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China's urbanization creating a new craving for protein
Surge in demand for animal feed expected
The urbanization of the world's most populous nation, China, along with its rapidly growing economy, is responsible for an upward trend in the country's protein consumption. For a country whose diet has been grain-based for centuries, it's a dramatic change, but not entirely unexpected.
As recent history has shown, urbanization and prosperity are generally accompanied by an increase in demand for meat and dairy products. However, nothing matches the enormity of that change in a nation like China, with its 1.3 billion citizens.
According to US Department of Agriculture Economic Research Service (USDA/ERS) estimates, China's policymakers are watching the increasing urbanization and analysts project an additional 270 million Chinese will be living in urban areas by 2020. More than likely, these new city dwellers will adapt to the same diet standards as their fellow urbanites.
This changing diet is expected to create unprecedented demand for producers of feed and animal feed supplements. In this Feedback article, we will attempt to provide you with some of the statistics that make up the story.
The Urban Connection
According to USDA/ERS, urban dwellers consume more meat, dairy products, processed foods and restaurant meals, and less grain than their rural counterparts. A household survey completed in 2000 showed that per capita consumption of red meat was 40 percent higher among urban than rural Chinese, fish consumption three times higher and egg and poultry consumption 2.5 times higher. Conversely, USDA/ERS points out that urban dwellers eat one-third less grain than their rural counterparts.
Two decades ago, when China's population was 1.1 billion, it consumed 20 million tonnes of meat annually; according to the USDA. Today, with 1.3 billion people, it consumes more than 70 million tonnes of meat. By 2030, meat consumption is expected to reach 110 million tonnes.
The Livestock Situation
China has little land to spare to grow animal fodder. It uses 7 percent of the world's agricultural land to feed 20 percent of the global population. As a result, it will have to import compound feedstuffs if it is to meet new production goals. The enzyme industry, in particular, may benefit greatly as demand grows for additives that improve digestibility of both grain and non-grain crops and forages.
This year, China is estimated to have 43 million cattle, and that number could rise to 167 million by 2015. The number of hogs is estimated at 531 million, expected to increase to 621 million by 2015, according to the Food and Agricultural Policy Research Institute's (FAPRI) Agricultural Outlook for 2006.
Aquaculture production in China increased from 9.6 million tonnes in 1993 to 28.8 million tonnes (68.3 percent of the world total) in 2003, according to a Food & Agriculture Organization (FAO) report. In fact, aquaculture has been growing dramatically since the 1980s when China opened up trade with other countries. Increased domestic and global demand for safe fish and shellfish products and advances in domestic aquaculture nutrition will increase commercial feed use by its aquaculture sector in the years to come. The potential market for formulated feed is 16.8 million tonnes, yet only 5 million tonnes were used in 2000 (Mai, Tan). This is partly due to farmers relying on the natural food chain and trash fish feeding (Mai, Tan). Still, aquaculture is the fastest growing agribusiness sector in China.
While output of fish, pork, beef and poultry has increased substantially since the mid-1980s, current per capita production of compound feed is approximately half of the global average. Much of China's livestock, raised by rural households in herds of under 100 animals, has been fed low-cost and readily available feedstuffs, including on-farm crops and crop residues. In some instances, wastes are recycled to recover nutrients and improve production efficiency from integrated crop, livestock and aquaculture farming systems. However, a recent British Sulphur study indicates that China is closing this compound feed gap. Since 1998, its compound feed production growth rate has averaged 3.9 percent, more than triple the world average. Yet, there is still substantial need for feedstuffs.
Modernizing Animal Husbandry
According to a statement by Zhang Baowen, Vice Minister of Agriculture, China realizes that new steps in animal husbandry must be taken to keep up with the population's increased demand for animal protein. As a result, programs are in place to change the animal husbandry industry from traditional to modernized farming with increasing productivity and enhanced production capacity.
To assist with this growth, the agricultural ministry has released Guidelines for Promoting Modernized Animal Farming. It lists ways to facilitate the animal breeding system through funding, development of modernized practices in regions of animal production competitiveness; and enhancement of the quality and safety of animal products.
The Outlook for Dairy
Over the past three decades, China's dairy industry has surged, with milk production rising tenfold and numbers of cows increasing to 14 times the level in 1970 (Dong). Milk production has grown at an average of 23 percent a year since 2000 and China is expected to leapfrog from the world's sixth-largest producer in 2005 to the third largest in 2006, according to Brilliant Pioneer Consultants.
Much of the increased dairy consumption, especially since the mid-1990s, has been attributed to the availability of refrigeration and the emergence of supermarkets and fast-food restaurants in urban areas (Fuller, et al).
Fluid milk consumption rose by 39 percent between 1999 and 2004, mostly in urban areas (Fuller, et al 2004). Recent estimates by FAPRI show that the number of milk cows increased from 4.8 million in 2000 to 8.8 million in 2005, and could reach nearly 13 million by 2015.
China still lags behind Western consumption of dairy products. In fact, FAPRI's latest Agricultural Outlook shows that consumption of fluid milk and nonfat dry milk is considerably less than in the US – even though China's population is more than four times the US population. The statistics are startling: In 2000 the average Chinese consumed 9.92 pounds of dairy products (including fluid milk, butter, cheese and nonfat dry milk) compared with 249 pounds consumed per capita in the US.
As for the future, China's continued economic growth and urbanization point toward a growing demand for dairy products along with other more nutritious, protein-rich foods. Many of its dairy commodities (such as fluid milk, yogurt and ice cream) are and will continue to be produced domestically, requiring further development of an efficient dairy sector to meet the demand for high-quality, safe milk products (Fuller, et al).
China's corn production could increase by 1.4 percent to 146 million tonnes in 2007, from 144 million tonnes in 2006. However, this may not be enough to feed its rapidly-growing livestock sector. USDA/ERS predicts it will become a net importer of corn by 2009, and a crop shortfall could make this sooner.
Prospects for Feed
It becomes evident that if China is to meet the protein demands of its ever-growing urban population, it must look to imports of livestock feedstuffs as a way to cope with its evolving animal agriculture.
This dietary shift is likely to increase global demand for feed grain and feed supplements, like phosphorus. With this demand comes an opportunity for all of us in the feed industry to share our knowledge of modern animal agricultural practices, quality assurance and animal feed safety practices.
Sources:
China's Food and Agriculture: Issues for the 21st Century/AIB-775, Economic Research Service/USDA.
Kangsen Mai, Beiping Tan. Present status and developmental trends of aquaculture nutrition and feed industry in China. Ocean University of Qingdao, P.R. China.
Fuller, Frank H., Beghin, John C., Rozelle, Scott. 2004. Urban Demand for Dairy Products in China: Evidence from New Survey Data. Working Paper - 04-
WP 380.
Dong, Fengxia, The Outlook for Asian
Diary Markets: The role of Demographics, Income and Prices. Center for Agricultural and Rural Development (CARD) Series Papers. June 2005.
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