China: Future Customer or Competitor in Livestock Markets?

C hina’s future role in international agricultural trade continues to be a puzzle. Part of this puzzle, namely that related to grains, has received far more attention than has livestock trade, which has been relatively neglected. China is a net exporter of livestock products, although over the last two decades imports have been increasing faster than exports. Figure 1 shows the time path of net exports (exports – imports) of meat, essentially poultry meat and pork, presented as a fraction of total non-ruminant meat trade (exports – imports) from 1965 to 1997. Forecasts from 1997 to 2005 (discussed below) are also shown. The trend is clear. The decrease of net exports as a proportion of total trade reflects a steady deterioration of China’s comparative advantage in pork and poultry production. This begs a further question: Will China eventually become a net importer of livestock products? The Organization of Economic Cooperation and Development (OECD) projects that China will be a major net importer of poultry meat by 2005. In contrast, the International Food Policy Research Institute (IFPRI) projects an increase in China’s net exports of poultry meat in the coming decades. Resolving this controversy requires examination of the forces underpinning change in consumption patterns in China, as well as the structural changes that have been occurring in China’s livestock industry (Figure 2). Rising Demand for Livestock Products The changing patterns of food consumption in Asia are now well documented. Rapid increases in household income, with urbanization, foreign investment, and marketing have combined to shift consumption toward non-traditional cereals and value-added products, including many derived from livestock. As a consequence, meat consumption in China has risen from 13.4 kg per person in 1980 to 41.2 kg per capita in 1995 – an increase of more than 200.0 percent! This rapid growth in meat consumption helps explain the increase in meat imports. In 1991 China became a net importer of poultry meat, and by 1995 China was the world’s third largest poultry meat importer. Research suggests that this increase in meat consumption will continue until 2020, when meat consumption will reach 60 kg per capita.