Since May this year, the US has replaced Australia as the fourth-largest beef supplier in China, according to USDA trade data. Since political tensions between China and Australia have arisen, the Chinese government has targeted the trade of various goods such as coal, barely, copper, and beef included among others. Since then, the Australian beef industry has entered into a crisis and saw a 22% decrease in export volumes to China. By targeting the beef trade, China has canceled seven large units in Australia dedicated to beef exports, which no longer have export permits to China. While for Australia, this has shaken its beef export industry to the core, for the US, this is a unique opportunity to fill the gap in the Chinese market for frozen beef.
There is no doubt that frozen beef imports in China have had accelerated growth in recent years as Chinese demand for meat increased. There has been a 45% rate value growth in Chinese imports from the 2016 to 2020 period. In 2020, China imported about 2.1 million metric tons of beef, over 460 thousand tons more than in the previous year. Trade reached USD 9.7 billion in value from imported beef in 2020, and Brazil was China’s leading supplier with 850,000 metric tons accounting for 42.7% of the import share. The second-largest supplier to China is Argentina, with 21.2% of the claim, followed by Australia with 12.4%.
The US is not a traditional beef supplier to China as there are just a few facilities that have been granted a permit to export to the country. For this reason, in 2020, the US just represented 1.9% of the Chinese import market. However, this is supposed to change radically this year, as trade data from the U.S. Department of Agriculture shows the US sold 48,292 tonnes of beef to China from January to April, up from 3,255 tonnes during the same period in 2020.
While the US will work to increase its frozen exports to China by approving multiple certified conditioned plants with Chinese requirements, Brazil will do the same with plants authorized by the US. In May, Brazil’s Agriculture Ministry announced that two new plants had been approved to ship products to the US, and this year's goal is to facilitate multiple plants that would be granted export permits.
In 2020, Brazilian beef exports had an 8% increase in volume, reaching 2.02 million MT. According to the Brazilian Beef Industry Association (Abrafrigo), beef exports in 2020 were 11% higher than the previous year, reaching USD 8.4 billion. Abrafrigo also stated that for this 2021 year, it expects a 5% increase in the beef exported volume.
Furthermore, with the Australian and Chinese trade war still going, the 5% increase forecast could fall short. Brazil´s intention is to increase its exports to the US while strengtheneth its leading position in China. According to ABIEC, Brazilian beef exports to the US have jumped 165.6% in volume to 33,800 tonnes during the first five months of the year. Exports in May alone surged 186% from the same month last year and have made the US the third-largest buyer of Brazilian beef.
In 2020, China was the largest buyer of Brazilian beef, with 850,000 metric tons of beef imports. Egypt was the second-largest customer at 127,953 metric tons. While the US was a smaller importer of Brazilian frozen beef with 20,000 tons, the US market opening for fresh beef in February 2020 positioned the US as Brazil's top four beef importers. Of both fresh and frozen beef, the US imported 60,000 tons last year. While the US directs part of its meat to China to offset the decrease in exports from Australia, Brazil will gain substantial market share in what could be a significant market for them.