Friday, December 8, 2023

Beef eats into pork’s lead

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Rabobank’s latest Chinese protein report highlights the ongoing impact of African Swine Fever on consumption and how it is also prompting some major shifts in distribution and purchasing behaviour to beef options.
Rabobank’s head of business sustainability, Blake Holgate, says carbon farming and forestry offer farmers some good opportunities, but it is vital to be making well-informed decisions in what is an emerging and complex market.
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With a 20% drop in pork supplies reported last year and a further 15-20% drop forecast this year, the world’s largest pork consumers are pivoting to alternative protein sources. This has helped accelerate consumers’ move to red meat, which New Zealand producers are well-positioned to capitalise upon, report author Blake Holgate says.

“Despite two years of strong imports the supply drop has been so drastic (that) pork consumption per capita in China has dropped from 40kg in 2018 to 32.6kg in 2019,” Holgate said. 

Consumers are increasingly starting to combine beef into home consumption when it used to be largely consumed while eating out, opening new opportunities for beef market growth.

If the predicted drop in pork consumption continues this year, it will take per capita consumption back to 1997 levels of about 28kg a head.

The report authors maintain Chinese consumers appear capable of adapting quickly to changes in market supply, largely on account of animal proteins not traditionally as essential as grains for most consumers.

Chicken for example was barely consumed by the Chinese until after 1985, and today is eaten at a rate of 17kg per capita per year.

Even with the gradual increase in red meat consumption, beef is still only consumed at 7kg per capita a year, compared to 17kg in NZ.

Analysts have found the traditionally strong correlation between pork and poultry substituting each other depending upon supply is weakening under covid-19 retail and consumption conditions. 

Despite strong pork prices through 2020, poultry prices have remained weak, indicating consumers are finding it difficult to shift to chicken for home-cooking with restaurants and food outlets shut. 

This is despite pork prices being 100% higher than at the same time a year ago.

Instead, with pork’s price rise pushing it closer in parity to beef, more consumers have been prompted to use beef in their home-cooking over covid lockdowns.

Beef is already well-established in e-commerce channels, so was well-positioned when lockdown conditions prompted more online purchases.

Blake Holgate | September 29, 2020 from GlobalHQ on Vimeo.

Long-time Beijing resident and Kiwi David Mahon reiterated several aspects of the report’s findings.

He says in coming months the chill in relations between Australia and China could play further to NZ’s advantage in the meat trade, although the Australians have a well-established position within China to fall from.

“If NZ can keep its non-aligned status, then growth should look good next year. It is still quite hard to get definitive figures on pork’s decline, and it may even be greater than that reported,” he said.

One problem for beef exports was despite being able to put chilled product into China through the free trade agreement, distributors were wary of holding too much at present.

“That is compared to frozen product where you have a longer shelf life,” he said.

Mahon says life in China is back to near normal, subject to some health precautions, and along the country’s wealthy east coast average incomes were continuing to track well above the national average of US$9000 a year.

“In fact most people in New Zealand would find it is a region that is very sophisticated, possibly even more so than many Western destinations,” he said.

Rabobank expects the “premiumisation” of food products to continue on the back of this continuing wealth. The Chinese market is becoming defined more by niches rather than mass markets, determined by dietary habits, lifestyle choices, purchasing power and social status.

This includes pork replaced increasingly more often by beef for home consumption, particularly if disease outbreaks remain a concern.

Mahon says NZ’s exceptional job in controlling covid-19 has not gone unnoticed by Chinese consumers.

“The level of trust in NZ goes deep,” he said.

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