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Meat industry

Beef deal with China not all it seems

There’s been so much positivity and expectation around Ireland being allowed into the Chinese beef market. It’s easy to be optimistic given China imported 688,557 tons – more than the equivalent of Irish beef export capacity – of frozen beef in 2017, compared to 60,524 tons in 2012 so obviously there’s a market if you’re in the beef trade.

But what’s been portrayed by the Irish agriculture ministry and food board as a ‘big win’ for Ireland is ultimately a bigger win for China. Home perhaps to Asia’s most polluted soil and water, China has been harshly cracking down on the pollution caused by unregulated expansion of its own livestock industry. Hence over the past two years there have been mass closures of unregulated livestock farms while others have relocated to newly built facilities.

China we’re told is switching to a more western diet – rising beef imports are proffered as proof of this. Yet China has long been the world’s largest producer of beef by dint of a large population of animals slaughtered each year. But it doesn’t want to produce the extra cattle it now needs because it doesn’t want to pay the associated environmental cost.

By importing beef China exports the associated environmental problems associated with production.

By importing beef China exports the associated environmental problems associated with production. Imported beef is cheaper than locally produced beef because China lacks the expanses of quality farmland to farm or feed at the scale and efficiency that characterises American and European production.

While Ireland has sought to portray itself as a ‘Green’ supplier of beef, China gets its beef from a small group of suppliers whose production is characterised by scale, low price and in many cases a laissez faire approach to the environmental impact of production. Brazil shipped 171,157 tons of China’s 2017 total, with Uruguay supplying 155,441 tons. Australia (104,078) New Zealand (72,052 tons) and Argentina (51,957 tons) supplied the rest. That’s the official trade: there is a large trade in smuggled beef which includes much American beef smuggled over from Hong Kong. Uruguay sold beef to China at an average USD3,551 per tonne in 2017, cheaper than even the Brazilians who got an average USD4,629/tonne in China. Will Ireland compete with those kinds of figures?

As it seeks to better protect its own environment China will now get access to an Irish beef product that’s subsidised by EU subsidies but more importantly subsidised by Irish farmers who often operate at a loss and only make an income from their basic farm payments which are paid by a mixture of European and Irish exchequer funds. Ireland exports 90% of its beef but too often Irish farmers sell cattle to meat factories for less than the cost of producing them.

To make better margins farmers are encouraged to aim for higher stocking rates. For this reason Irish waterways have been degraded by increased usage of fertilizer and slurry as the country for better or worse adapts farming practises perfected in continental Europe and the US. Pollution in Ireland doesn’t impact a beef eater in China, ironically told in Irish marketing material that they’re buying green and sustainable beef.

There are also diplomatic benefits to allowing access to its beef market. The Chinese have given access to a select bunch of countries – a list which includes Costa Rica and Hungary (it shipped beef into China in 2016, though RTE reported that Ireland was the “first European country” to get access to China’s beef market) for various political reasons. But the big suppliers are Australia and Brazil which can supply the kind of quantities at the price China wants.

Interviews with leading Irish agricultural figures in the Irish press recently gave the impression that China has become acutely aware of the ‘green’ and ‘sustainable’ nature of Irish beef production. However what little knowledge does exist of Irish beef farming has not been a persuader in the context of mass promotion by Australian beef exporters and government bodies which have vastly superior marketing resources in China.

The Meat & Livestock Australia has over 100 staff working in Chinese cities, meeting buyers and officials every day and running promotions with hotels and restaurant chains. Similar numbers work for New Zealand trade promotion bureaus promoting Kiwi lamb and dairy, which dominate their respective markets in China.

China’s current ranking of beef suppliers will remain as they currently stand. China likes buying from Australia because it’s able to acquire assets – several Chinese companies have taken control of Australian beef farms. Likewise, its cattleyards are within two week’s shipping distance of Chinese ports. Thus the Chinese have set up processing facilities to slaughter live cattle and thus create jobs and extract all the value add from what are often termed by-products in Europe – offal is prized in Chinese dishes and tripe (stomach) is common in many dishes.

Irish farmers don’t even get paid for these by-products – they’re paid for carcasses only. Irish meat factories will have more options by getting access to China and this may create more demand and thus higher pricing for Irish cattle. The value of offal – the so-called ‘fifth quarter’ was pointed out by agriculture minister Michael Creed when he welcomed the opening of the Chinese beef market as a “win” for Irish beef farmers.

Finally, by giving any country access to its food markets China gets unspoken payback in diplomatic terms. Ireland, like most EU countries, has long ago stopped questioning China’s policy of suffocating suppression of minorities like the Uyghurs and the Tibetans. Such issues –and other issues like questionable Chinese trade and investment practises in Europe – are now left to the EU offices in Beijing to raise.

Norway sees China ultimately as the biggest market for its salmon went through almost six years of obstruction from China for its salmon imports (much salmon was left to rot at ports due to suddenly onerous veterinary inspections) after the Oslo-based Nobel society gave its peace prize to a Chinese dissident in 2011. Such unspoken interference –six years of it- ensures that everyone else has gotten the message – access to the world’s largest market for most food products will only be granted in return for support or at least silence or acquiescence on diplomatic issues of importance to China.

Access to the Chinese market for any product is a good thing. But it’s also worth considering the trade-off required for such access – in environmental and diplomatic terms.   

This commentary appeared in The Times on May 4, 2018.

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