There is no question that China’s beef sector is attracting the interest of investors and world beef exporters. After decades of low prices, Chinese live cattle prices of roughly $1 per pound are higher than those of even the United States.
China’s appetite for beef is growing at a long-term trend rate that is unparalleled by any other major consuming market. It is one reason that Oklahoma State University’s Brad Morgan, Department of Animal Science meat scientist, recently traveled to all corners of China and talked to several purchasing groups regarding the usefulness, high quality and safety associated with the current U.S. beef offering.
“China’s foodservice and restaurant sectors have expanded at a rate double than that of its already torrid GDP growth,” Morgan said. “One can find a plethora of new beef-focused restaurants, ranging from hot pot and Korean barbecue restaurants to the golden arches of McDonalds in primary cities like Beijing and Shanghai, which have 18 million people each, as well as smaller, secondary cities.”
However, Morgan said China’s beef industry faces structural problems meeting the new demand. Household cow-calf operations and the small, but growing, feedlot industry remains in the hands of small households, whom in recent years have chosen to raise hogs and poultry rather than beef cattle. Cattle’s long production cycle and lean profits make investment unattractive.
“China’s ‘modern’ beef slaughter and processing industry, the majority of whose infrastructure is less than 10 years old, is squeezed between high cattle prices and demand constraints for most beef products,” Morgan said.
While in China, Morgan, with the cooperation of the U.S. Meat Export Federation (USMEF), conducted a series of one-day workshops with several of the largest Chinese food importing and processing businesses that are beginning to utilize U.S. beef items into their operations.
One of the organizations was the COFCO Corp., which is China’s largest diversified products and services supplier in agribusiness and food industry.
Morgan said this company is similar to Cargill or ConAgra in the U.S. in that they are not only in the meat processing business, but they are also leaders in the wine, hotel, snack food and canned food items manufacturing.
During the seminars, Morgan discussed the overview of the U.S. beef industry, the process associated with beef carcass grading, and the ongoing and future aspects associated with beef safety programs.