When considering the potential that China offers for U.S. beef, it's important to remember to look at it from all perspectives.
Chinese government officials can commiserate. After all, the U.S. had the same problem about 100 years past.
Back in 1919, at the close of World War I, a popular song asked “How Ya Gonna Keep ‘Em Down On the Farm After They’ve Seen Paree?” For the central controllers in China, it’s just a matter of geography.
Indeed, China is a study in two worlds, says Brett Stuart with CattleFax. Speaking during the Cattlemen’s College at the Cattle Industry Convention this week in Nashville, Stuart said China has a problem.
That is, how are they going to keep them down of the farm after they’ve seen Shanghai, or any number of other million-plus people cities that increasingly dot the landscape?
China desperately wants to produce all its own food, to be 100% self-sustainable in feeding its 1.3 billion or so people. The trouble is, that is increasingly looking like an impossible goal, he says. China is long on people, and growing shorter on resources like water.
So to continue any semblance of social stability, the government lever pushers have to keep farmers farming, urban denizens working, and everyone eating. To accomplish that, China will have to become an even bigger player in the global ag market.
What does that mean for U.S. beef producers, given China’s longstanding and largely successful efforts to keep U.S. beef out? Maybe, someday, things will change.
And when they do, maybe U.S. beef producers will have to change how we look at China’s potential.
Per capita, the Chinese only consume 12 lbs. of beef. And not all of that is whole-muscle cuts, which is what we tend to automatically envision when we (U.S. beef producers) talk about beef exports. As Stuart points out, we send a lot of beef stomach to China. Not directly to China, mind you. It goes to Hong Kong first. But make no mistake, its final destination is the mainland.
“And we get a premium,” he says. Importers are booking beef stomach (omasum) into Hong Kong at $3.50/lb. Figuring that backwards, he says it generates about $30/head in value for U.S. fed cattle.
“Food is essential. Food is behind most of the politics in China today,” he says. It’s a very diverse market, he adds, and their historical 100% self-sufficiency rates are not sustainable.
So as the China dynamic plays itself out, let’s look at its potential from a different perspective. We don’t necessarily have to send them Choice, whole-muscle product. Let’s build beef consumption in China one beef stomach at a time.
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