December 23, 2011
China is trying to build up its food production capacity, including that of high-grade beef and fishery products, as imports will not be sufficient to feed the country's population.
The move comes in response to sharply rising demand, changing eating habits and growing consumer awareness of food safety as the Chinese economy continues to grow at a blistering pace.
Chinese demand has driven prices for animal and fishery products higher, and concerns about depletion of food resources are growing.
While pork and chicken are more popular among Chinese consumers than beef, beef consumption is growing, especially among younger people. Supermarkets in urban areas now sell a wide range of high-grade beef.
As the Chinese appetite for beef rises, the beef cattle business has proved lucrative. Dalian Xuelong Industry Group Co, a producer of high-grade beef, currently raises about 10,000 head of cattle at a ranch on the outskirts of Dalian, Liaoning province in northeast China.
The company sells its beef for an average wholesale price of about RMB150 (US$24)/kg, about six times the price of pork. The market in China for premium beef rose much faster than that of pork and chicken in 2010, surging 25% from a year earlier to 150,000 tonnes.
This year, Dalian Xuelong Industry Group shipped about 3,000 tonnes of beef, up 50% from last year. The company plans to build new cattle sheds and increase the size of its herd to 100,000 animals within five years. "China will become the world's largest beef market in the future," analysts said.
Meanwhile, Dalian Zhangzidao Fishery Group Co, a seafood farming and processing conglomerate, farmed 50,000 tonnes of scallops in 2010, up 60% from a year earlier. The company initially exported high-end products to Japan, but its chairman, Wu Hougang, said the firm will now also sell in China.
In China, prices for meat and fishery products have been rising by about 10% per year. Consumers are also more conscious of food safety, following a series of scandals involving tainted food products such as cooking oil and baby formula.
"Safety will also become a selling point in China," said an official at Longda Foodstuffs Group Co, a major food processor based in Laiyang, Shandong province. "The era in which we only needed to increase our sales volume has already ended."
In fact, many organically grown vegetables and food products with traceability tags are already sold at supermarkets in China. Longda Foodstuffs Group is also trying to attract customers by vertically integrating production, processing and selling of meat and vegetables to ensure safety.