Friday, March 29, 2024

Chinese sheep meat demand on up

Avatar photo
Strong, high-priced growth in New Zealand sheep meat supply to China is happening independently of the impact of that country’s collapse in pork production, Beef + Lamb says.
Reading Time: 3 minutes

Sheep meat is a premium and niche product with solid underlying consumer demand. 

It is eaten less often than other meat proteins as a substitute for the pork being lost to African swine fever.

The biggest consumers are middle aged, educated and urban Chinese and restaurant consumers. 

Surveys found two-thirds of sheep meat is eaten away from home, B+LNZ says in its latest New Season Outlook.

The breakthrough in lamb and mutton imports from NZ took place in 2016, well before the fever outbreak in the pig population.

China is the world’s biggest sheep meat producer but new regulations on stocking rates to prevent over-grazing of land came into force then. About half of the traditional flocks are goats. 

The cutback was followed by a drought that lowered production further. 

During that time Chinese hot pot became more popular in the main centres and filtered out to second-tier cities.

New, modern production systems have enabled new production growth but it has been outpaced by demand, which is being met by imports.

Mutton is eaten mainly as a winter meal, said to provide health benefits, and that timing is complementary to NZ’s seasonal production, though that has evened out in urban areas in recent years as consumption has spread across the seasons.

The B+LNZ report said the high demand for mutton has extended to greater demand for value cuts of lambs, a good outcome for NZ at a time when the traditionally strongest market, the United Kingdom, has been in a weaker buying position.

Sheep meat and beef are the highest priced retail meat proteins in China. 

B+LNZ believes value beef cuts are benefiting from the need for substitutes for pork but most of the demand transfer will be got to value proteins such as poultry and fish. 

It believes the demand drivers will continue or grow in the short-term despite trade uncertainty in Europe.

That includes disruption to sheep meat supply in Australia and the tight NZ supply. That is significant because between the two countries provide more that 70% of international sheep meat exports by volume.

A rebuilding of the Australian flock is expected to begin in the next year if the weather allows. Extreme dry in eastern regions has increased mutton slaughter and reduced the number of breeding ewes. Being unable to retain ewe lambs at a time when ewe numbers are down has contribute to an 11% decline in the Australian flock between the 2013-14 and 2015-16 seasons. 

Shifting from high processing levels last season to rebuilding this season will tighten availability further, especially for mutton.

B+LNZ said the swine fever outbreak has contributed to increased demand for beef, especially manufacturing cuts, though the trade was already strengthening before the fever, with manufacturing cuts being boosted from the 2017-18 year.

That competition with United States demand lifted export value though the markets are not entirely like-for-like in the product they want. 

The US trade has been dominated by manufacturing beef but China had been the significant market for secondary cuts.

The timing of China’s increased demand is opportune for NZ with signals of herd reductions in the US and Australia.

If that happens it will temporarily increase production of lean manufacturing beef in both of those countries. 

“If these signals are correct it could put NZ’s beef exports in a strong position in the coming seasons.”

Australia’s Bureau of Agricultural and Resource Economics has estimated lamb processing numbers this season will fall 9% and adult sheep by 28% as the national flock increases by 4%.

The demand for replacements has pushed Australian breeding ewe prices above already high levels and the bureau forecasts sale yard lamb prices will be at their highest level since the mid 1970s.

B+LNZ said Australia is also benefiting from Chinese demand but less so than NZ because the US and Middle East are large markets for it and the domestic market takes a large chunk of supply.

Britain is the third biggest exporter of sheep meat but most of it goes to mainland Europe. The Brexit uncertainty highlights the possible impact on both British and EU production, trade and prices, B+LNZ said.

Total
0
Shares
People are also reading