December 18, 2003

 

    

Difficult Times Ahead Seen For China's Meat Exports

 

An eFeedLink Exclusive Report                                               

                     

In the recent "2003 China Safety Meat Products Forum", an official from China's Ministry of Commerce said that China's meat products industry could face difficult times in the coming year. The official indicated that pressures will come as foreign meat imports become increasingly attractive and Chinese meat products encounter barriers to exports.

 

The cost of China's entrance to the World Trade Organization (WTO) is significant. Among the terms of the accession is a clause that states import duties on agricultural products will have to be further reduced by 2% to 15.8% in 2004.

 

In addition, the recent boom in China's economy translates to an increase in consumption of meat products as Chinese society becomes more affluent. Consequently there will be a rising demand for high quality meat products. This demand will further boost imports as major meat products exporting countries such as the United States, the European Union, and Latin American are eyeing for a bigger market share in the Chinese market.

 

With the increase in imports, export of China's meat products is also becoming increasingly difficult. According to Chinese Ministry of Commerce officials, this is primarily because of the strict restrictions imposed on Chinese exports.

 

Prior to China's WTO accession, restrictions on Chinese products were confined to import quota. However, since joining the WTO, China has found itself hit with an escalating number of trade barriers, thus posing a stumbling block to China's meat products export industry.

 

The current situation is further exacerbated when some countries overplay the issues in China's agricultural products. This results in a rising 'anti-China products' sentiment in these countries.

 

With the U.S. Presidential elections due in next year, contesting political parties in the US are bound to touch of sensitive issues such as the import of Chinese agricultural products. This will certainly have an impact on China' agricultural exports to the US and other Western countries, including meat products.

 

The pricing of China's meat products has also contributed to the declining exports. Since the second quarter of the year, Chinese meat products have been less price competitive in the international market. This is because of the substantial increase in the cost of raw feed ingredients, particularly in the third quarter when the prices of corn and soymeal registered a 40% increase. This translated into higher production costs for meat products and subsequently higher selling prices.

 

Despite this, the Ministry official still sees great potential in the export of China's meat products. Considering China's total meat production amounts to 60 million tons last year, meat products exports stood only at 1.2 million tons. Consequently, the Chinese government will be implementing measures to encourage the growth of meat products exports.

 

During the forum, solutions to the problems facing China's meat products export industry were discussed. A number of experts highlighted that the key solution would be to improve brand awareness of Chinese products whilst increasing the quality and variety of meat products.

 

The lack of brand awareness in Chinese products is becoming increasingly disadvantageous to China's meat products export industry. For instance, when problems with specific brands of meat products arise, importing countries will respond by restricting all meat products from China. Time and again, the inability to differentiate Chinese products has adversely affected the entire meat products export industry in China.

 

China's meat product exports consist mainly of primary products and semi-processed produce. In view of changes in the global market, Chinese producers should upgrade production facilities and increase its exports of processed meat products.

 

From January to September this year, China's import and export of meat products amounted to USD1.79 billion, a drop of 4.5% compared to the same period last year. Of this, total exports of meat products during the period totaled USD1.19 billion, accounting for 8% of total agricultural product export in the same period, and registering a 3.6% year-on-year decline. The total meat products imports from January to September stood at USD600 million, registering a 19.7% year-on-year increase.

 

China's meat products export from January to September made up of 20.7% of livestock products, 35.5% of meats and entrails, and 43.8% processed meat. During the period, the top 5 importers of China's meat products were Japan, Hong Kong, Russia, South East Asia and Saudi Arabia.

 

In the case of meats import, major meat products imported into China were meat and entrails, while the import of livestock experienced a rapid growth. During the first 9 months of this year, China's import of meat and entrails reached USD534 million, accounting for 89% of total meat products import and showing an increase of 17.14% compared to the same period last year. The major exporters of meat products to China are the U.S, Canada, Australia and New Zealand.