This is the second of the “China series’ that Xiaomeng (Sharon) Lucock and I wrote for the journal ‘Primary Industry Management’. It was written in December 2012 and published in March 2013.
As with everything relating to China, the statistics do not stand still. In the year ending December 2012, 13% of New Zealand’s sheep meat exports income came from China. Move forward six months, and in the 12 months ending June 2013 this had risen to 21%. Then in the 12 months to June 2014 it rose again to 30%. On a monthly basis, the latest statistics for March 2014 show the China component of New Zealand’s sheep meat trade was 31% by value and 44% by volume.
Although the statistics have changed, the driving forces as outlined in the preceding paper here have not changed. The only differences are that both consumer wealth and the size of the urban populations have further increased.
The demand for sheep meats is just one part of the increasing demand for red meats. However, there are some special features relating to the cultural significance of mutton within China’s Muslim groups. The Muslim population – currently about 23 million – continues to increase rapidly (they have never been forced to follow the one-child policy). In contrast, the productivity of the Chinese grasslands, where the sheep have traditionally been grazed is in decline.
Mutton is also important well beyond the Muslin community. It is an important part of hot-pot cuisine across all of northern China. The fat component is a valued part of the product and is where the flavour comes from.
The market continues to evolve. Whereas two years ago the demand was mainly for the cheaper forequarter cuts, the Chinese are now buying the more expensive cuts given that there is no more forequarter to buy.
The Chinese wholesalers prefer to purchase the meat bone-in and with minimal processing. This has had implications for the availability of jobs for meat workers in New Zealand. As one meat industry leader said to me recently, in terms of value-adding it is a case of going forward to the past.
Another meat industry CEO said to me that his Board has tried to put limits on how much meat could be sold to China in an effort to minimise risk. However, the reality is that product always goes to wherever the demand takes it. Both currently and in the foreseeable future that place is China.
In the paper we discuss the supply chain logistics and some of the opportunities. Currently it remains as very much a commodity market, but some companies are starting to address the challenges of marketing product in a consumer-ready form.
The pdf of the full paper is here.
Woodford & Lucock Sheep Meat in China PIM March 2013