China is a land of opportunities and obstacles, where highly sophisticated technologies and very ancient lifestyles exist side-by-side.
Federated Farmers Meat and Fibre Chairman Rick Powdrell says it is a market too big to ignore, but one which needs careful navigation.
Rick gained recent first-hand experience of China, when he visited the country as part of a Silver Fern Farms tour. And he returning home convinced that if New Zealand is to succeed in successfully selling red meat there, it needs to form alliances such as the Silver Fern Farms/Shanghai Maling joint venture proposal.
“Should the Overseas Investment Office and the Ministers give the joint venture their support it will be a huge help in regards to access to the market.”
The $261 million deal is still awaiting OIO approval; and the two companies have agreed in principle to extend the deadline for their joint venture proposal to September 30 while they await that decision.
Rick says China is not an easy market to operate in as other New Zealand exporters, including Zespri, have found.
“There are a lot of barriers to the chilled meat trade because of infrastructure issues, but there are also significant opportunities.”
How people shop in China is changing rapidly and at the extreme end, the wealthy are buying fresh meat and produce online and having it delivered to refrigerated letterboxes at their homes.
As well as importing red met, China is moving to increase its own production, says Rick, who visited a genetics farm near Hohhot, the capital of Inner Mongolia Autonomous Region in northern China.
“They are using Australian Merino, Dorper and Suffolk genetics to improve the meat quality of the flock. The challenge is how these sheep, bred on a feedlot, will adapt to Chinese conditions, particularly the winters experienced on the grasslands of Inner Mongolia.”
The 27-strong tour group, which included Silver Fern Farms chairman Rob Hewitt, Rick and farmer suppliers, also visited beef feed lots – which are vastly different from New Zealand’s pastoral farming systems of raising beef.
“We also saw traditional Chinese agriculture being carried out by hand on small plots of land, by farmers who lived in nearby skyscraper apartment blocks.”
Rick has concerns about how China, which is rapidly modernising, will overcome its environmental issues – especially those around water and air quality – but was also impressed at how many trees are planted in the heart of cities, the new plants happening throughout the country and the ability of the government to act to implement change rapidly if it chooses.
“One thing that is very evident when you visit China is that if the government is serious about doing something, it will be done.”
An announcement that the Chinese Government wishes to reduce its citizen’s meat consumption by more than half is just such an example and has implications for New Zealand.
“Climate change enthusiasts jumped on this news, claiming it would reduce greenhouse gas emissions by one billion tonnes by 2030. It was predicted the present rate of increased meat consumption would add 233 million tonnes during the same period.”
“However, the Chinese Government promoted the reduction based on concerns that as meat consumption has risen, the health of the population has decreased.
“Having recently been to China and witnessed the ongoing Westernisation of the population, I ask is this goal really achievable?”
Currently, the average citizen consumes 63kg of meat per annum with the government targeting a reduction to 14kg-27kg per person. This is a significant reversal of a trend moving rapidly in the opposite direction. China consumes 28 per cent of the world’s meat, including half the world’s pork.
“All indications from meat industry participants we visited pointed to a rising consumption, with a high-level of optimism around future potential. This proposal would be a monumental u-turn from the current pathway.
“So how will the government achieve these reductions? I can’t see the population reducing its consumption voluntarily, so will the government enforce substantial reductions of livestock numbers and imports?
“If so, the population will need another food source to replace the red meat. Can this be provided easily and at reasonable cost? In 1982 meat consumption per head was 13kg per annum, so the diet of that time may well be the answer, except the population was far smaller than it is today.
“We need to watch this possibility as should it become a reality, it may well impact our volumes to the Chinese market,” warns Rick.