Transcript Livestock & Meat outlook PRC

Livestock &
Meat outlook
China
February 25, 2008
Prepared by Shiyao
Investment Ltd
Shanghai, ATO
Oklahoma Agricultural
Leadership Program
Table of contents
Shiyao Investment Ltd
Outlook of China livestock situation in
2008
Opportunities for US grain and
livestock producers
Shiyao Investment Ltd
Shiyao Investment Ltd is a very focused
company providing advisory and investment
banking services with a strict focus on Greater
China and Japan and on the complete food
chain, from the farm to the end consumer.
We are headquartered in Shanghai and
established since 1999
Meat consumption in PRC: 92-02
Consumption volume of pork, beef and chicken meat per capita in China (1992 ~2002)
Consumption per capita/year/person (KG)
35
32.4
30.3
30
26.9
25
31.6
29.5
31.4
31.8
32.2
Consumption trend:
5.6
4.4
Fast growing demand
of meat products
especially high-grade
chilled meat products
in large cities require
high quality raw
materials including
quality feed
ingredients to insure
food traceability.
26.1
24.2
22.6
20
15
10
5
0
2
2.5
1.5
1.9
1992
1993
4.2
4.3
4.6
4.7
5.0
5.1
5.3
3.3
2.7
3.3
2.9
3.4
3.4
3.5
3.6
4.2
1994
1995
1996
Pork
1997
1998
Chicken
1999
Beef
2000
2001
2002
Evolution of meat production in China between 1962 and
2002
Beef meat consumption in PRC
Beef meat consumed in China as a % of total meat
consumed per capita per month (2002)
Beef Consumption in PRC
There are three forms of consumption for beef in PRC:
1. Frozen beef: Chinese beef cooking methods are mostly based on
frying, and boiling while adding many condiments. People are
used to buy frozen beef products for home consumption
especially for festivals opportunities.
2. Fresh beef: This is the main form of consumption of residents
particularly in rural market. Most people won’t keep the beef
meat more than eight hours after buying it fresh.
3. Chilled beef: this form of consumption has developed in recent
years. Together with the growth of modern retailers in PRC.
Consumers' consumption preference has evolved (from fresh
meat to chilled meat, and from fat meat to lean meat, with a
tendency to high quality consumption).
Import/Export value of beef meat in PRC for the last 10 years
Import/Export value of beef meat
(1000$)
250,000
200,000
184,520
168,708
150,000
Import
Export
110,454
100,000
73,402
50,000
0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Year
Beef imports forecast
 By 2008, USMEF (US Meat Export Federation)
expects Chinese beef imports to nearly double
from levels of 2004. Increases in per capita
income, improvements in the frozen product
distribution chain, increasingly Western tastes
and lower import duties will drive such import
growth.
 Given the genetic constraints of the Chinese herd
and the lack of intensive grain-fed production,
USMEF estimates that China will face a serious
challenge to meet its demand for high-quality
beef with domestic sources – and will need to
import more.
Chicken meat consumption in PRC
Chicken meat consumed in China as a % of total meat
consumed per capita per month (2002)
Foreign Retailers in PRC since 1900
Foundation of Sino-Foreign Joint-Venture Retailors
2006
Tesco
2004
2002
2000
1998
1996
1994
1992
1990
Anchan
OBI
Lotus
Hymall
Wal-Mart
RT-Mart Trust-Mart
Makro
Pricesmart
Carrefour
Pacific Department
Store
Shanghai
No.1
Yaohan
Metro
Parkson China
Resources Vanguard
B&Q
View from modern retailers in PRC
The Chinese meat market in modern cities is asking
increasingly for more elaborate products at
affordable price
12
Comparison of distribution chanels for meat products
Retailers
Strong developmemt of retail industry (in 2001, total sales of the
91 largest retailers in China reached Rmb 116 billion (USD 14.0
billion equivalent); with a total of 7953 retailers including: 3328
supermarkets, 271 hypermarkets, 3342 convenience stores).
Modern retail chanel are becoming a fast growing sale chanel
for meat products in PRC
Because of its guarantee for meat quality, more and
more consumers prefer to buy meat products at
supermarkets. It is believed that in the future,
supermarkets and hypermarkets will replace wet
markets and will become the main distribution chanel
for meat products in China.
In order to ensure meat quality and improve city
Most meat products in wet markets are directly supplied by
sanitary condition, the PRC governments has begun to
slaughterhouses. Because of its lower meat price offering, this
Wet markets
forbid these wet markets, and the share of meat
chanel is still at present the main distribution market for meat in
purchased through this channel will be decreasing in
China, particularly in the countryside.
the coming years.
Main provinces producing meat in PRC
Dairy cow
Pork
Beef
Lamb
Poultry
Top 8 provinces for meat production in PRC
Heilongjiang
Liaoning
Jilin
Xinjiang
Beijing
Inner Mongolia
Hebei
Qinghai
Tianjin
Ningxia
Shanxi
Gansu
Tibet
Shandong
Henan
Shannxi
Jiangsu
Hubei
Sichuan/Chongqing
Anhui
Shanghai
Zhejiang
Hunan
Jiangxi
Fujian
Guizhou
Yunnan
Guangxi
Guangdong
Hainan
Top 8 provinces for meat production and their characteristics
Province
Pig
Shandong
XXX
XXX
XX
XXX
XX
Guangdong
XXX
XXX
XX
XXX
XX
Hebei
Henan
XXX
XXX
XXX
XXX
XX
X
XX
X
XXX
XX
Sichuan
XXX
XX
XX
XX
XX
Jilin
XXX
XX
XX
XX
XX
Hunan
XXX
XX
XX
XX
XX
Heilongjiang
XX
XX
XX
XX
XXX
Legend:
High:
Average:
Low:
Broiler Layer Aquaculture Dairy cows
XXX
XX
X
Main characteristics
Organized and relatively transparent market. One of
the most important agricultural province. Strong
power in agricultural industrialization (Longda,
Jinluo)
Guangdong province is ranked as No.1 in terms of
live poultry export value in China. High level of
agricultural modernization
Big agricultural products supplier to Beijing market
Big total volume but small farming size
One of the most important province for pig breeding.
Mostly household
One of the three new live pig production areas.
Biggest province of pig supply for the national
market
One of the most important province for dairy cow
production
An example: the Shineway Group
Backwards integration of meat processor (Ex: Shineway Group)
Shineway Group is the largest meat processor in China with total assets of
RMB 6.3 billion (USD 759 million equivalent as of 2004) and 1,800,000
tons of meat products production volume, roughly 850 million USD of
sales
Shineway started its business from a small meat processing company in
1969. After over 30 years development, Shineway has moved its business
backward to slaughter house, breeding farm and forward to retail store.
To ensure the quality and safety of their meat products, Shineway is more
and more involved in backward industries for integration. Recently
Shineway just acquired a feed plant to produce feed products by
themselves, which indicates the trend of the backwards integration in
Shineway group.
Traceability challenges
Traceability: chances & difficulties
Chances
1.
2.
Food safety issue promoted
by government
Safe and high quality food
products required by
consumers.
Difficulties
1.
2.
Relatively few food
enterprises in China have
capacity to implement
traceability for their
products.
Additional cost for
traceability procedures limit
its development in China
Measures of the Chinese government related to
the administration of food safety and quality
The Chinese government clearly mentions in its Tenth
Five-year development plan that it will “accelerate the
establishment of standard system to control agricultural
products, food safety and quality” clearly putting food
safety concern as a priority.
 《Food Safety Action Plan》
 《Food Quality Insurance Program》
 《Research on the Development Strategy of
Food Safety in China 》
 《Guidance for Establishment of Food Safety
Credit System》（protocol）
19
Needs & Opportunities
 Genetic
 Equipment
 Professional farming opportunities, especially in:
• Beef production
• Dairy production
 Meat exports
 Grain exports
China: soybean production
Soybean Production in China
Production (10000 Mt)
1800
1500
1200
900
600
300
0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
China: Soybean imports & exports:94-03
Imports/Exports Quantity
tons)
(Unit: 10000
2500
2000
1500
1000
500
0
1994
1995
1996
1997
1998
Imports
1999
Exports
2000
2001
2002
2003
Shiyao Investment Ltd
Your contact:
Dr Benoit Rossignol, CEO
E-mail: [email protected]
Shanghai Office:
Tel: +86 21 6508 8020/ 6507 8328
Fax: +86 21 6507 8354
www.shiyaoinvestment.com