The numbers are staggering — 854 million people in China are expected to be regular beef eaters by the year 2030.
Despite their large land base, cattle numbers cannot keep up with the demand for beef that has been increasing by 15 per cent per year.
What has happened? Where does the beef come from?
China’s middle class is hungry for beef. They are flush with cash and because beef is a status symbol, they want to be seen eating it. Expats used to account for 90 per cent of the beef consumed in steak houses — now 90 per cent is being ordered by middle-class Chinese. Beef consumption is linked to growth in GDP — the stronger the economy, the more beef is eaten.
When steak houses and restaurants first started serving imported beef, they did so in the manner in which the country of origin was used to eating it: Large portions and a little pink in the middle. This was culturally offensive (and still is) because rare is seen as vulgar and unclean. The Chinese consumer will, however, devour well-cooked beef that comes in a smaller portion. The younger generation has travelled and is more open to try a piece of beef, such as rib-eye, that is more flavourful. And because dining with guests is very much a part of the business culture, some companies are looking to offer their guests an exclusive experience that includes beef.
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China produces about seven million tons of carcass beef a year, which is significant. But beef farmers in China have been swept into mass urbanization. There are fewer farmers and farm labourers than before. Urbanization has resulted in significant losses in farmland, which has translated into huge gains for traders as the wholesale price of beef doubled between 2008 and 2013. It was not enough to spark a spring in domestic beef production, although there is a trend favouring branded Chinese product. Even that is a tough sell as the Chinese people don’t trust their domestic supply and would rather buy imported food products.
Environmental concerns have also been hard on beef production and governments have been convinced that raising beef will deplete air quality and water supplies. In 2016, the Chinese government issued dietary guidelines which recommended beef consumption be cut by 50 per cent. But it didn’t gain much traction and the demand for beef kept growing.
Where does China’s beef come from?
‘Local’ beef often comes from cattle of European origin sourced in inner Mongolia and dry aged. The bulk of imports come from Brazil, followed by those from Uruguay, Australia, and Argentina. The preference is still for grass fed and what is called ‘hormone’-free beef. Much of it is for domestic use and is competitively priced. China is also courting beef from India. Like Canadian beef, that has found its way to China in previous years, water buffalo from India (or carabeef as it is called) comes into grey markets via Vietnam. However it gets into China, there is a market for price point and for quality beef products.
Although a big importer of pork and chicken, China also has a taste for imported beef. How much is imported also depends on what happens domestically with their own food safety concerns, and with world markets. Australia’s drought was costly in terms of exports and it lost market share. The JBS scandal was costly for Brazil. The recent case of a BSE cow in the U.S. may be costly for its beef exporters. It is an ever-revolving door, but the GDP growth in China signals buying power.
There will be little fluctuation in GDP because Chinese culture will not allow for such an embarrassment. Certainly, there are issues in the country that are specific to rural farms and the relocation of people, but the newly minted middle class will always seek a way to display their wealth — be that a car, clothing, or on the plate.
China lifted its 13-year-old ban on Canadian beef last fall and Canada is currently in free trade negotiations with the Chinese government. This would increase the potential of Canadian beef being sold into China, but the high cost of our product limits the better cuts to high-end consumers near port.
Showcasing Canadian product and its versatility through the Canadian Beef Centre of Excellence has been foundational in communicating to our export partners as has the ability to show how we can identify individual animals. The requirements for shipping beef into China from Canada were updated this year and can be found at the website of the Canadian Food Inspection Agency. (Use the Food pull-down menu, then click on Meat and Poultry followed by Manual of Procedures; Chapter 11; and finally the China section of section 11.7 Special Requirements by Export Markets.)
It is hard to break a good habit like eating beef. Export partners of China, such as Canada, are counting on the increased desire for beef on the plate in China.