Monday, February 2, 2015

Pork market in China

Pork market in China

A huge Chinese demand for pork

Chinese rising middle class consuming a big quantities of pork is responsible for the increasing demand over the last decades. Pork is definitely Chinese people favourite meat. In 1975, average annual pork consumption per capita was around 8 kilograms in China and 25 kilograms in the USA. Today, Chinese people consume about 39 kilograms pork a year whereas American consumption remains stable with 27 kilograms of pork in 2014. Following this booming demand, suppliers increased production significantly. China is today the world's largest pork producer. Half of the global pork population is “living” in China. Pork accounts for 67% of Chinese production in retail weight. In 2013, China's output reached 53.8 million tonnes corresponding to half of the global pork output. A major part of this production is for domestic consumption and this trend is likely to last. Indeed, China only exports about 70000 million tonnes a year to Hong Kong, Macau, South Korea and Albania, with Hong Hong accounting for 80% of the pork shipped abroad.

Imports in addition to domestic production

This huge domestic production is not enough to satisfy the Chinese demand. Consequently, China imports pork. Canada and the USA are among China pork suppliers. However, those imports were interrupted after ractopamine, a growth stimulant was discovered in the meat.
Chinese people are more and more concerned about the safety of the food they purchase. When they can afford it (and the number of consumers who can afford it is increasing), they do not hesitate to buy imported meat whose brand they trust. Italian and Spanish ham, namely available in restaurants are popular in China. French pork companies also intend to conquer a share of the Chinese pork market: France and China signed an agreement this year so that France provides China with pork.

Enhancing local pork supply genetic quality

China is determined to get a large slice of the Chinese pork market-share and intends to increase its production. Over the last decades, it has shifted to a large scale production. The number of farms producing porks declined and the number of meat produced by the remaining farms significantly increased about ten fold.  However, to satisfy the requirements of Chinese consumers, China is willing to use a strategy based on long term quality rather than short term increase of quantities. It consequently plans to enhance the genetic quality of Chinese pork.
In 2013, China and the UK agreed on a 73 million dollar export deal so that the British pig breeding companies provide China with British pig semen. According to a Chinese government source, this will help China “increase the efficiency of its production while minimising the environmental impact of increased production”.

Government influencing the pork market-share

The pork prices play an important role in the Chinese economy and Beijing has sometimes to regulate it, either to prevent it from soaring and harming consumer consumers purchase power or declining and harming producers in rural areas. China maintains a reserve of frozen pork corresponding to less than 1% of the Chinese annual pork consumption. This reserve is a powerful weapon when Beijing wants to increase or decrease pork prices. This year, in May, the second round of purchase from this reserve, was the occasion to make prices increase and protect farmers by making hog prices reach six times the price of grain.