Land equal in size to all of England, Scotland, and Wales combined will be needed to meet the growing demand for meat in China according to the report, China’s Agricultural Challenges.
Meat consumption in China has climbed by almost 25% since 2003, with average consumption reaching 57 kilograms per person per year. Given the ever-increasing portion of protein in Chinese diets, this consumption is expected to climb to 74 kilograms per person within the next decade, resulting in demand for soybeans and grains for livestock feed to increase from the current 650 million tons to 744 million tons.
Taken together, these forecasted trends indicate that an additional 15-20 million hectares of agricultural land will be needed, according to Richard Ferguson, advisor to auditors, PwC and author of the report.
Increasingly limited availability of domestic land and water will drive China to rely more and more on imports, or to securing land overseas to meet production needs, a strategy that China is already employing.
Mr. Ferguson states that the increased demand for meat “will place enormous burdens on an already challenged domestic food system and have significant ramifications on international trade in agriculture.”
This report has been released at a time when commodity prices have been falling precipitously, China is experiencing an economic contraction causing concerns on global markets, and the world is in the midst of oversupply of many grains and oilseeds – all concerns that will likely result in agricultural production cuts. However, at the same time, China’s (and the rest of Asia’s) increase in demand continues, creating a scenario of future supply shortfalls.
The rest of Asia is also seeing their own increases in income, urbanization, and protein demand leading to expectations for an increase in the number of agricultural investments and trade flows in the region – an expectation that is already being fulfilled.
A few expamples of recent activity include Japanese trading company, Marubeni, acquired grains company, Gavilon in 2013 for $2.7 billion, China’s state-backed COFCO acquired control of Noble Group and the Dutch trader, Nidera for nearly $3 billion, and most recently, Mitsubishi acquired a 20% stake in agricultural trader, Olam International through two deals worth $1.1 billion.
China currently imports 70% of the world’s global trade in soybeans to feed its livestock sector, and as the country undertakes measures to sell down its domestic stockpile of corn, it will need to pick up its reliance on imports once again. Meanwhile, Indonesia is rapidly becoming another major Asian corn importing country, according to BMI Research. And despite the efforts by some countries to attain self-sufficiency in corn, analysts expect that the dependence of the region on imports will only grow in the coming years.