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Livestock & Meat outlook China February 25, 2008 Prepared by Shiyao Investment Ltd Shanghai, ATO Oklahoma Agricultural Leadership Program.

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Presentation on theme: "Livestock & Meat outlook China February 25, 2008 Prepared by Shiyao Investment Ltd Shanghai, ATO Oklahoma Agricultural Leadership Program."— Presentation transcript:

1 Livestock & Meat outlook China February 25, 2008 Prepared by Shiyao Investment Ltd Shanghai, ATO Oklahoma Agricultural Leadership Program

2 Table of contents  Shiyao Investment Ltd  Outlook of China livestock situation in 2008  Opportunities for US grain and livestock producers

3 Shiyao Investment Ltd Shiyao Investment Ltd is a very focused company providing advisory and investment banking services with a strict focus on Greater China and Japan and on the complete food chain, from the farm to the end consumer. We are headquartered in Shanghai and established since 1999

4 Meat consumption in PRC: Consumption volume of pork, beef and chicken meat per capita in China (1992 ~2002) Consumption trend: Fast growing demand of meat products especially high-grade chilled meat products in large cities require high quality raw materials including quality feed ingredients to insure food traceability.

5 Evolution of meat production in China between 1962 and 2002

6 Beef meat consumed in China as a % of total meat consumed per capita per month (2002) Beef meat consumption in PRC

7 Beef Consumption in PRC There are three forms of consumption for beef in PRC: 1. Frozen beef: Chinese beef cooking methods are mostly based on frying, and boiling while adding many condiments. People are used to buy frozen beef products for home consumption especially for festivals opportunities. 2. Fresh beef: This is the main form of consumption of residents particularly in rural market. Most people won ’ t keep the beef meat more than eight hours after buying it fresh. 3. Chilled beef: this form of consumption has developed in recent years. Together with the growth of modern retailers in PRC. Consumers' consumption preference has evolved (from fresh meat to chilled meat, and from fat meat to lean meat, with a tendency to high quality consumption).

8 Import/Export value of beef meat in PRC for the last 10 years

9 Beef imports forecast  By 2008, USMEF (US Meat Export Federation) expects Chinese beef imports to nearly double from levels of Increases in per capita income, improvements in the frozen product distribution chain, increasingly Western tastes and lower import duties will drive such import growth.  Given the genetic constraints of the Chinese herd and the lack of intensive grain-fed production, USMEF estimates that China will face a serious challenge to meet its demand for high-quality beef with domestic sources – and will need to import more.

10 Chicken meat consumed in China as a % of total meat consumed per capita per month (2002) Chicken meat consumption in PRC

11 Foreign Retailers in PRC since 1900

12 12 View from modern retailers in PRC The Chinese meat market in modern cities is asking increasingly for more elaborate products at affordable price

13 Comparison of distribution chanels for meat products

14 Main provinces producing meat in PRC Pork Beef Lamb Poultry Dairy cow

15 Top 8 provinces for meat production in PRC

16 Legend:High:XXX Average:XX Low:X Top 8 provinces for meat production and their characteristics

17 An example: the Shineway Group Backwards integration of meat processor (Ex: Shineway Group) Shineway Group is the largest meat processor in China with total assets of RMB 6.3 billion (USD 759 million equivalent as of 2004) and 1,800,000 tons of meat products production volume, roughly 850 million USD of sales Shineway started its business from a small meat processing company in After over 30 years development, Shineway has moved its business backward to slaughter house, breeding farm and forward to retail store. To ensure the quality and safety of their meat products, Shineway is more and more involved in backward industries for integration. Recently Shineway just acquired a feed plant to produce feed products by themselves, which indicates the trend of the backwards integration in Shineway group.

18 Traceability challenges Traceability: chances & difficulties ChancesDifficulties 1.Food safety issue promoted by government 2.Safe and high quality food products required by consumers. 1.Relatively few food enterprises in China have capacity to implement traceability for their products. 2.Additional cost for traceability procedures limit its development in China

19 Measures of the Chinese government related to the administration of food safety and quality The Chinese government clearly mentions in its Tenth Five-year development plan that it will “accelerate the establishment of standard system to control agricultural products, food safety and quality” clearly putting food safety concern as a priority.  《 Food Safety Action Plan 》  《 Food Quality Insurance Program 》  《 Research on the Development Strategy of Food Safety in China 》  《 Guidance for Establishment of Food Safety Credit System 》( protocol ) 19

20 Needs & Opportunities  Genetic  Equipment  Professional farming opportunities, especially in: Beef production Dairy production  Meat exports  Grain exports

21 China: soybean production

22 China: Soybean imports & exports:94-03

23 Your contact: Dr Benoit Rossignol, CEO Shanghai Office: Tel: / Fax: Shiyao Investment Ltd


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