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China's Taste for Meat Prompts Industry Transformation

A customer, right, looks at meat at a shop in Shanghai, China, Jan. 17, 2012.
China’s soaring demand for meat is straining the capacity of the country’s traditional farms, as authorities try to ramp up production while keeping safety high and prices low.

In 1978, Americans consumed three times the amount of meat that Chinese did. But by 2011, Chinese consumers turned the table, eating 71 million tons of meat, more than double the amount that Americans consumed.

As the producer and consumer of more than half of the world's pigs, Chinese have so far maintained an almost complete self reliance on meat, with 97 percent of the animal’s produced at home.

Instead of direct pork imports, China has traditionally opted for imports of feed. Sixty three percent of the world's traded soybeans are bought by China for its domestic farms.

“They do not have enough land to produce the feed for the meat, but they want to develop a agribusiness sector that does handle that meat,” says Mindi Schneider, a PHD candidate at Cornell University who studies global agricultural markets and agricultural development.

To keep up with demand, China is now engaged in a structural transformation of its meat industry.

In 2011, fewer than a quarter of China's pigs were raised in industrialized farms with more than 500 pigs. Smaller scale “backyard farms” and “specialized household farms” account for the majority of the country's pork output. Beijing's aim has been to consolidate production by subsidizing large scale farms, and promoting collective management of small enterprises.

Chinese economists have pushed for the creation of “dragon-head” firms, large scale farms that involve smaller enterprises in their supply chain and provide them guidance on production practices.

“The idea,” says Schneider, “is that by subsidizing those companies and requiring that they contract with small-holder farms, that they are sort of leading the agribusiness sector and also leading rural development by having this responsibility to small-holder farmers.”

While Beijing is engaged in modernizing its agricultural industry, experts are trying to gauge how the growing appetite for meat in China will impact global markets.

Joel Haggard, Asia Pacific vice president of the U.S. Meat Export Federation, says that before 2008 the Chinese meat market was almost completely divorced from the rest of the world.

“What happened in China had no influence on the global market, and what happened in the global market had no influence in China,” he said, “But that changed,” he added.

In 2008 a decline in pork supply, partly due to a disease outbreak, drove up the price of pork produced domestically. China compensated by importing unprecedented amounts of pork, thus driving up the global market price.

“If China comes in and just orders a hundred thousand tons extra pork, it has tremendous influence on the market,” Haggard says, and adds that “anybody that is producing pork in the world is looking at what is going to happen in China over the next couple of decades.”

Cornell University's Mindi Schneider has conducted field research in the Chinese pig industry, and says that with the government's push to develop China's domestic industry, she is skeptical of the current international rush to supply China's meat market.

“I would be really reluctant to advise anyone; to say 'Yeah, rescale your whole production so that you can ship meat to China,' because I am just not sure that it's as big as people are projecting."