US beef grinds into China

China may be starting to beef up.

By the end of September, US beef exports to Chinese mainland reached about 1,000 metric tons, for a total of $12.5 million since the export ban was lifted in May, according to the US Meat Export Federation.

The number is still small - in contrast, US beef exports to Hong Kong totaled $551 million as of September. Exports to Chinese mainland are climbing, albeit slowly, with total exports expected to reach $20 million by the end of the year.

The Chinese mainland potentially represents a $2.6 billion market for US beef products, so US exports have a lot of room to grow.

Industry experts attribute the slow growth to two major factors: short supply and hefty prices.

Beef exported to China must meet stringent requirements, including no growth hormones. Currently, supplies meeting those requirements are rather small, and raising cattle that meet those standards takes about two years starting with a calf, said Pete Bonds, a rancher in Saginaw, Texas, and a former president of the Texas and Southwestern Cattle Raisers Association.

Bonds said that while it takes time to develop China-specific beef products, meeting the Chinese requirement also increases costs.

"We hoped to be able to export a lot of beef to China's middle class, but by not using growth hormone, the price will be prohibitive. Currently, most US beef is sold only in major cities like Shanghai and Beijing," Bonds said.

USDA Prime ribeye sells for nearly $60 a pound in Shanghai, according to media reports.

"It's more a luxury item in China, instead of being a daily protein source for the Chinese," said Bonds.

However, Chinese are quite partial to US beef due to its remarkable marble cut.

"The rest of the world produces grass [fed] beef, we have the luxury of feeding cattle with corn for 150-180 days to produce marbled beef. US beef is juicier, more tender and more delicious," said Bonds.

He said recent studies show that marble fat is healthier than fat from other part of the cattle, akin to olive oil.

How many Chinese are willing to pay a high premium for a bite of tasty and healthy US beef?

S&S AgriSource, a Houston-based company exporting beef to China, is testing the market.

S&S AgriSource has been exporting beef from South America to China. It is utilizing its available distribution network to gain a market share for US beef in China.

"We do see high enthusiasm for US beef from China; many are interested," said Jane Shi, a purchasing specialist at S&S AgriSource. "We have quoted prices to distributors in China. Due to the high price, they haven't made up their mind to issue the order yet, but we are close to making some deals."

mayzhou@chinadailyusa.com