Interview: Mark Goodman on why we can't expect any Asian country to replace the UK beef market

 

Mark Goodman, Commercial Director ABP Food Group.
Mark Goodman, Commercial Director ABP Food Group.
Mark Goodman, managing director of ABP’s International Division
Margaret Donnelly

Margaret Donnelly

Demand for beef is growing in Asia, but we can't expect China or any Asian country to replace the UK market, according to Mark Goodman of ABP.

Since the ABP group set up its international division in 2011, the company was the first European beef producer to agree contract arrangements with Chinese customers in February 2018.

However, Mr Goodman maintains that Irish beef exports to China are unlikely to exceed 28,000t, which is just 12pc of the 250,000t sold in Britain each year.

Ireland sent 1,400t of frozen beef to China in 2018, a figure that doesn't even put China on the list of top countries we export to, but Goodman is confident that figure can grow substantially.

"It seems small, but we're only getting going," he says.

Already this year Ireland has shipped over 2,000t of frozen beef to China, and increasing the number of Irish factories approved to export to China, Goodman says, is vital.

Chinese Minister of Agriculture and Rural Affairs Han Changfu visits the farm of Gerard Murphy, Boherbue, Mallow, Co Cork
Chinese Minister of Agriculture and Rural Affairs Han Changfu visits the farm of Gerard Murphy, Boherbue, Mallow, Co Cork

"China returns a better balanced value for the carcass and will take what we perceive as lower value products," says Goodman. "Meat cuts that are 30pc fat, that European consumers don't entertain, are more attractive to the Chinese consumer than sirloin."

Approximately 80pc of the Chinese beef market is estimated to be what European's consider low-quality produce - namely thin cuts used in traditional cooking such as hotpots.

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Retail options

At ground level, ABP discovered that retail was a 'no go' for the group in China, as it needs fresh meat, which meant food service and retail are where it has positioned itself.

According to Goodman, food-service is ideal for Irish frozen meat, as the Chinese market takes the middle cuts and frozen works better for stock control.

Cross country: Mr Jan Shi, WowPrime; Brendan Gleeson, DAFM; Franck Fang, ABP; Mark Goodman, Managing Director of ABP’s International Division; and Michael Creed, the Minister for Agriculture, Food and the Marine
Cross country: Mr Jan Shi, WowPrime; Brendan Gleeson, DAFM; Franck Fang, ABP; Mark Goodman, Managing Director of ABP’s International Division; and Michael Creed, the Minister for Agriculture, Food and the Marine

The Asian market, he says, plays an important role in carcass balance, as Asian consumers don't value the cuts we eat and prefer cuts European consumers see as lesser quality, such as middle ribs and flank.

"Asia works because of what we call 'carcass balance'. This means the more expensive steak and round cuts can be marketed to the UK and Europe and the more fatty middle and flank cuts can be sold to Asia, thus returning a better balanced value on an animal," he says.

Mr Goodman predicts that Irish beef exports to China could reach 25,000t per annum, which would make China Ireland's fifth most important market, worth around €125m.

However, he warned that China, or any Asian country, won't take away Ireland's reliance on the UK. "It helps and it negates, but it's not going to fix it. We need to find a resolution to continue to supply Britain.

"China will pick up the premium cuts, but it won't be at premium prices. It will be at world beef prices, which is a different ball game."

Online market

Early last year ABP signed a three-year €50m deal to supply the Wowprime chain of restaurants in China. A further deal with Hopewise gave the Goodman group a toehold into the lucrative online market, with Hopewise acting as distributor for online sales of its beef through JD.com, a website with over 300m users.

Today, approximately 70pc of ABP's beef sales in China are through food-service, while online sales account for the rest.

According to Goodman, it's the growth in middle class numbers in China that's creating the demand. Today in China there is 12.5m households that earn more than $35,000 and by 2022 that will be 32m households, he says.

"That's the middle class who buys beef. European demand is flat so there won't be much more demand for beef in Europe. If we want to sell it there, we have to sell it cheaper."

And foreign food imports are seen in China, he says, as a safer and healthier option.

In anticipation of Ireland getting access to the Chinese market, ABP established a Chinese presence in 2011, researching food-service, manufacturing and retail to find the segment best suited to ABP's product mix.

Mark himself travelled the east coast of China, visiting the major cities to get a first-hand understanding of the market.

China does not feature in the top 12 countries that Ireland currently exports to, but according to Goodman, that situation will change.

South Korea, too, holds much promise for Irish beef exports, where 49pc of households have an income over US$35,000 and a population of 51m who consume significantly larger amounts of beef than the Chinese.

Asian opportunity

With seven beef plants approved to supply China, there is ongoing work, he says, to get that number up to 14.

"If that happens we could be looking at 25,000t of exports per annum, which makes China our fifth most important market, worth around €125m.

"If you had 22 plants, it would be volumes of around 28,000t - or €140-170m."

Read also: Goodman: Don't turn the beef industry into dairy by-product

China by numbers

Population - 1.4bn: China has 287 times more people than Ireland and contains 20pc of the world's population

12.5m households have an average income of $35,000, with 36.5m households expected to have $35,000 income in next five years

Beef Imports - c800,000t-1mt

Key suppliers: Australia, Uruguay, Argentina, Brazil, New Zealand

Beef consumption: 5.8kg per capita

An increase in beef consumption per capita of 1kg is equal to 1.4m tonnes of beef

China imported 688,000t of beef in 2017 - over 100,000t more than Ireland's current production levels

Largest beef producers

1. USA 12mt

2. Brazil 9.9mt

3. EU 7.9mt

4. China 7.3mt

5. India 4.3mt

Largest Beef Exporters

1. India 1.25mt

2. Brazil 1.2mt

3. Australia 1.07mt

4. USA 1mt

5. Ireland 512,000

6. New Zealand 417,000t

7. Uruguay 311,000t

8. Argentina 266,000t

Indo Farming


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