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China demand dominating global beef trade

Trade war and restrictions limit ability of U.S. to capture beef market share in China.

The rapid growth in China's beef imports has dramatically altered global beef trade flows, with several countries now exporting a significant share of their total exports to China, according to Derrell Peel, Oklahoma State University Extension livestock marketing specialist. In fact, during the last two or three years, China has replaced the U.S. as the leading beef importer in the world. China's beef imports exceeded total U.S. beef imports in 2018, and combined with Hong Kong, total China/Hong Kong imports were larger than U.S. beef imports beginning in 2017, Peel noted.

“Total world beef imports have increased by 17.7% in the five years from 2015 to projected 2019 totals,” he said. “Over that same period, beef imports in China increased 153.4%, along with a 62.2% increase in beef imports into Hong Kong leading to a 122.6% increase in beef imports in the China/Hong Kong region.”

In contrast, total U.S. beef imports decreased by an estimated 12.3% over the same period, Peel reported. Increased beef imports for China alone, on the other hand, accounted for more than 75% of the net increase in total world imports during this five-year period.

In 2015, China accounted for 8.7% of global beef imports, and that share rose to 13.1% when including Hong Kong. Total U.S. beef imports in 2015 accounted for 20.0% of global beef imports. Peel said projections for 2019 show China accounting for 18.7% of global beef imports; along with another 6.1% of imports for Hong Kong, that means the China/Hong Kong region currently accounts for a 24.8% share of all world beef imports. The U.S. is projected to account for 14.9% of total global beef imports in 2019.

Peel relayed that China now receives the majority of beef imports from Brazil, Uruguay, Argentina, Australia and New Zealand. Number-one beef exporter Brazil currently ships about 22% of total exports to China and accounts for 31% of China's total beef imports. It sends another 17% of its beef exports to Hong Kong.

Uruguay is currently the eighth-largest beef-exporting country but sends about 70% of exports to China and accounts for 21% of China's total beef imports. Argentina, currently the sixth-largest beef exporter, sends about 65% of its total beef exports to the China/Hong Kong region. Argentina accounts for 17% of China's beef imports. Number-two exporter Australia ships 16% of its total beef exports to China and accounts for 17% of total beef imports into China. New Zealand, the number-five beef exporter, sends 26% of all of its exports to China and accounts for 11% of China's total beef imports.

Notably absent from the sources of Chinese beef imports are North American beef suppliers, Peel said. Only about 2% of Canada's beef exports move to China, and less than 1% of U.S. and Mexican beef exports head to China. Hong Kong is an important export market for Canada, at 6% of exports, the U.S. at 10% and Mexico at 4%.

According to Peel, numerous factors account for the lack of U.S. market share in China.

“Despite receiving access to the Chinese market in 2017, U.S. beef exports have shown almost no growth. This is partly due to the need to develop markets in China for higher-quality/more expensive U.S. beef,” Peel explained. This process has also been completely interrupted by the trade war and the additional tariffs currently in place in China for U.S. beef, he added. Further, restrictions on production technologies allowed in beef exported to China (implants, beta-agonists, etc.)  mean that the supply of U.S. beef available for the Chinese market is limited.

“The U.S. is currently caught in a chicken-and-egg situation of not having much supply for the Chinese market and not having enough market potential to warrant increased production to meet Chinese demand. Nevertheless, it is important for the U.S. to participate in the growing Chinese beef market,” he said.

At current levels, Peel said if the U.S. could achieve a 10% market share of China's beef imports, it would add more than 11% to total U.S. beef exports.

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