Thursday, 11 October 2012

Accessing the market in China - part 1


David Cameron said in his speech at the Conservative Party Conference this week that China is creating an economy the size of Greece every three months. The potential benefits to us as beef and sheep meat producers in England are huge so it is vital that we are at that particular table. And that is why this week I am over in Beijing for the China International Meat Industry Exhibition (CIMIE).

Securing market access to China is a long process and ensuring visibility at events like these, meeting potential importers, is essential. It also gives us the chance to have face-to-face meetings with officials in China who actively move the process forward with the ultimate goal of allowing us to sell beef and lamb produced in England to Chinese consumers.

It is my first visit here and the first thing that strikes you is the sheer scale of everything. Beijing is vibrant and, like New York, never sleeps. It is a city where the rules of both architecture and driving have been abandoned!

After a long journey here, we went straight into a series of meetings and a conference yesterday. One incredible statistic that I took away from the conference that demonstrates the sheer number of people in China – and the potential market for us – is that every year at the moment 32 million people give up farming and become consumers. Yes, 32 million! It’s mind blowing when you stop to think about it.

It is impossible to put a value on the potential market for us here but if you look at the English pig meat sector, which finally secured market access in May after several years of negotiation, it is estimated that it could very quickly reach £50 million a year. And the first shipment only went in August. For beef and lamb, who knows what that could translate to? Total meat consumption here is currently twice that of the United States and they do not produce enough domestically to meet demand

China has the added benefit of taking bits of the animals for which there is no market domestically and little elsewhere, things like tendons, membranes and pizzles. This is an area where domestic processors can really get more value out of the carcase, potentially up to £100 per head. One of my colleagues did some calculations recently and found that in The Netherlands, for instance, they make an extra £36.50 per head through maximising fifth quarter sales. This means a theoretical loss of value to the UK beef sector of £96.5 million per annum.

So our meetings continue and I will report back by way of this blog next week. This visit is already clearly illustrating to me the challenges we face before the trading doors with China are open. It is a long road, but one we are determined to successfully navigate.

Nick Allen
EBLEX sector director