quality producer.
“Quality in whatever sector is a really big thing in China at present,” Mr Ek said.
This has led to an overhaul of more than 6000 national standards for food, including the ergot regulations.
While there will be an increased focus on compliance, the potential rewards are huge, with Mr Ek estimating China would continue to import more than 100 million tonnes of grain per annum, in spite of increasing domestic production.
“Domestic Chinese production is expected to hit 600mt by 2020, but demand is around 700mt, so they will need to import the remainder.”
Chinese grain imports this year are predicted to be around the 120mt mark, with soybeans the major crop brought in.
Mr Ek said Australia had a good reputation as a high quality, safe provider of food, which was important in China where there was widespread consumer mistrust of domestically produced food.
“There are concerns about both a lack of quality and more importantly a lack of safety, with unsustainable practices damaging water, soil and air.”
In spite of this, he said many Chinese consumers would remain heavily conscious of price.
“We’re moving away from a trader/supplier led demand for grain to consumers, but most people in China care more for price than quality,” Mr Ek said.
He said the Australian industry would need to create consumer demand for branded Australian products.
“The ability to make high quality noodles from Australian wheat has huge implications.
“You see Chinese consumers flocking to local noodles from a particular region, they have the nostalgia for their mum’s food, you need to win them over to a new, premium experience.”
In terms of world trade Mr Ek said China would look to influence world grain markets through schemes such as developing futures markets for product.
“China is thinking globally on this one and they see futures as a very important tool, they feel if they can keep grain prices good then China will be good, which is a change from past policies.”
Mr Ek said responsibility for food security was likely to be devolved to a provincial level.
“The central government is saying ‘we will provide credit lines and you need to pay back’ to the regional administrations.”
Source: Farm Weekly. Date: 2017-08-21