Cargill this week opened its first animal protein plant in China. With demand for protein soaring in the country, the move looks a sound one from the US agribusiness giant. However, the poultry sector in China can be a challenging place to do business.
As in many other sectors, industry watchers expect China to be a key factor in the growth of the global poultry sector.
Go deeper with GlobalData
Pork is the staple meat of Chinese consumers but changing diets have led to growing interest in poultry.
However, the avian flu outbreak earlier this year hit demand. The outbreak of the HN79 virus is said to have killed 36 people, according to the World Health Organization. Consumers turned away from poultry and switched to other proteins. There were reports in April that poultry sales in eastern China dropped by 80%. Fast-food operator Yum Brands saw its sales fall by more than a third. The outbreak has been estimated to have cost China’s poultry sector CNY40bn.
Nevertheless, there are those who still believe in the potential of China’s poultry industry – and one of those is Cargill, the US agribusiness giant.
See Also:
On Monday (23 September), Cargill opened its new poultry plant in China’s eastern Anhui province. It is Cargill’s first animal protein facility in the country – and the company has spent US$250m on a “fully-integrated project” that covers “each stage of the poultry supply chain”, from breeding to processing.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataChristopher Langholz, president of Cargill’s Chinese animal protein business, tells just-food the “integrated supply chain” of the Anhui project is a “unique strength” it will have over its competitors – and will help it process products safely.
“We have 43 farms and a farm lab, a hatchery, a feedmill plant with a primary processing plant and food safety lab. We will have one further processing plant launched in June 2014,” he says. “Animal disease is a challenge and we have world-class bio-security technology to address that issue.”
Langholz insists the way Cargill has developed the site can help convince customers and consumers of the safety of its poultry products in the wake of scares like the HN79 virus.
“As the government said, they believe that some of the origin of the avian influenza was the wild birds mixing with the small farmer chickens. In our farming systems, the chickens are in houses and protected so that they don’t have to come into contact with wild birds,” he explains.
The plant in Anhui will supply domestic and multinational quick service restaurants and food manufacturers, the Cargill executive says, although the company has an eye on supplying China’s growing supermarket chains “in the future”.
What is the long-term outlook for poultry demand in China? Despite the safety scares, industry watchers believe the prospects for the sector are robust and Langholz seems to agree.
“Research indicates that 20% of the global growth in poultry will come from China in the next five years – which suggests a mega trend,” he says. “In addition, statistically, when a country’s GDP per capita is between $3,000 and $5,000, it will result in rapid increase in consumption. China’s GDP per capita currently is $3,002, which suggests the country is following this pattern.”
Cargill has faith in the outlook for poultry in China – and in its project, which is now live in what remains a fragmented industry. Market fragmentation can be factor in supply and safety issues – as has been seen in China’s dairy sector – but can also, for some in business, be seen as an opportunity. “Even we are in full capacity, our market share is only 1%,” Langholz says.
