July 23, 2018
Pork on the Pacific Rim, poultry in India, beef everywhere: Asian meat consumption trends
China, Northeast Asia and pork dominate consumption. India, Southeast Asia and poultry are its future. The question of whether to import meat or feed remains unanswered.
By Eric J. Brooks
An eFeedLink Hot Topic
Containing over half the world's population and accounting for a large majority of each year's economic growth, the 3.9 billion people who live in Northeast Asia, Southeast Asia and Indian subcontinent dominate world meat consumption. Currently accounting for 43% of world beef, pork and chicken consumption, they will account for over half by 2030 and 60% by the 2040s.
Based on USDA statistics from 1992 through 2017 inclusive total consumption of beef, chicken and pork in Northeast Asia (China, Japan, South Korea), Southeast Asia (ASEAN) and South Asia (India, Pakistan, Bangladesh, Nepal, Bhutan) grew at a 3.6% annual rate, compared to a 2.3% average increase in world consumption of these meat over this same time.
While South Asia's 1.89 billion people have a GDP per capita of below US$2,000, with their chicken consumption rising 8.3% annually since 1992, this region's meat consumption has increased at a 6.8% rate. While South Asia's population increased 50%, its chicken consumption multiplied seven times, from barely 0.8 million tonnes in 1992 to 5.715 million tonnes in 2017. India on its own accounts for 4.4 million tonnes or 77% of South Asia's USDA estimated 5.715 million tonnes of annual chicken meat consumption.
With a 250 million Islamic minority in India and large Muslim majority populations in Pakistan and Bangladesh, South Asia's demand for beef has risen at an approximate 5.4% annual rate over this time. From barely a million tonnes in 1992, South Asia's beef consumption totaled approximately 3.6 million tonnes in 2017, with India accounting for 2.4 million tonnes of this total.
Despite South Asia's faster growth metrics, there is a good reason why Asia Pacific countries overshadow those bordering on the Indian Ocean: Even after years of rapid growth, India and neighboring South Asian countries only consume around 10 million tonnes or less than 4% of the nearly 259 million tonnes of beef, chicken and pork the world eats every year.
Moreover, unlike Asia's Pacific Rim, India, Pakistan and Bangladesh are mostly self-sufficient in protein, neither importing nor exporting much on the world market. Nevertheless, with their total combined consumption of beef, chicken and pork just slightly above 5kg, South Asia's meat consumption has at least three decades of rapid, pent-up growth ahead of it. South Asia's high population density and arid, mountainous regions imply that at some point, nations like India and Pakistan must become major importers of either meat or feed inputs.
By comparison, both Northeast Asia and Southeast Asia enjoy much higher meat consumption and do so by accessing the world market. Of these two, Northeast Asia is the larger market but with parts that operate at very different speeds. China's meat demand will continue rising by 3% multiplied by 1.3 billion people into the foreseeable future, South Korea's by over 2%. On the other hand, with flat incomes and a falling population, Japanese meat consumption is flat and in some cases, declining.
Whereas South Asia is heavily weighted towards chicken consumption, Northeast Asia is swine-centric: China, Japan and South Korea collectively consume 54% or 59.5 million tonnes of the 110.5 million tonnes of pork the world consumed last year, with China accounting for 50% on its own.
Powered by China's annual 3.5% increase in total consumption of beef (6.4%), chicken (4.9%) and pork (3.0%) since 1992, Northeast Asia's consumption of these meats rose at a 3.3% rate in the 25 years to 2017. Surprisingly strong growth in South Korean consumption of chicken (4.2%), pork (4.0%) and beef (3.9%) counterbalanced Japan's stagnation, with the latter's consumption increase for these three meat ranging between 0.3% and 1.7%.
China dominates Northeast Asian meat consumption and despite a multitude of challenges, holds most of the region's growth momentum. South Korea is one of the faster growing mature markets while Japan's relative stagnation partly counterweighs China's dynamism. Even so, Northeast Asia has its share of quirky meat consumption details.
For example, despite pork-dominated China's meteoric growth, South Korea's pork consumption grew even faster: Since 1997, South Korea's pork consumption jumped over 100%, from a USDA estimated 0.87 million tonnes to 1.93 million in 2017. Despite China's far larger market and more rapid income growth, its pork consumption rose 53.5%, from 35.8 million tonnes in 1997 to 54.8 million tonnes last year.
Over the past twenty-five years, South Korea's annual pork consumption growth (4.0%) has exceeded both that of China (3.0%) and Japan (1.1%). With China's swine sector besieged by government capped pork prices and artificially high corn costs, its pork consumption only increased at a 0.3% pace since 2012, compared to 4.4% in South Korea and 1.4% in Japan.
A similar fate appears to have befallen Northeast Asian poultry demand. Due to a succession of food safety scandals, bird flu epidemics and cultural condescension of eating chicken, China's rapid 1992 to 2017 poultry consumption growth of 4.9% has turned into a -0.3% average annual decline in the five years since 2012.
The one livestock line where China -and Northeast Asia -continue to lead consumption growth is beef demand. Chinese beef consumption expanded at a 6.4% annual rate from 1992 to 2017 and continued increasing 4.3% annually in the five years since 2012. With South Korea's 3.6% annual rise in beef consumption offsetting Japan's 0.7% stagnation, overall Northeast Asian beef demand has risen at a 4.2% annual rate over the last five years, faster than that of any region.
Going forward, the gradual liberalization of China's feed corn market and tentative recovery of its poultry sector is poised to dovetail with an expected slowdown in Korean meat consumption growth. It implies that if all goes well, Chinese pork consumption will resume increasing by 2%+ annually in years to come.
Finally, while Southeast Asia may have the smallest population of the major Asian subregions but it also has the most balanced, trade-friendly meat consumption. Unlike India in South Asia or China in Northeast Asia, no one nation dominates Southeast meat consumption.
Nor is ASEAN meat consumption overly skewed in favor of any particular protein line. Unlike pork dominated Northeast Asia (69% of consumption) or poultry dominated South Asia (60%), Southeast Asia has a more balanced consumption profile.
Chicken accounts for a slight majority of Southeast Asian meat consumption. The last twenty-five years have seen ASEAN chicken consumption (5.2%) grow the fastest with beef (3.4%) and pork (2.8%) also chalking up respectable demand expansion.
With neither Buddhism, Islam or Christianity completely dominating the region, all three meat lines are well represented, though in a heterogeneous manner. Poultry meat accounts for over 75% of Muslim majority Malaysian and Indonesian meat consumption, whereas in Chinese influenced Vietnam, pork makes up 75% of the meat eaten. By comparison, Catholic Philippines has a more balanced mix of pork (48%), chicken (40%), beef (10%) and other meats.
With Thailand, Philippines, Myanmar, Indonesia and Malaysia all consuming 1 to 2 million tonnes of chicken each, its production and consumption are widely dispersed throughout the region. Similarly, Philippines, Vietnam and Thailand all produce and consume from 1 million to 2.8 million tonnes of pork annually.
At the same time, all three of these Asian regions face the following paradox: High overall meat consumption, rapidly rising per capita consumption and high population growth in the world's most land poor region. With too high a population density and too small an arable land area, all three regions must face a future dominated by imports of feed inputs, meat or both.
Due to Japan's traditionally large-scale importation of beef (0.82 million tonnes in 2017), chicken (1.15 million tonnes) and pork (1.15 million tonnes), northeast Asia has long led the world in meat imports. Recent years has seen Northeast Asia dominate meat imports even more, mainly because of China's largely unanticipated rise in red meat consumption, particularly beef.
On one hand, rising incomes made China's beef consumption growth jump from 2% in 2007-12 to 4.3% annual pace since 2012. At the same time, its dairy industry crisis and high feed costs constrained the domestic supply of cattle. As a result, whereas Japanese beef imports grew 2% annually after 2012, those of China increased at a 59% annual rate. In 2017 it overtook Japan as the world's largest beef importer and will buy a USDA estimated 1.2 million tonnes of foreign beef in 2018.
Similarly, with South Korea's supply of arable land long maxed out and its beef consumption rising 3.6% annually, the years since 2012 saw the volume of South Korean beef imports rise 7.5% annually, rising from 370,000 to 531,000 tonnes over the last five years.
A similar China-centered Northeast Asian meat trade story is being played out with pork: China's over-regulated pork market is burdened by artificially high feed costs and government suppressed pork prices and low swine rearing returns: With incomes constantly rising, the shortfall in pork supply was met by imports rising by 32% annually in the five years after 2007 and 17% annually since 2012. As a result, its 1.62 million tonnes of pork imports overtook those of Japan (1.48 million) to become the world's top pork buyer.
Despite having a lower overall income level than China, Southeast Asia also displayed surprisingly strong demand for imported red meat, with ASEAN pork import volumes (8.4%) and beef imports (6.2%) both growing strongly in the years since 2012.
As religiously acceptable as it is in Northeast Asia or Sout Asia, rising incomes are boosting ASEAN beef consumption and -due to its lack of pastureland, imports. But while Southeast Asian is destined to import almost all its beef, how it satisfies pork and poultry consumption is up to policymakers.
Much like China, both Philippines and Vietnam protect domestic corn farmers and impose artificially high feed costs on feed and livestock producers. This makes it difficult for pork production to keep pace with conjunction, resulting in Vietnamese (28.2%) and Filipino (26.2%) pork import volumes growing at even faster annual rates than those of China (17.3%).
Going forward, with China gradually deregulating feed costs, its swine sector returns should recover after 2020. That will stabilize and may even cause its pork import volume to fall below that of Japan
On the other hand, China's beef imports are poised to grow by more than 5% annually through to 2030. With Japan continuing to import mass quantities of beef and pork and South Korean consumption continuing to rise by 2% to 3% annually, Northeast Asia will become the red meat importing center of the world, with ASEAN becoming beef's second most important export destination.
With regards to pork and poultry, Southeast Asia faces more of a political choice: Philippines, Indonesia and Vietnam can protect their corn farmers and let their collective import volumes red meat and poultry approach northeast Asian levels. -Or they can deregulate feed costs, liberalize corn and soy imports and make it economically viable to substitute locally raised pork and poultry in place of imports.
Similarly, with three times more people and far less arable land than China, only low per capita meat consumption has kept India from entering the world market for either poultry meat or feed crops in a big way. At this time, South Asia is protecting feed crop farmers at the expense of livestock producers but when consumption rises from its 5kg level to near 10kg, it too will face a choice: Will it satisfy its meat demand by directly importing meat? Or rival China as an importer of corn and other feed inputs? Time will tell.
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