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The Chinese New Year for Irish producers

The Chinese New Year for Irish producers

In 2023 according to the Chinese zodiac it will be the ‘Year of the rabbit’, which is reputed to symbolise peace and prosperity. Irish pig and beef producers will definitely be hoping that that this prophecy comes through as Chinese import demand has a growing influence on our farm-gate prices.

Pork has traditionally been the staple meat of Chinese consumers however an outbreak of African Swine Fever in 2018 decimated their sow herd, which is the largest in the world. An estimated 40% national pig herd decrease (180 million pigs) resulted in their domestic pigmeat prices rocketing thereby causing Chinese households to switch from pork consumption to more beef and chicken. High pig prices stimulated a massive and rapid restock of their sow herd in 2020 with a consequential crash in their domestic pig price in late 2021, due to overproduction. The pendulum then swung to a further cycle of sow destocking as high feed ingredient price and low  pig prices, forced less efficient Chinese pig farms out of business. There is now a shortage of pigmeat supply in China. How did this Chinses price yo-yo’ing affect Irish pig prices from Bantry to Buncrana? The value of Irish pigmeat exports to China nearly trebled in value from Jan-October 2018 to Jan-October 2021 (€55m to €158m) but then crashed by 44% in 2022 (€89m). The lack of Chinese import demand in 2022, allied to record high feed ingredient prices resulted in the lowest Irish pig profitability in a generation. Thankfully the 2023 outlook is rosier for Irish pig producers, with forecasted higher Chinese demand, decreasing feed ingredient prices and an expected return to modest profitability in the year ahead.

However, it is not just the Irish pig price that is influenced by Chinese demand. Irish beef price is also affected by the international beef trade to China. As previously outlined, traditionally the meat of choice for the 1.4 billion Chinese consumers was pork but over the last 20 years, and especially the last 4 years, their beef consumption has increased steadily (Fig.1).

graph, details in text

Fig 1. Chinese beef import volumes by source; Jan-Sept.

Source: Trade Data Monitor, ADHB

In the January-to-September period from 2019 to 2022, the Chinese import volume increased from 1.1 million to 1.94 million tonnes respectively.  The predominant source of this beef (87%) were the cattle farms of South America (SA) and Australasia. While this export volume is great for those beef producers how does this affect Irish beef farmers? The simple answer is that these large exporters have been more focused on the Chinese market then other destinations, including Europe, which has benefitted Irish farmers. In a twenty year period (2000-2020) Brazil’s beef exports to Europe decreased by 47% (from 184,000 to 97,000 tonnes) while their overall beef export volume increased by +500%, mostly to China. This has reduced potential competition for Irish exporters on the European market, especially our important U.K. destination where SA imports only contributed 8% of total import volume in 2021. The outlook for Chinese beef imports in 2023 is a little less rosey than for pork with reduced import demand expected, however this outlook may be significantly influenced by their level of Covid outbreaks and economic growth.

Hopefully the ‘Year of the rabbit’ will indeed prove to be prosperous for Irish producers!