Tuesday, March 5, 2024

Promising opportunities in China agri outlook

Neal Wallace
Consumer consumption predicted to outstrip domestic production.
Reading Time: 3 minutes

The Chinese economy could be about to come alive again.

A new report predicts agricultural production in China to grow in the next decade – but so will consumer consumption, with consumers seeking imported high-value, high-nutrition protein products.

The Agricultural Outlook Report by the China Ministry of Agricultural and Rural Affairs expects imports of beef, sheepmeat, dairy fruit and seafood to rise in the next 10 years, but the volume of imported grains and oil seeds to fall.

The report, which is cited on the website of New Zealand’s Ministry for Foreign Affairs and Trade, says that to improve food security, in the coming decade China will need more imported protein but will also invest in production efficiency, rural modernisation and a diversified food supply system.

Low consumer confidence and the collapsed property market have undermined Chinese demand for New Zealand meat and dairy products this year, sending farmgate prices plummeting.

The report forecasts Chinese GDP to grow 5% next year and average 4.9% through until 2032.

China’s population in that period is picked to fall 1.4% to 1.391 billion and the urban-rural income gap to significantly reduce.

Over the next decade China’s dairy production is expected to grow, and consumption to “increase significantly”; 71% of domestic demand will be met by local supply, but import demand will also increase.

“Dairy imports will continue to grow over the projection period but the rate of growth will decline over time.”

Up to 2027, consumption of pork and poultry will increase but then fall through until 2032 with imports easing 2%.

Chinese beef production is expected to grow 9.2% and sheepmeat 10.2%, reflecting the Chinese government’s drive for food security.

“However, the demand for beef and sheepmeat will still exceed domestic supply in the 10-year period, which will result in continued reliance on imports to meet excess demand.”

Beef imports are projected to increase 17% to 460,000 tonnes, equivalent to more than double NZ’s current annual beef exports to China.

Beef access to China was recently granted to Denmark and Poland.

Sheepmeat imports are also expected to grow significantly. China already accounts for more than 57% of NZ’s total sheepmeat exports and, given that volume, current sheepmeat production and the limited ability to ramp up production, NZ is unlikely to be able to fill that demand.

Imported fruit accounts for less than 3% of the Chinese fruit market and the report predicts higher household disposable income and consumer preference for premium imported fruit will almost double demand.

A report for the NZ China Council says that senior Chinese leaders consider food security the “highest agri-food policy priority”.

A council webinar this week was told that Beijing will in the short term not adopt sustainable practices that threaten the stable and affordable supply of food.

That includes delaying setting climate change targets for agriculture, with data only now starting to be collected to enable the measuring or regulation of emissions from food production.

Reduction targets are likely from 2030.

But some companies are taking action. At least 10 major Chinese livestock and dairy companies, including Yili Group and Mengniu Group, have net-zero targets and reduction strategies.

The research looked at public documents released by the Chinese government to get a steer on the policy direction it is pursuing and to determine implications for food exporters such as NZ.

It found in the short term agricultural sustainability is focused on meeting environmental issues by managing animal waste and reducing food and food packaging waste.

Report author Even Day says “grass-fed” is still a key selling point for meat and dairy in China, and Chinese livestock farmers are starting to graze underutilised grasslands.

Another finding was the level of investment going into alternative protein driven by property investors looking for new industries.

The report notes, however, that adoption of these new products is being tempered by concerns over food safety.

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