May 4, 2021
Suppliers rise and fall but China owns the world beef trade
China, Hong Kong, Taiwan, Vietnam account for more than the entire post-2000 increase in beef imports and 34% of all shipments. This leaves exporters at the mercy of one large market.
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It was never China's intention to dominate the world beef trade but that is exactly what it does. Even so, western exporters are very lucky that China plays a disproportionate role in the world beef market.
Despite the worst global recession in a century, 2020 world beef exports stayed constant, falling an immaterial 0.9% or 95,000 tonnes.
But without a collective 771,000 tonnes increase in imports by China (+605,000 tonnes), Hong Kong (+157,000 tonnes), and Taiwan (+9,000 tonnes) world beef exports would have plunged 8% or 866,000 tonnes, to 10.034 million tonnes.
Moreover, world beef's dependence on China has been growing for some time. As the attached chart shows, except for China, its satellite economies (Hong Kong and Taiwan), and Vietnam, the rest of the world did not import any more beef in 2021 than it did in the year 2000. The world population rose 25.5% over these 21 years but world per capita beef consumption fell 10.3 %, from 8.7kg to 7.8kg. Except for Japan, falling per capita beef consumption mostly occurred in western countries.
In the 2000s, a short-lived surge in Russian (+9.9% per annum) beef imports offset falling Japanese (-4.7%) and Mexican (-3.6%) imports. On the other hand, with the notable exception of Japan, consumption skyrocketed in land-scarce East Asian nations that traditionally import a large proportion of their red meat consumption. After peaking at 1.15 million tonnes in 2008, Russian imports fell a whopping 71% or 825,000 tonnes over 13 years to a USDA estimated 340,000 tonnes in 2021.
This would normally plunge beef suppliers into a deep crisis, but it didn't: Instead, after rising 2.6% annually over the seven years up to 2013, export growth accelerated to 3.7% in the six years up to 2019, before COVID-19 struck. Thanks to fast-rising Chinese red meat consumption and that nation's subsequent ASF-induced hog die-off, the annual increase in world beef exports from 2016 through 2019 (before COVID-19 struck) was 6.6%.
From a mere 16,000 tonnes in 2000 and 38,000 tonnes in 2010, Chinese beef imports jumped 1,513% to 613,000 tonnes in 2015, doubling to 1.37 million tonnes in 2018. After ASF created a pork supply deficit, China's beef imports again jumped 126% in three years, totaling a USDA estimated 3.1 million tonnes in 2021.
The collective 3.8 million tonnes of 2021 beef exports headed to China (3.10 million tonnes), Hong Kong (0.51 million), Taiwan (0.19 million), and Vietnam (0.1 million) account for 34% of world beef exports. China, its satellite economies, and Vietnam make up the entire increase in world beef exports that occurred from 2010 through 2021 inclusive.
As China recovers from ASF, its demand for beef imports will level off or possibly even decline –but no Asian beef buying nation has even a tenth of China's population. African nations are too economically immature to absorb massive beef import volumes. Middle Eastern nations cannot boost imports unless oil prices recover.
In Western Europe, America, Australia, Russia, and Canada, per capita beef consumption has fallen by approximately 40% to 60% from peak levels. In western cattle farming nations, booming beef exports to Asia could not even offset their falling domestic consumption. Without China, post-2000 Asian import growth barely offset falling Russian and Japanese beef demand.
All this begs the following question: After China's appetite for foreign beef stops growing, how will the industry avoid stagnation?
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