After a 14-year embargo, the Chinese market is finally open to American beef, and Montana ranchers have an immense opportunity. However, they need to play their cards, or we should say mah jong tiles, just right.
The road to American business success in China is littered with road kill. Poor planning, unreal expectations due to the incredible size of the China market, lack of patience and good partners, and having no strategy are some of the reasons for failure. Fortunately, Montana ranchers are starting with a clean slate.
Itís easy to be overwhelmed by the numbers. A lot has happened since American beef was last exported to China. In just the last five years, beef demand has grown rapidly due to more wealth and an increased value placed on a better, healthier, and more diverse diet. Per capita beef consumption has increased to 5.77 kilos per person from 4.9 kilos; total consumption of beef has increased to 7.5 million tons from 5.6 million; and perhaps most interesting is imports.
In 2003, the last year China imported U.S. beef, total beef imports to feed Chinese consumers was worth $15 million ($10 million of which came from the USA). Last year, China had to import $2.5 billion in beef just to meet existing demand. Due to limited land available for grass farming (i.e., pastures) and the growing desertification of large swathes of Western China, Chinese ranchers will likely never be able to feed their own people.
So whatís this mean for Montana producers?
Without a doubt, the big commodity beef players are ready to go with multi, multi-million dollar campaigns. Perhaps a handful of Montana calves will eventually make their way to a Chinese dinner plate, but the financial gain for Montana ranchers will be minimal. Thatís how commodity markets work.
The real opportunity for Montana is two-fold. First, cow/calf ranchers can set aside some calves and raise them for the Chinese consumer into clean, healthy, and naturally raised beef that is an option to commodity beef. There will be buyers. Second, we can tell the Montana story behind our beef. Itís a story that the commodity beef industry, and really the rest of America, can never tell. They just donít have what we have.
If you were to survey Chinese households about their priorities, the environment would be No. 1, followed by the education of their children, and then food safety. The Chinese consumer increasingly wants to know where their food comes from. More and more have the money to back up this demand. A healthy, naturally raised beef product from Montana will be a welcome addition for beef consumers in the worldís largest market.
A driver of this demand is going to be the imagery that we can associate with our beef. We can tell the Montana story through our beef. We have the backdrops to our pastures, as well as the ranchers, that no other state can replicate. The commodity industryís marketing millions canít re-create the Montana environment. Letís figure out a way to best tell our story so we can truly benefit from this new opportunity to sell our own beef to the largest consumer market in the world. This is our chance and the time to start is now.
Sam Korsmoe is a Montana native and entrepreneur who lives two-thirds of the year in Shanghai and one-third in Ennis, Montana. He is building bridges between Montana and the rest of the world through education, sports, and, beginning in 2017, Montana beef. Contact him by email at firstname.lastname@example.org