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How Brazil benefited from China’s growing appetite for meat, and why Africa can too

Africa can benefit from expected rising Chinese demand for agricultural commodities, much in the same way that Brazil did.

China's growing appetite for meat products means the country has a high demand for soya beans, which is used as animal feed.

China's growing appetite for meat products means the country has a high demand for soya beans, which is used as animal feed.

Until the early 1970s, Brazil’s agricultural sector was uncompetitive with low yields. The Brazilian government then started to introduce various interventions to revive the sector. A new report by Renaissance Capital, titled African Agriculture: This other Eden, however, points out that although these reforms had a dramatic impact, rising Chinese demand for soya beans also played an important role in changing the fortunes of Brazilian farmers.

China’s meat consumption has increased significantly over the past decades. In 2001, the average Chinese consumed around 43 kg of meat every year, of which almost 75% was pork. Over the following ten years, annual per capita consumption rose to approximately 54 kg, a 22% increase. More meat consumption has led to a rising demand for soya beans – a popular source of feed for livestock.

China, however, cannot supply its own need for soya beans. In 2001, the country produced 15.4 million tonnes of soya beans. This year, the US Department for Agriculture expects production to be about 14 million tonnes. Although Chinese soya bean production has decreased, domestic consumption has skyrocketed from 28.3 million tonnes in 2001 to 71.6 million tonnes in 2011. This higher demand has been met through imports.

Brazil was, and continues to be, a major beneficiary of China’s increased demand for soya beans. “Most of this increase in imports of about 46 million tonnes has been met by Argentina, Brazil and the US, which have increased their exports in the same period by about 36 million tonnes. Specifically, Brazilian exports during this period rose nearly 22 million tonnes, thanks mostly to the [country’s agricultural] transformation,” notes the report.

As China’s economy continues to grow, meat consumption is expected to increase together with the demand for livestock feed. “Consider that the average Taiwanese in 2001 consumed around 75 kg of meat annually. In the past decade, the Taiwanese diet has witnessed a 4% decline in overall meat consumption, but the per capita consumption is still almost 71 kg – over 31% more than the corresponding figure for the average Chinese. If China‘s per capita meat consumption equalises with Taiwan, it will require approximately 91 million tonnes of additional grains [to be used as livestock feed].”

How Africa can benefit

In addition to soya beans, China’s ability to be self-sufficient in the production of other crops is also likely to be reversed in a dramatic fashion over the next few years. Renaissance says that the same situation as what happened with soya beans could play itself out in other grains, such as maize, wheat and rice. The past two years has seen a minimal increase in the harvested area for wheat and rice, while yields for all three grains have also only seen a marginal improvement. Rising urbanisation is putting increasing pressure on farmland.

It is not only China that will import more grains. “Similar dietary changes are underway in a number of other emerging economies. As demand rises, internal constraints in a number of geographies are becoming apparent.”

Renaissance says this is a good opportunity for Africa, which has significant farming potential, to increase its exports of agricultural commodities. “Similar to how [Brazil] benefited from China‘s growing appetite for soya beans, we believe Africa could benefit from increased global demand for maize, palm oil and other crops.”

“China – and the world in general – does not just need Africa to satisfy its grain and oilseed demands; it also needs Africa to provide it with broader food security. Hence, Africa – a continent plagued by well-entrenched media images of famine, poverty and relentless food shortages – is required to give the world food security.”

However, Brazil didn’t become the agricultural power that it is today just because of Chinese demand for soya beans. Far reaching reforms by the Brazilian government played a significant role in boosting farming. Likewise, Africa cannot expect its agricultural sector to thrive just because of greater demand from China; governments on the continent will also need to put in place policies to ensure that farmers have the capacity to meet this expected future demand.

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