GIRA Meat Club 2003

Far East:

Beef

Marie-Pierre Boudet

GIRA Meat Club 2003

Continuous Rise in Imports

Imports ('000tcwe)

2002 2003 2004

Japan 719 869 900

S. Korea 374 382 401

Philippines 127 139 150

Taiwan 85 96 102

China 73 75 76

Exports ('000tcwe)

2002 2003 2004

India 369 413 463

China 22 19 19

GIRA Meat Club 2003

• Japan: Despite demand recovery and limited domestic beef supply, high international prices slow down the recovery in import volumes

• S. Korea: Imports were low this year due to the economic downturn, high export offer prices and high inventory levels

• China: Lower tariff in 2004 hence higher imports of high-end muscle meat and beef cuts (domestic production is inadequate)

• Philippines: expanding domestic meat processing industry, hence a rise in meat imports in both 2003 and 2004

• Taiwan: Imports will benefit from the Taiwan economic recovery this year and the next + reduction in tariffs

• India: Exports of buffalo meat are forecast to grow : increasing demand from traditional and emerging markets in both 2003 and 2004

Overall Market Growth

GIRA Meat Club 2003

Consumption Affected by High Prices, better outlook for 2004

3.0%4.0%

-0.3%

0.9%

0.4%

2.5%

3.2%

8.5%

1.7%2.9%

12.7%

6.1%

China (4.6kg): rising income continue to favour growth in beef consumption

India (2.4kg): high prices prevent any big consumption growth

Japan (10kg): fewer price promotions beef and cooler weather slowed down beef consumption recovery in 2003. High prices expected again next year

S. Korea (11kg): lower rise in 2003 for economic reasons and high beef prices. Elections and higher GDP growth in 2004

Philippines (5kg): relative poor economic conditions. Elections planned in 2004

Taiwan (4kg): increasing purchasing power in both years

GIRA Meat Club 2003

JP Consumption Recovery

First 8 m. Beef marketing quantities rose by 5.4% on last year level

August was hampered by the cool weather (lower barbequing)

High prices during the rest of the year prevents price promotions

Consumption is thus expected to increase only slightly this year (+0.4%)

Japan Monthly Beef Marketing Quantities 2001, 2002, 2003

40 000

50 000

60 000

70 000

80 000

90 000

100 000

110 000

Ja

Fe

b

Ma

r

Ap

r

Ma

y

Jun

e

July

Au

g

Se

pt

Oct

No

v

De

c

2001 2002 2003

(Tonnes pw)

Source: ALIC

+5.4%/2002

-12.4%/2001

Stronger recovery expected in 2004, +2.5% (providing weather is better)

GIRA Meat Club 2003

Retail Prices have been very High this Year

Imported Beef Loin Retail Prices (Tokyo Market)

2001, 2002, 2003

300

310

320

330

340

350

360

370

380

390

400

Ja

Feb

Mar

Apr

May

Jun

e

July

Aug

Sep

t

Oct

No

v

De

c

2001 2002 2003

(jpy/100g)

Source: ALIC

Domestic Beef Loin Retail Prices (Tokyo Market)

2001, 2002, 2003

700

720

740

760

780

800

820

840

860

880

900

Ja

Fe

b

Mar

Ap

r

Ma

y

Jun

e

July

Au

g

Se

pt

Oct

No

v

De

c

2001 2002 2003

(jpy/100g)

Source: ALIC

+7%

+2%

GIRA Meat Club 2003

Imported Products still more Affected than Domestic

Japan Monthly Marketing Quantities per Origin 2001, 2002, 2003

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00Ja

Ma

r

Ma

y

July

Se

pt

No

v

Ja

Ma

r

Ma

y

July

Se

pt

No

v

Ja

Ma

r

Ma

y

July

Domestic Imported

('000 tpw)

Source: ALIC

2001 2002 2003

+9% -10%

-2% / 2001

-31% +18%

-19% / 2001

GIRA Meat Club 2003

Recovery in Imports in 2003 (+20%)

Decrease in imports in 2002 as more promotions on domestic beef

Japan Monthly Beef Stock Levels 2001, 2002, 2003

70

80

90

100

110

120

130

140

Janu

ary

Feb

ruar

y

Mar

ch

Apr

il

May

June

July

Aug

Sep

t

Oct

Nov

Dec

2001 2002 2003

(t boneless)

Source: ALIC

Japan Monthly Beef Imports 2001, 2002, 2003

10000

20000

30000

40000

50000

60000

70000

80000

Ja

Fe

b

Ma

rch

Ap

r

Ma

y

Jun

e

July

Au

g

Se

pt

Oct

No

v

De

c

2001 2002 2003

(t boneless)

Source: ALIC

+23%

This year, the low stock levels make it necessary to import more, despite very high imported prices

Given the tight situation in Australia and the US, trade has been relatively slow during the end of the year (very high prices)

2004: high international prices are likely to slow the growth in imports (+3%)

GIRA Meat Club 2003

• Australia dominates the chilled sector (55%)

• The US dominates the frozen sector (48%)

• Australia has suffered from a strengthening of the Australian dollar and its tight supplies

• However, given soaring US prices, some users of US beef have shifted to lower quality Australian beef

• Similar situation expected for 2004

Tight Supplies in 2003 and 2004

Japan Beef Suppliers, 2001-2003*

46.148.0

2.4 3.4

46.5 47.3

2.13.9

45.8

48.9

3.22.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

USA Australia New Zealand Canada

2001

2002

2003*

(%)

* January-August

GIRA Meat Club 2003

Herd Contraction Stopped in S. Korea

Korea Cow Slaughtering, 2002-2003

0

5 000

10 000

15 000

20 000

25 000

30 000

Ja

Ma

rch

Ma

y

July

Se

pt

No

v

Ja

Ma

rch

Ma

y

July

Hanwoo female Dairy cattle female

Source: MAFF

(head/month)

-23%

-3%

KR Monthly Wholesale Prices2001, 2002, 2003

5000

6000

7000

8000

9000

10000

11000

12000

13000

Ja

Fe

b

Ma

rch

Ap

ril

Ma

y

Jun

e

July

Au

g

Se

pt

2001 2002 2003

(Won/kg)

Source: NACF

+4%

GIRA Meat Club 2003

KR Imports Suffered from High Prices in 2003

• Surge in imports in 2002 (full liberalisation): +78% ! • Early 2003: rise in imports again (high domestic prices,

appreciation of the won)• Starting in July higher import prices and slow down in

consumption (economic downturn)• Rise in inventories• But still interest for imported products, cheaper than

domestic• Strong rise in chilled imports (no restrictions any more)• 2.3% increase expected in 2003• 2004 should increase by 5% (economic recovery and

slight decrease in import prices along with Canada re-entry)

GIRA Meat Club 2003

Australian Continuous Loss of Shares

• US share keeps on growing (66% of imports in 2003)

• High prices and inadequate supplies of Australia

• Short ribs are the favourite product in S. Korea

• 2004 should see a stronger competition between high priced US beef and lower priced Australian beef

Imports of US beef by cut, 2002

short rib64%

Brisket6%

Chuck roll22%

Striploin6%

shin & shank1%

blade1%

Source: MAFFImports of Australia beef by cut, 2002

Short rib16%

Other16%

topside9%

Brisket9%

Blade13%

Rump4%

Chuck roll14%

Striploin7%

Shin&shank10%

Tenderloin2%

Source: MAFF

GIRA Meat Club 2003

Indian Buffalo Meat mostly destined to Muslim Countries

• The rise in exports have led to a rise in buffalo culling in 2003

• Exports of buffalo meat are forecast to grow to cater to the increasing demand from traditional and emerging markets in both 2003 and 2004 (Indian products are particularly cheap), +12% annually

• India exporters expect to send:– 30 to 50 000 tonnes to Saudi Arabia (once lifted the

ban)– Jordan, Kuwait and Lebanon have become a major

re-exporter of buffalo mat to Iraq– Egypt should re-open its market to Indian products

GIRA Meat Club 2003

Continuous Rise in Chinese Production

• China production is mostly made up of small holders with 2 to 3 cows

• China cattle industry is still faced with problems (genetics, expensive feed, unconsistent quality, lack of comprehensive veterinary system, under-developped abattoirs)

• However the government is keen on reducing imports and encourage exports, hence a new strategic plan

• In the mean-time there is:– Growth in overall beef demand (rising incomes)– A true beef industry quickly emerging (growing and fattening

operations)– Increase of large companies engaged in production and marketing,

with sales network– Growing demand for innovations– Rapidly growing food-service

GIRA Meat Club 2003

Chinese Beef Imports have been increasing Regularly

• Imports this year was negatively impacted by SARS and higher imported prices, hence a small increase overall (+1.8%)

• Lower tariffs will benefit imports in 2004 (from 45% in 2001 to 12% in 2004)

• But higher imported prices again might slow imports down (+2.2% overall)

• USA and Australia are the major China suppliers

• They have met the strong competition of Brazil in both 2003 and 2004

• Higher food safety than wet markets favours the rise in imports

• However these account for only 1% of consumption (75 000 tonnes including what comes through Hong Kong)

• But are expected to double by 2010