Declan Fennell, Sector Manager Sheepmeat, Bord Bia - The Irish Food Board
The explosive growth of China’s middle class has brought about sweeping economic and social changes and this in turn has fuelled an engine of consumer spending and demand for a protein rich diet of red meats. China has developed an insatiable appetite for sheep meat and is the now the largest producer, consumer and importer of sheep meat globally.
According to GTIS Chinese import demand delivered double digit growth in the first half of 2019, with a 23% lift in export volumes despite an increased import prices (up 9%). New Zealand shipments were up 17% while Australian trade, led by the growth in mutton, was up 31% giving. A noteworthy landmark for both countries is that the Chinese market has not only now reached 50% of total New Zealand shipments but now represents 25% of Australian exports.
The Chinese market is being dominated by shortages of animal protein a situation that is expected to worsen. Ongoing cases of African Swine Fever are decimating the pig meat sector with other proteins unable to compensate with the market having to adjust through higher prices. According to a recent Rabobank study it is estimated that Chinese pig meat production will fall by 25% in 2019 with another fall of 10-15% projected in 2020.
China’s sheep meat imports, which are predominately low value cuts, in frozen format are primarily sourced from New Zealand (60%) and Australia (38%), with Uruguay contributing to a small share of import volumes. However one possible cloud on the horizon which could dampen import demand is an economic slowdown associated with a China/US trade war. In addition in the longer term Government policy, including investment in more mega farms, could impact on import demand.
While China places a bigger draw on sheep meat from the southern hemisphere suppliers, the Irish sheep meat industry has gained from the ripple effect of less New Zealand product entering the EU. For 2019 it is estimated that New Zealand will only fill 60% of their EU quota of 228,254 tonnes cwe.
