The recent Bord Bia seminar highlighted the dramatic six-fold growth in the value of the Chinese market for Irish food. This suggests that when we get beef approval for that market, business opportunities should exist. The Irish Farmers Journal spoke with Mark Goodman, commercial director (International) with ABP, who has focused on China over the past five years. He spent a period of time in China in 2010 and was sufficiently convinced of the opportunity to install a company representative in the Bord Bia hub opened in 2012 to investigate the market further and build relationships.

The period since has further convinced ABP that China will be the single most important new market for beef. It has the potential to challenge mainland European markets such as France or Italy in terms of volume, with 25,000t a realistic initial target.

There are a couple of specific features that should be noted in relation to China. Like Japan, it will be a market for under-30-month-old beef and initially at least will also be a market for boneless beef. Neither bone-in beef, which is equally preferred by Chinese customers, nor offal, will be approved.

Once access is secured for boneless, getting approval for bone-in beef has to be the next priority to get full value from the market. Getting offal approval will be a longer-term target.

The other interesting feature of the Chinese market is its segmentation, which can loosely be classified in three tiers – premium, intermediate and value manufacturing. India, when it has approval, and Brazil will service the lower-value manufacturing markets as their cattle, often buffalo in the case of India, do not have the eating quality comparable with traditional European or British beef breeds.

When approved, Irish beef will go into the segment currently occupied by New Zealand, Australia and Uruguay. Taste-wise there is actually a preference for grain-fed beef that comes from Australian feedlots, but there is no reason why Ireland cannot be the next preferred supplier at the top end of the market.

A further attraction of the Chinese market is that it complements the UK and EU business for steak meat and roasts as their demand is primarily for forequarter cuts and flanks, which contributes to achieving carcase balance.

Beef is a minority meat in China, and is mainly used in the food service and restaurant sector. The higher-end hot-pot and barbecue-style restaurants will be the target outlets for Irish beef, at least initially. There are also the global fast-food restaurants such as QSR Chains, McDonald’s and KFC. This segment will not be easy for Ireland to crack, as we will come up against price competition from cheap Brazilian, Uruguayan and New Zealand grinding beef. While less important, there are large retailers such as Walmart, Auchan, Carrefour and Tesco in China, but these will be a long-term target.

What is needed?

There is no single silver bullet that will capture the Chinese market. Most importantly, it has to be approached as a long courtship, which Ireland is currently doing.

Like anywhere, we will have to be price competitive and we need a proactive market access team involving everyone from the Minister for Agriculture, Department officials, diplomatic staff, the Irish meat processing industry and farmer representatives to explain the story of Irish beef, supplemented by an intensive Bord Bia marketing campaign.

When Ireland gets approval, it is likely that the import tariff will be 12%, the same as Brazil and Uruguay. This in itself puts us at a disadvantage compared with New Zealand, which has a free-trade agreement with China, and Australia, which signed a free-trade deal in 2014 which puts it on a reducing rate, reaching zero after nine years.

It would be desirable for Ireland’s tariff to be reduced or removed through negotiation, as New Zealand and Australia have achieved.

Irrespective of the challenges, China is worth the effort. It is neatly summarised by Mark Goodman: “I believe that Ireland, as the largest net exporter of beef in the northern hemisphere, must make sure we become an integral part of China’s beef import strategy for the future.”

Comment box

It is clear that China presents a real volume market opportunity which will be essential to handle the extra beef coming into the system later this year and from 2017 on. There are genuine market opportunities and we could expect faster development than has been the case in the US.

Work to secure approval is still required, with the AQSIQ inspectors due in Ireland in coming days. This is government-to-government, and factory inspections by the Certification and Accreditation Administration of the People’s Republic of China (CNCA) will follow, leaving the agreement of certificate and protocols then required to complete the process.

Much political hype surrounded the announcement by China that it was lifting the BSE ban last February. That left the impression that we would be doing business quickly but in reality that was just one part of a longer process.

Suggestions are that in a best-case scenario trade would begin at the end of this year or early next year, with plenty of potential for delay. ABP has a long tradition of developing international markets and we can be sure they will succeed in China.

Getting Irish beef into the highest value markets will be essential.

While issues around weights and specifications dominate current thinking, extra cattle coming into the system later in the year is the next issue and we need to prepare now.

We need more markets and China has the potential to be as important as of any of our EU markets outside the UK.