China builds an appetite: how this is affecting global food prices
The food industry is particularly exposed to global trends, the most impactful of these being the rise of Chinese demand.
China’s population is 1.4 billion and growing. In 2015 alone it consumed 1,151 million tons of food, and this is projected to increase by 33% by 2050.
If you work in the industry, you will have noticed an increase in food prices first hand and you might be asking how to navigate your way around these changes.
Here we look at how particular meat and seafood products have increased in price and we give you our recommendations on competitive alternative ingredients worth looking at.
Fish
China’s growing appetite for fresh salmon has seen this country import more of the seafood product than ever before. Exporters of Atlantic salmon have reaped the rewards of improved trade with China and observed a huge increase in salmon exports.
Between January and July of 2019, 12,130 tons of fresh salmon were exported to China from Norway. To put this into context, that amount was more than the total quantity of Norwegian salmon exported throughout the whole year of 2018 to this market.
China’s demand for whole salmon (compared to smaller cuts) has limited market availability and driven the global cost up. According to the Norwegian Seafood Council, the average cost of fresh whole Norwegian salmon increased from NOK 55.54/kg in August 2018, to NOK 54.48/kg in August 2019.
Our recommendation
“A switch to UK Farmed Sea or Rainbow Trout is one I like to recommend to customers.” says Natalia Spinetto from the Collectiv Food purchasing team. ”This alternative stands up well in regards to taste and it’s also generally less intensively farmed.
“An interesting trend we’ve seen is more and more restaurants in Japan moving towards trout, so much so that rather than salmon, it’s often trout found on sushi plates there. The UK has over hundreds of trout farms, but the British appetite for trout is not big. There is plenty of potential to grow consumption of this fish with innovative dishes, whilst controlling costs.”
Meat
In August 2018, China reported a widespread outbreak of African Swine Fever (ASF) to the World Organisation for Animal Health. Since then, hundreds of millions of pigs have been culled and China has lost approximately 45–50% of its pig herds. As a result of this, pork prices in China have increased by a staggering 170%.
Given this severe shortage of pigs, China’s pork imports have grown rapidly in an attempt to meet the country’s high demand. The USDA predicts that China will import 3.5 million tons of pork in 2020, which makes up 35% of global pork imports.
The rising costs and dwindling availability of pork products is presenting a challenge to restaurant businesses in the UK. In particular, the price of pork belly and trim have more than doubled in cost since March 2019, as Scott Young, national account manager at Browns Food Group, explains:
“Pork belly has seen the steepest increase in price in recent months. This is a direct result of African Swine Fever and of the massive demand from the Chinese market — now made more extreme because of Chinese New Year on 25th January. This cut is currently disproportionately overpriced, even in comparison to other pork parts.”
With growth in both population and income-per-capita, China is developing a taste for other meat types as well. Chicken and beef prices have grown by 40% and 20% respectively in the last year. Beef in particular is regarded as a status symbol by the growing middle class, and consumption is projected to rise by 119% to 1,139.2 million tons by 2050.
In 2020, imports of beef and chicken are likely to grow by a further 20–30%. A potential resolution of the US-China trade agreement could lead to even more US protein going to China — this will increase protein prices on the global market.
Other meat producing countries are also competing for the Chinese market. Brazil, in particular, displayed an aggressive penetration strategy, and in the last months China has approved lots of Brazilian plants which has brought up the price for the whole region, including Argentine beef.
Chinese demand has hit lamb products too: according to data from the New Zealand Ministry of Primary Industry, local producers have shifted away from the traditional UK market towards shipments to China. Indeed, China has increased sheep meat imports from New Zealand by five times in the last ten years (AHDB). This surging demand, paired with a decline in production of both New Zealand and Australia sheep meat is a clear indication of rising prices.
Our recommendation
Natalia says: “The pork market is under pressure at the moment due to ASF and global market conditions. No one part of the pig is feeling this pressure more than the pork belly, from where we get our beloved streaky bacon. From what we hear, it is one of the worst times to buy this type of bacon.”
“A tough market calls for alternatives. One of the ways we are advising customers to keep buying bacon is making a switch from streaky to back bacon. While many might be quick to highlight their visual differences, the price of back bacon is more steady, allowing chefs to continue to keep bacon on the menu while the pork belly market recovers.”
“When it comes to beef, we think a good alternative is Canadian. There are excellent products at different price brackets, consistent in quality, hormone free and not at risk of hitting import quota, unlike US beef.
With regards to lamb, our global producers forecast a flood of British products in the domestic market. 85% of British lamb is destined to EU markets, mostly exported as livestock. Once Brexit takes effect, that output might close, leaving us with an over stock of British lamb at very competitive prices.”
Food trends for restaurant professionals
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