Outlook for China's Agriculture in the Next Decade: Steady Development of Livestock Products
How will the production, consumption, prices and trade of agricultural products trend over the next 10 years? The "2015 China Agricultural Outlook Conference" was held in Beijing on the 20th, where the Market Early-Warning Expert Committee of the Ministry of Agriculture released the "China Agricultural Outlook Report (2015—2024)", providing information on the supply and changing trends of 18 major agricultural products including grains, cotton, oilseeds, sugar crops, meat and vegetables.
Experts predict that over the next 10 years China's grain sown area will remain generally stable, and the comprehensive grain production capacity will be further enhanced. By 2024, China's total sown area of rice, wheat and corn is expected to remain stable at over 1.36 billion mu, with output reaching 580 million tonnes and total consumption projected at 600 million tonnes. During the outlook period, China's grains will maintain a reasonable self-sufficiency rate; the two staple food grain varieties, rice and wheat, will have sufficient domestic supply for food consumption, achieving the food security goal of "basic self-sufficiency in grains and absolute security in staple foods".
According to the report's projections, over the next 10 years, the production of China's major agricultural products including grains, oilseeds, vegetables, fruits, meat, poultry eggs, dairy and aquatic products will continue to develop steadily.
Correspondingly, China's consumption of major agricultural products will also maintain relatively rapid growth. During the outlook period, rice consumption will grow at an average annual rate of 0.3%, wheat consumption at 0.6%, and corn consumption at 3.1%, projected to reach 265 million tonnes by 2024. Consumer demand for vegetables, fruits, poultry eggs, dairy products and aquatic products will all show an increasing trend. Among these, the feed industry has already passed its rapid growth phase and entered a mature stage, and "saturation growth" will become the main theme of China's feed market over the next 10 years.
The report holds that China's agriculture will face favourable conditions in the future such as accelerated transformation and upgrading of the food consumption structure and continuous improvement of the agricultural policy system, as well as major challenges such as increasingly prominent constraints from agricultural resources and the ecological environment, insufficient optimisation of the agricultural production structure and inverted domestic and international prices for agricultural products. Overall, over the next 10 years, China's agricultural production will continue to develop steadily, the capacity to coordinate the use of both resources and both markets will steadily strengthen, and the supply and demand of the domestic agricultural product market will remain generally balanced.
Pork
Consumption growth slows, supply and demand tend toward stability
The report projects that over the next 10 years the share of China's pork output in total meat output will decline from 66.4% in 2014 to 64.9% in 2024, and farms slaughtering more than 500 head annually will become the dominant force in pig farming, with their share of slaughter reaching over 60% by 2024.
The report predicts that over the next 10 years the average annual growth rates of pork consumption and per capita availability will remain at 1.3% and 0.8%. In 2015, total pork consumption and per capita availability are expected to increase by 1.0% and 0.4% respectively over the previous year, reaching 57.6 million tonnes and 41.87 kg per person per year. By 2024, total pork consumption and per capita availability are expected to reach 65.1 million tonnes and 45.24 kg per person per year respectively. Among these, per capita pork consumption of Chinese households will increase from 20.19 kg in 2015 to 22.00 kg in 2024, an average annual increase of 1.0%, lower than the average annual growth rate of 4.2% during 2012-2014. Per capita pork consumption of urban and rural households will increase from 16.32 kg and 23.23 kg in 2015 to 17.92 kg and 24.30 kg in 2024, with average annual growth rates of 1.1% and 0.5% respectively; over the next 10 years, processed pork consumption is expected to grow at an average annual rate of 3.3%, from 9.9 million tonnes in 2015 to 13.4 million tonnes in 2024.
The report holds that although the supply and demand situation for pigs will improve significantly in the second half of 2015, with pig prices generally showing an upward trend and the possibility of periodic tightness in supply and demand, given that consumption is in a stable state, the overall price increase will not be too large, and pig farming will be at a slight profit level for the full year. In the long term, live pig and pork prices will generally fluctuate upward. Over the next 10 years, live pig and pork prices will rise amid fluctuations, and the range of fluctuation will be significantly reduced due to the impact of increased scale of operations.
In terms of international trade, pork will still maintain a certain volume of imports, while exports will increase steadily. In the early part of the outlook period, imports will not increase substantially. In the short term, pork imports in 2015 are expected to increase steadily, with imports at around 590,000 tonnes. In the long term, affected by the slowdown in capacity growth, pork imports will remain above 800,000 tonnes after 2019, and at around 1 million tonnes in 2024; net imports will rise from 340,000 tonnes in 2014 to around 700,000 tonnes in 2024. In terms of exports, pork exports will increase steadily. Affected by Russia's resumption of pork imports from China, future pork exports (including live pigs converted to pork equivalent) will continue to increase, remaining above 200,000 tonnes and expected to be around 300,000 tonnes in 2024.
Poultry Meat
Large-scale production gains momentum, market maintains supply-demand balance
The report predicts that against the backdrop of economic development entering a new normal, accelerating the transformation and upgrading of the poultry meat industry will be an important guarantee for the healthy development of the industry and its adaptation to the new demand-oriented situation. Over the next 10 years, the growth rates of both China's poultry meat production and consumption will gradually slow, imports will remain stable, and the poultry meat market will continue to maintain a supply-demand balance.
In recent years, affected by factors such as high production costs and lacklustre overall household consumption, China's poultry meat industry has entered a period of adjustment. Output has declined for two consecutive years, and is expected to remain basically stable in the near term, with a recovery in growth expected in the longer term. Considering the rapid development of the entire industry over the past 5 years and the slow growth in consumer demand, the possibility of continued rapid expansion of production in the future has decreased. Shortages of land, water and feed resources, along with high production costs, have also constrained industry expansion. The report holds that over the next 10 years the average annual growth rate of poultry meat output will decline to 1.9%, 1.5 percentage points lower than the past 10 years.
Over the next 10 years, the production methods of the poultry meat industry will accelerate their transformation, with the degree of large-scale, standardised, specialised and intensive operations increasing significantly. In 2013, the proportion of broiler farms in China slaughtering more than 2,000 and more than 10,000 birds reached 85.6% and 71.9% respectively, and large-scale farming of over 1 million birds developed rapidly, reaching a proportion of 12%. In the future, the share of large-scale broiler farming will further increase, and more integrated leading enterprises that raise and slaughter their own broilers will emerge.
The production of high-value-added poultry products will increase. As residents' living standards continue to improve and consumer demand becomes more diversified, the poultry meat deep-processing industry has broad development prospects. It can be foreseen that in the future poultry enterprises will pay more attention to brand development and develop a variety of high-value-added deep-processed products.
With the improvement of urban and rural residents' income levels and the development of urbanisation, poultry meat consumption will continue to increase. In the long run, the newly added urban population and rural residents are both major sources of potential growth in poultry meat consumption. From the perspective of consumption structure, chilled poultry and processed products will become mainstream consumer products in the future. However, constrained by the diversification of food consumption demand, the growth rate of poultry meat consumption will be limited, and the possibility of China's poultry meat consumption exceeding pork over the next 10 years is unlikely. Overall, over the next 10 years poultry meat consumption will increase steadily, with per capita availability expected to reach 14.6 kg in 2024, an average annual increase of 1.3%, 1.6 percentage points lower than the average annual growth rate of the past 10 years.
Over the next 10 years, China's poultry meat trade will continue to develop steadily. Currently China's poultry meat trade volume is only about 500,000 tonnes, accounting for less than 5% of global poultry meat trade. Over the next 10 years, China's poultry meat trade is expected to continue to develop steadily, with imports remaining within 600,000 tonnes by 2024, and exports likely to expand, particularly with a slight increase in exports to the Central Asian region.
Beef and Mutton
Consumption continues to grow, supply and demand generally tight
As people's living standards continue to improve, both the number of consumers and the consumption volume of beef and mutton in China have increased, with consumption overall in a steady growth trend. However, affected by factors such as breeding cycles, production costs, transformation of development methods and frequent disease outbreaks, the trend of tight supply of beef and mutton will continue to exist over the next 10 years.
In the future, the comprehensive production capacity of beef and mutton will be further enhanced, and beef and mutton production will grow steadily. Driven by market prices and national support policies, the degree of large-scale, standardised, industrialised and organised cattle and sheep farming will increase substantially. It is expected that in 2015 beef and mutton output will increase by 3.1% and 3.7% respectively over 2014; in 2020 beef and mutton output will be 7.84 million tonnes and 5.09 million tonnes respectively; in 2024 beef output will reach around 8.28 million tonnes, with an average annual growth rate of 1.9%; mutton output will reach around 5.48 million tonnes, with an average annual growth rate of 2.5%.
Beef and mutton consumer demand is expected to continue growing, with the growth rate slowing. Considering factors such as Chinese residents' dietary structure, consumption habits and meat prices, China's beef and mutton consumption is expected to continue increasing, especially in ethnic minority areas where consumption shows rigid growth. It is expected that in 2020 beef and mutton consumption will be 8.23 million tonnes and 5.37 million tonnes respectively, and in 2024, 8.77 million tonnes and 5.77 million tonnes respectively, up 22.3% and 26.8% respectively over 2014.
Although beef and mutton consumption will increase, the growth rate is expected to slow year by year. With the upgrading of consumption structure and diversification of consumer choices, the growth rate of beef and mutton consumption is expected to decline. It is expected that over the next 10 years the average annual growth rates of China's beef and mutton consumption will be 2.0% and 2.4% respectively, both lower than the past 10 years.
The supply-demand contradiction for beef and mutton in China still exists. Over the next 10 years, considering the development speed of China's domestic cattle and sheep industry and the supply capacity of the international market, it is expected that by 2024 China's beef supply-demand gap will be around 500,000 tonnes and the mutton supply-demand gap around 300,000 tonnes. In the future, beef imports will show a continued increasing trend, while mutton imports will be stable.
The report points out that over the next 10 years, beef and mutton will remain in a state of tight supply. Affected by this, beef and mutton prices will run at a high level, and the possibility of continued increases cannot be ruled out, but the rate of increase will slow. In addition, the supply and demand levels of beef and mutton are also affected by epidemics, natural disasters, the ecological environment and policies, with periodic and regional supply-demand imbalances domestically.
Poultry Eggs
Output growth slows, consumption grows steadily
The report predicts that over the next 10 years, China's poultry egg production will continue to maintain its world-leading position, with output increasing steadily but at a slower growth rate; poultry egg consumption will grow steadily, prices will fluctuate upward, and import and export trade will remain basically stable. Uncertainties such as cost fluctuations, policy changes, scientific and technological innovation processes and risk-aversion measures will still exist.
Over the past 30 years, China's poultry egg production has developed rapidly, with an average annual output growth rate of 6.5%. Currently, China is the world's largest poultry egg producer, accounting for around 40% of world poultry egg output. In 2014, national poultry egg output was 28.94 million tonnes, up 0.6% year-on-year, a relatively low growth rate for the past 5 years. According to estimates, total poultry egg consumption in 2014 was 28.80 million tonnes, up 1.0% year-on-year. Due to rising international egg prices, China's poultry egg exports grew rapidly in 2014, with export volume of 94,582.7 tonnes, up 1.4% year-on-year; the full-year poultry egg trade surplus reached 189 million US dollars, up 7.8% year-on-year.
Over the next 10 years, benefiting from the intensive and large-scale development of poultry farming, China's poultry egg output will continue to maintain its world-leading position. However, constrained by factors such as environmental protection and market development, small-scale farms will accelerate their exit, the scale structure of laying hen farming will be further adjusted and optimised, and the growth rate of poultry egg output will slow. It is expected that in 2015 poultry egg output will grow 0.9% year-on-year, reaching 32.106 million tonnes by 2024, with an average annual growth rate of 1.0% during the outlook period, slightly slower than the average annual growth rate of the past 10 years.
With the continuous growth of population, rising income levels of residents and the acceleration of urbanisation, poultry egg consumption will continue to maintain steady growth. In 2015 total poultry egg consumption was 29.065 million tonnes, up 0.9% year-on-year, and in 2024 it will be 31.958 million tonnes, with an average annual growth rate of 1.0% during the outlook period. Among these, processed poultry egg consumption will be 5.157 million tonnes, with an average annual growth rate of 1.5%, significantly higher than total consumption growth. Per capita consumption will grow slowly, with the urban-rural gap still evident. During the outlook period, per capita poultry egg consumption of urban and rural residents will grow at an average annual rate of 0.7%, growing slowly, reaching 17.1 kg per person by 2024; among these, annual per capita poultry egg consumption of urban residents will reach 19.7 kg and that of rural residents will reach 12.5 kg, with the urban-rural gap still evident.
Poultry egg trade will continue to maintain a surplus pattern. Export volume will be around 100,000 tonnes, with export markets still mainly neighbouring countries and regions.
The report points out that uncertainties such as the resource environment for poultry production, related industry policies, the level of science and technology, and poultry raising risks may affect the development of the poultry egg industry.