Amazing: a few years ago I wrote an article wondering if the Chinese nation will be able to feed itself (it was then uncertain), now they are out-competing traditional meat exporting countries. They have learnt to raise cattle and they have established the cold chains necessary for its distribution. I see the end of an era: Argentine cattle industry based on rich extensive pastures is doomed. The price of the land in Argentina will necessarily fall because there is not much else to do in the pampas.
It is wonderful how fast this is happening. Argentines eating Chinese meat.
12 comments:
A little bit more complex the issue.
Just like Western Europe was a large food producer but when Adolf took over it went to hunger in a year.
China imports a lot of cereals. Just like WE. If you take that out a collapse of diary and meat production takes place very very fast. They had built huge animal growing complexes - especially pigs, had some connection to the issue through my job - but the arable land for cereals and progressively the water are not there. At least in sufficient quantities.
"since 2000 the depletion of China's main aquifers has led to an overall decrease in grain production, turning China into a net importer. The trend of Chinese dependence on imported food is expected to accelerate as the water shortage worsens."
"China is the world's largest importer of soybeans and other food crops.[31] China is expected to become the top importer of farm products within the next decade.["
Quoted because they say it better.
Future is pretty bleak but anyway they fight.
Most impotant factor in the attempt to make it sustainable - in the future - is to collapse the population to a sustainable level. Othrewise a mega syrian scenario was inevitable.
But anyway they are a large and growing importer of food products. And the pampas is becoming more and more valuable. 2 billion asians are clawing their way towards good diets with proteins.
What will happen with ME non oil producing countries is anyones guess.
Agriculture is becoming a gold mine. And a very productive one.
A river of gold will flow towards Argentina. As it flows now towards Brazil and US.
Argentina got masively outflanked by Brazil but the need is so great I think they'll come back in glory.
It's just a matter of opening a valve and enjoying the benefits so to speak.
All economic growth in asia means a change of diets. Just that they missed a large part of the gold river coming their way but there is time enough. Billions of asians wil not disapear and their desire to eat diary and meat grows according to their incomes.
Nice analysis here about the brazilian story :
http://www.economist.com/node/16886442
http://www.economist.com/node/16889019
I agree with teo. China is desperately short of water. One of my clients has made a great deal of money exporting American and Canadian grain to China.
These grains and legumes used to go to Anatolia, by the way; as D. Goldman says, under the new order, Chinese pigs will eat before Middle Eastern peasants.
-s.n.
What the others said. China will grow in food exports but at the labor intensive end of the food chain. They are now #1 world producer of apples for example. US apple growers have a hard time finding labor to pick apples. They will do (are already doing) farmed freshwater fish, canned fruit, etc. One problem is consumer acceptance - people associate Chinese food products with contamination and adulteration (sometimes for good reason). Chinese producers of all kinds have no qualms about taking whatever shortcuts they can get away with and they can get away with a lot.
K
You are undervaluating Chinese capabilities. The beef I bought in Kifl Harith caem from a large feedlot operation in China, with a well managed hygienic slaughterhouse and packing and cold chain. It is true that China is importing large quantities of grains, but cattle rations are not only grains but everything digestible for the cows (which is almost everything) from pig slaughterhouse sludge to fishmeal and bakelite.
Argentine extensive pasture based production is fast becoming uncompetitive vis a vis feedlots, and even Chinese feedlots. Pasture is increasingly useless.
Regarding Chinese water problem, it certainly is very bad. I was surprised by the Yellow River being no more than a mud basin, with no fish nor frogs nor nothing in it.
Our water problem was much worse than the Chinese one, yet we solved it through desalination. China is very very large and it can solve its water supply problems through large public works, which they know how to do and love. Dont forget the Himalayas, they are covered with water. If things get desperate, the Ganges head source is at hand.
But the point of my note is the surprise how fast the Chinese learnt intensive animal husbandry and how they are starting to export frozen meat. Twenty, fifteen years ago they were starving. You couldnt see a cow in the countryside.
The same is dairy farming. We Israelis tought them how to do it, and now they are exporting milk products. There is no reason why they could not kill New Zealand, Holland and Danish dairy industries. Very capable people those Chinese.
Even Chinese people won't buy Chinese dairy products due to melamine scandal. I don't doubt their technical capabilities at all but they have issues of consumer trust. I was shocked to see a pet food section in Chinese supermarkets - 30 years ago "pet food" had a completely different meaning. Of course for cash (and the Chinese have plenty of cash) you can buy anything - American wheat, Brazilian soy, whatever. Grass-fed beef still has its niche. Some people prefer it as healthier. It is also a low cost item - grass is free. The Argentine beef industry will be OK, though they should try to keep up with current technology.
K
K,
Interesting you mention modernization issues. I just spoke with my client today - he recently got back from a business trip to Argentina and Chile. He said everythin in Chile was reasonably modern and well-run, but Argentina was pathetic and backward. I suspect, based on his comments, that the Argentines have been failing to reinvest for quite some time. Probably they are too corrupt and incompetent to start now. I hear their universities are basket cases as well.
-s.n.
The pace of progress in the modern economy is shocking. It was always the case that doing things the way they were done 50 years ago or 20 was not competitive (but this did not keep Argentina from producing 1960 Ford Falcons into the 90s) but now the time horizon keeps shrinking - technology from 5 years ago or even 2 is considered outmoded and discarded. If you can't keep up with this brutal pace and remain on the cutting edge, you fall behind further and further and are toast in the global economy.
K
The melamine (bakelite) and other scandals are unevitable in a growing and somewhat chaotic market economy. They ar being corrected and China is exporting dairy products. And now they are starting to conquer the frozen meat market. What I am saying is that this market has been marked for a deep change, to the point that the countries that dominated it in the last 150 years are in danger of losing their basic industries. A whole lifestyle is going to disappear. The American cowboy and the Argentine gaucho exist on on films, soon the grass land itself will lose its worth. May be they will re-beranded as natural reserves for turists.
I am surprized no-one has commented on the obvious solution, which is that China, and Saudi, will (and have already) bought large tracts of potential or actual agricultural land in places like Madagascar.
Why not Argentina?
Anon.
" It is true that China is importing large quantities of grains, but cattle rations are not only grains but everything digestible for the cows (which is almost everything) from pig slaughterhouse sludge to fishmeal and bakelite.
Argentine extensive pasture based production is fast becoming uncompetitive vis a vis feedlots, and even Chinese feedlots."
You are right but I was also right.
As the number of animals grows what was cheap becomes well expensive.
As an ex: 1 billion chinese eating grains is OK for the market - for poor consumers like egyptians that is. But now a few hundred million chinese are chowing animal products, so now we have 1.3 billion chinese eating grains, plus a few hundred million pigs eating grains - half a billion, plus cattle - some 140 million in china, plus chickens , billions of chickens etc.
Add indians, russians, brazilians etc taking a sit at the table and putting bacon and cheese on their plates, so other hundreds of millions of pigs, cows, billions of chicken taking a sit at the feedingslots.
That is why what was cheap - grains, grows more and more expensive. It's a dynamic equilibrium. The pampas has low value due to the lack of an efficient structure able to transform grass into money through beef. Probably sometime in the future brazil's agro indutry will make the transformation. It seems the pecking order in that area is established for the future and Argentina is going to be something like Canada is to US. Just that is a little bit more difficult to transform grass into money then to transform oil and gas into money like in Canada. But I have no doubts it will be done.
J identified perfectly the transformation in China. But what he told us was the transformation of China into a modern urban industrial society on the western european model. Not China morphing into a raw materials producers.
Something like Holland/Germany on a larger scale. You put energy, grains, soybean etc in and get meat out. Any fluctuation in the energy and grain supply takes production of animal products down instantly.
About the number of cattle it can be found here :
India 281,700,000
Brazil 187,087,000
China 139,721,000
US 96,669,000
EU-27 87,650,000
Argentina 51,062,000
Australia 29,202,000
Mexico 26,489,000
Russian Federation 18,370,000
South Africa 14,187,000
Canada 13,945,000
Other 49,756,000
If they will be able to seriously affect anglo and european producers dairy producers remains an interesting topic for the future. It's a particular market and bothering competitors can be easily shut out. Of course they might retaliate so we shall see, it's gonna be interesting.
PS. Of course due to peak oil a deep economic depresion might happen , in which case both chinese feedingslots and pampas may nosedive. But the pampas might return to being a gold mine as it was before the industrial animal husbandry. Modern approach means enormous energy consumption.
In the end we are discussing possibilities.
Only certainty that it's an energy equation. The rest are symptoms of the state of the energy sector.
Between 1950 - when development took off everywhere - up to 2010 the energy consumption grew from 100 exajoules to over 500 exajoules.
Link here if interested:
http://www.theoildrum.com/node/8936#more
Rather than raw numbers, cattle per capita tells a different story. Argentina still has more cows than people. China would need to increase its herd tenfold to match Argentine levels - this is pretty much impossible.
The pampas will remain as a viable method of converting otherwise useless grass to edible human food. The Argentines will have to move up the processing chain so that they are not just exporters of low value unprocessed beef. Unfortunately they don't seem to have the will to do this.
Modern transport and packaging technology makes a lot of things possible. In my local "Trader Joes" store, I see frozen Thai food that is actually from Thailand, Indian food packed in MRE type pouches from India, etc. Coffee (which was traditional exported as low value green (raw) beans is being roasted in the country of origin (Colombia, Rwanda, etc.)and sold as a higher value product. The Chileans have created a large export industry sending grapes, peaches, etc. north during the Northern winter when they are out of season in the US.
K
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