Commodities

David Fickling is a Bloomberg Gadfly columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.

Elaine He oversees Bloomberg Gadfly's data visualization work in Europe and also pursues her own columns combining business and markets coverage. Before joining Bloomberg, she was a graphics editor at the Wall Street Journal and the New York Times.

The task of feeding China's 1.4 billion people is transforming the global food industry.

In the effort to keep up with rising demand, domestic farms have been saturated with fertilizers and pesticides, while Chinese companies have bought arable land on every inhabited continent. In tandem with a Bloomberg News series on the world's second green revolution, Gadfly takes a look at how China's changing diet is reshaping global trade in unexpected ways.

1. Competitive Eating

When China joined the World Trade Organization in 2001, the value of its meat imports was just 15 percent of those in the U.S. Last year, China's meat imports overtook those destined for America. 

Appetite Whetted
The value of China's meat imports overtook the U.S. last year
Source: International Trade Centre

That's been driven by surging demand for beef, pork and offal:

2. What's the Beef?

Judging by the prices people are prepared to pay, Chinese tastes are growing more Westernized. Beef -- once so rare that one 18th-century recipe book grouped it with exotica like palm civet and water deer -- has risen in cost by about 40 percent over the past five years.

Load of Carp
At least judging by the prices people pay, China's food appetites are getting more westernized
Source: National Bureau of Statistics of China, Bloomberg, Gadfly calculations
Note: Rebased. May 2012=0.

While pork, a more classic Chinese staple, has also gained, traditional foods like duck and carp have been weaker -- prices for the latter even fell over the period.

That might in part be to do with land constraints limiting supply. Farming cattle requires large tracts of country, whereas pigs, poultry and fish can be raised at much higher densities. Between 2008 and 2013, China's indigenous production of pigs, poultry and freshwater fish rose between 17 percent and 22 percent, according to the Food and Agriculture Organization. Beef was up just 9 percent.

3. How Offal

Chinese tastes aren't coinciding with the rest of the world in every aspect. Offal amounts to just 3.6 percent of U.S. meat imports, according to the International Trade Centre, but it's about a quarter of the total in China.

Organ of the State
China imports more offal than beef or poultry
Source: International Trade Centre
Note: "Offal" includes ungulate offal but not that of other species such as poultry or rabbits.

The U.S. and Germany are particularly big suppliers: About 70 percent of the value of U.S. meat imports into China, and 35 percent of the value of German imports, consist of the offal of ungulate mammals such as cattle, pigs, sheep and goats.

4. Mystery Meat

If you believe the numbers, Hong Kong is one of the most meat-crazed societies on earth. Beef consumption in 2016 came in at 53.2 kilograms per head -- roughly the equivalent of eating two Big Macs a day, 365 days a year.

Something in the Milk Ain't Clean
Hong Kong seems to consume a weirdly large amount of meat. Smuggling probably explains it
Source: Bloomberg Intelligence

The craze appears to have arrived and vanished with the ferocity of a zombie apocalypse. From 2009 to 2014, Hong Kongers' beef consumption jumped fourfold to as much as 92 kilograms a head, before slumping 42 percent over the past two years.

Such numbers don't only put the territory ahead of other ethnic-Chinese societies in the region, such as Taiwan, Singapore and China -- they even handily outstrip Australia, a country built in part on ranching.

The Hunger
Hong Kongers' apparent consumption of beef and veal has soared over the past five years
Source: Bloomberg Intelligence

A better explanation for this strange behavior, rather than genuine consumption by Hong Kongers, is smuggling across the border. A gray market large enough to distort data for Hong Kong (population: 7.3 million) would barely make a ripple among China's 1.4 billion-strong population.

One reason to risk the wrath of customs officials would be to circumvent the domestic shortages that have driven Chinese beef prices so high. There's also the daigou issue: Mainland Chinese consumers tend to prefer imported foreign goods because of their perceived higher quality. Hong Kongers' consumption of packaged baby food comes to a suspiciously high $396 a head, versus $28.20 in Singapore and $21.50 in the U.S.

5. Sweet Tooth

China imposes harsh restrictions on sugar imports to protect the domestic industry, with the nation's Ministry of Commerce on Monday levying an additional 45 percent duty on top of an existing 50 percent tariff.

Bitter Sweet
Prices of sugar on Chinese commodity markets are well above their global equivalents
Source: Bloomberg, Gadfly calculations

That helps explain prices on domestic commodity markets that run well ahead of those on global markets, but it's not been enough to stop a growing appetite for sweet stuff.

Sugar High
Australians eat four times more sugar than the Chinese and Indians eat twice as much, but China has seen the fastest growth in per capita sugar consumption
Source: Bloomberg Intelligence

While sugar consumption in China was 12.7 kilograms per head in 2016, according to Bloomberg Intelligence, compared to 21.5 kilograms in India and 52 kilograms in Australia, it's grown by far the fastest of the three countries.

Read the Bloomberg News series:

Farming the World: China's Epic Race to Avoid a Food Crisis
China Spins a Global Food Web From Mozambique to Missouri

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. The annual spikes on the chart coincide with Lunar New Year, when prices tend to rise along with celebratory consumption.

To contact the authors of this story:
David Fickling in Sydney at dfickling@bloomberg.net
Elaine He in London at ehe36@bloomberg.net

To contact the editor responsible for this story:
Katrina Nicholas at knicholas2@bloomberg.net