China Food and Meat Industry
April 2014
Table of Contents
1
Overview of China Food and Meat Industry
2
Outlook of China Food and Meat Industry
3
About COFCO
2
1
China’s Fast Economic Growth and Urbanization since 1978
GDP growth rate（%）
proportion of urban population（%）
16
60
14
51,3
14,2
12
48,3
50
13,5
45,9
43,0
12,7
40,5
11,7
10
11,3
10,9
10,4
10 10,1
9,6
9,1
8
9,2
50,0
47,0
44,3
41,8
39,1
9,2
29,036,2
8,4 8,3
7,8
37,7
40
30
23,7
6
20
17,9
4
26,4
19,4
3,8
10
2
0
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1995
1990
1985
1980
1978
0
Source: National Bureau of Statistics of China
3
The Change of Consumption Structure
The change of average food consumption during 2001-2011
150%
Animal protein, plant oil
125%
and sugar
100%
Staple foods
Rice and flour
-3%
-6%
rice
flour
25%
meat
plantoil
sugar
dairyproduct
Source: Total consumption data from USDA, population data from NBSC; starch sugar consumption data from China Fermentation Industry
Association-starch sugar branch
Note: Dairy product is already converted to raw milk; sugar includes table sugar made from sugarcane & sugarbeet, and starch sugar made from
4
corn
2
The Growth of Soybean and Corn Consumption
The change of soybean and corn consumption during 2001-2011 (10k t)
18000
20000
15000
12024
CAGR=4.1%
10000
6595
5000
2670
CAGR=9.5%
2001
2002
2003
2004
2005
2006
soybean
2007
2008
2009
2010
2011
corn
5
Source: USDA
A Relatively High Self-sufficiency Rate of Grain Rations
Wheat self-sufficiency rate
Corn self-sufficiency rate
120%
120%
104,2%
Source: USDA
2011
2010
2009
2008
2007
2006
2005
2004
98,5%
2003
2011
2010
2009
2008
2007
2006
0%
2005
0%
2004
0%
2003
20%
2002
20%
2001
20%
2011
40%
2010
40%
2009
40%
2008
60%
2007
60%
2006
60%
2005
80%
2004
80%
2003
80%
2002
100%
2001
100%
2002
101,5%
100%
2001
Rice self-sufficiency rate
120%
6
3
Import of Oils & Oilseeds, and Net Import of Corn
palm oil import(k t)
4000
60000
54797
52640
6952
7000
6304
6174
6000
-
50000
5623
5095
5082
40000
3325
3000
-12000
-14000
10000
1000
-8607
-10000
13574
11315
1503
-4879
-8000
20741
20230
20000
2221
-3005
-6000
28270
26590
30000
-2316
-4000
30821
3857
-203-46
-2000
37436
4330
4000
1617
1445
2000
42552
5000
-16000
2011
2010
2009
2008
2007
2006
2003
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
-16389
2005
-18000
-
2004
-
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2000
corn net import(k t)
soybean import(k t)
8000
Source: China Customs
7
The Trend of Meat Production and Consumption
pork production and consumption(10k t)
poultry production and consumption(10k t)
6000
1500
5000
4000
1000
3000
production
2000
consumption
production
consumption
500
1000
0
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
The CAGR of China pork production maintains at 2%, and consumption at 3%, a
little higher than production.
Over the past 10 years, poultry production and consumption both grow at 3%
mutton production (10k t)
beef production and consumption(10k t)
500
620
450
600
400
580
560
production
350
consumption
300
540
250
520
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Domestic beef production began falling since 2008.In 2013, beef production fell by
8% to 5,640,000 tons, while consumption went up by 7%.
Source: USDA, National Bureau of Statistics of China
200
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Domestic mutton production began falling since 2007.In 2012, mutton
production fell by 14% to 4.01 million tons, compared to 2006.
8
4
Global Meat Production Cost
5,00
4,80
6,20
3,40
2,45
1,77
1,23
1,22
2,99
1,03
1,27
Germany
Russia
America
China
3,00
dollar/kg(weight of carcass) 1,84
0,99
3,30
Poultry production cost
Pork production cost
Brazil
Australia
Beef production cost
9
The Countries and Categories of Meat of China Import
Meat
Countries allowed to import from
Categories allowed to import
Pork
America, Denmark, Germany, Canada, etc
America, Denmark: All categories of pork
Germany: Pork, not including stomachs or intestines.
Canada: Pork, including viscera
Poultry
America, Brazil, Argentina, Chile, etc
America: All categories of poultry
Brazil, Argentina, Chile: Poultry, not including digestive organs such as
stomachs and intestines.
Beef
Australia, Uruguay, New Zealand, Canada,
etc
Australia, New Zealand: Beef including viscera, but not including heads,
hooves, lungs, stomachs or intestines
Uruguay: Beef, not including digestive organs such as stomachs and
intestines.
Canada: Beef produced after Feb 1st and younger than 30-month old,
without bones.
Mutton
New Zealand, Australia, Uruguay
New Zealand, Australia: Mutton, including viscera, but not including
heads, hooves, lungs, stomachs or intestines
Uruguay: Mutton, not including digestive organs such as stomachs and
intestines.
10
5
The Trend of China Pork Import
(10k t)
Pork import by item
150
100
frozen
pork
offal
57,4%
50
0
frozen
bone-in or
boneless
shoulder
and leg
10,1%
other
frozen
pork
44,39
31,7%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Ireland
2,1%
Since 2004, the CAGR of China Pork import has been as high as
19%.In 2013, domestic supply of pork went up, resulting in the fall
of pork price and a smaller rise of pork import, which is basically
the same as 2012.
Pork import by country Britain
Chile
2,5% 2,7%
America
26,1%
Denmark
16,7%
France
6,0%
Poland
5,3%
Spain
9,0%
Canada
Germany 11,8%
16,2%
Source: China Customs
11
The Trend of China Mutton Import
frozen
Mutton import by item
lamb
carcass
and half
frozen
carcass
2,1%sheep
carcass
and half
carcass
frozen
3,0%
bone-in
frozen
sheep
boneless
87,7%
sheep
5,5%
(10k t)
30
25
20
15
10
5
goat meat
1,7%
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Mutton import by country
Since 2011, China mutton import has been going up rapidly. In 2013, China imported 260
thousand tons of mutton, 108.7% higher than 2012.
New
Zealand
53,21%
Source: China Customs
Australia
43,19%
Uruguay
3,60%
12
6
The Trend of China Poultry Import
frozen
chicken
nuggets
with bones
8,7%
(10k t)
80
Poultry import by item
frozen
turkey
nuggets
and chops
7,4%
60
other
frozen
chicken
chops
frozen
11,5% chicken
wings
without tips
20,8%
40
20
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Before 2009,China poultry import was going up significantly year by year.
Since 2010, main-port import declined sharply due to the anti-dumping
policy against America. Still, a huge number of American chicken toes was
smuggled into China. With the heavy blow on smuggling in recent years,
some American products have been turning to legal channel, pushing up
poultry import by 12% in 2013.
frozen
chicken's
feet
50,7%
Chile Poultry import by country
2,17%
Argentina
4,05%
Brazil
32,93%
America
59,47%
Source: China Customs
13
The Trend of China Beef Import
Beef import by item
(10k t)
frozen beef
offal
6,4%
40
fresh or chilled
boneless beef
2,7%
30
20
frozen bone-in
beef
18,4%
10
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
frozen
boneless beef
71,5%
2013
In recent years, China beef import is growing fast, with CAGR as high as
31%.In 2013, there was a severe shortage of cattle, resulting in a 345% rise
in import.
Beef import by country
Canada
7,72%
New Zealand
11,82%
Uruguay
25,36%
Source: China Customs
Argentina
2,96%
Australia
52,11%
14
7
The Global Meat Flow：a global export at 26.35 million
tons in 2012
15
Table of Contents
1
Overview of China’s Food and Meat Industry
2
Outlook of China’s Food and Meat Industry
3
About COFCO
16
8
China’s Consumption Growth Rate
40,0%
30,0%
20,0%
10,0%
0,0%
2002
-10,0%
2004
2006
2008
2010
-20,0%
pork,beefandpoultry
liquidmilk
edibleoil
sugar
Source: USDA
17
Consumption Trend of Taiwan, Japan and Korea
 Taiwan, Japan and Korea, with similar consumption habits, have the following
characteristics:
– GDP per capita of PPP $15,000 is a milestone.
– When GDP per capita reaches PPP $15,000 to $20,000, consumption tends towards stable or slow
growth. With the change of population structure, consumption per person may drop due to aging
and low birthrate.
18
9
The Consumption Growth Path of Taiwan
 After year 2000， when Taiwan GDP per capita reached PPP $15,000, the rice and flour
consumption remained at around 90kg, meat at 80kg, aquatic products at 30kg, eggs at 20kg, oil
at 25kg; and sugar at 25kg (since middle and late 1970s).
160
90
140
80
35
meat
30
sugar and
honey
70
120
25
60
100
total
oil
20
50
eggs
80
aquatic
products
40
60
rice
40
flour
20
30
10
20
5
10
0
0
0
10000
20000
30000
15
0
0
40000
10000
20000
30000
40000
0
10000
20000
30000
40000
Note: The horizontal axis shows GDP per capita, PPP, and the vertical axis shows annual per capita consumption in kg
19
Source: Taiwan COA, OECD, research department of COFCO
The Consumption Path of Japan
 In the early 1990s, (Nominal GDP between $25000～$35000, GDP per capita, PPP between $
15000～$20000) Japan consumption became stability, with rice and flour consumption at around
100kg, meat at 40kg, milk at 90kg and oil at 20kg.
200
100
80
180
90
70
160
milk
80
60
aquatic
products
140
total
120
50
70
60
meat
100
50
40
80
rice
60
flour
40
30
eggs
oil
30
20
40
20
10
20
0
10
0
0
10000 20000 30000 40000 50000
0
0
10000 20000 30000 40000 50000
0
10000 20000 30000 40000 50000
Note: The horizontal axis shows GDP per capita, PPP, and the vertical axis shows annual per capita consumption in kg
20
Source: MAFF, World Bank, OECD, research department of COFCO
10
The Consumption Path of Korea
 Korea consumption became stability since 2000 (GDP per capita at PPP $20000) with rice and
flour consumption at around 140kg, meat at 50kg, oil at 15kg.
200
60
total
180
80
70
50
160
milk
60
140
total
40
50
120
pork
rice
100
30
40
80
poultry
30
20
60
beef
flour
40
oil
20
10
10
20
0
0
0
10000
20000
30000
0
0
10000
20000
30000
0
10000
20000
Note: The horizontal axis shows GDP per capita, PPP, and the vertical axis shows annual per capita consumption in kg
30000
21
Source: USDA, World Bank, OECD, research department of COFCO
China GDP per Capita Will Approach PPP $15,000 in 2020
16 000
15 000 14 000
12 000
10 000 10 000
8 000
6 000
5 000 4 000
2 000
2007
Source: OECD and the research department of COFCO
2015E
2020E
22
11
China Food Consumption with Relative High Growth in Next
10 Years
 If the experience of Taiwan, Japan and Korea applies to China, the next 10 years will be the last
gold decade for China consumption growth.
 Compared with last 10 years, the next decade ending in 2020 will show a weaker consumption
growth.
 After 2020, China food consumption will tend towards stability or enter a stage of slow growth.
23
China’s Consumption of Animal protein, Oil and Sugar in Next
10 Years
China food consumption expectation
Item
Average consumption in 2020
（kg/person•year）
Total consumption in 2020 （10k
Compared with 2010
t）
rice
90
18,150(rice)
-5%
flour
49
9,200(wheat)
-5%
meat
76
10,700
35%
edible oil
23.4
3,300
35%
sugar(including
starch sugar)
22.9
3230
52%
60
8,500
116%
milk
24
12
Meat Demand Forecast
Pork demand forecast(kg/person)
Chicken demand forecast (kg/person)
36
14,0
34
13,0
32
12,0
30
28
2014
2015
2016
2017
2018
2019
2020
2021
11,0
2022
2014
In the next 9 years, CAGR of China pork demand is
estimated to be 1.3%
2015
2016
2017
2018
2019
2020
2021
2022
In the next 9 years, CAGR of China chicken demand
is estimated to be 1.7%
Beef demand forecast(kg/person)
Mutton demand forecast(kg/person)
4,0
3
3,8
2
3,6
1
3,4
0
3,2
2014
2015
2016
2017
2018
2019
2020
2021
2014 2015 2016 2017 2018 2019 2020 2021 2022
2022
In the next 9 years, CAGR of China beef demand is
estimated to be 1.4%
In the next 9 years, CAGR of China pork demand is
expected to stay the same.
Source: FAO-OECD
25
Continuous Decrease of Agricultural acreage in China
 middle or low-yield lands take up 2/3，severely restraining area yield improvement.
20,0
19,5
19,45
19,38
19,24
100
million
mu
19,14
18,89
19,0
18,51
18,5
18,37
18,31
18,27
18,26
18,26
18,18
18,05
18,0
17,5
17,0
1998
1999
2000
2001
Source: Ministry of Land and Resources
2002
2003
2004
2005
2006
2007
2008
2010E
2020E
26
13
Lack of Water Resources Problems.
Per capita water
resource
China per capita water resource is 2200m³， 1/4 of world
average per capita water resource.
Seasonally unevenly
distributed
Annual precipitation mainly happens between June and
September, therefore, the shortage of water is severe during
spring ploughing and autumn/winter planting.
Regionally unevenly
distributed
The farmlands north of the Huaihe River take up 2/3of the
country，with water resources less than 1/5 of the country.
Misuse
Waste; over-extraction of underground water ; pollution…
27
Relatively Stable Yield of Corn and Soybean in the Past 10
Years
Area yield of corn(ton/ hectare )
6
5
5,27
4,70
4,92 4,81
5,12
5,29 5,33 5,17
5,56
5,26
5,45
Area yield of soybean(ton/
2
1,89
1,63
hectare )
1,81
1,65
1,70
1,62
1,70
1,53
1,77
1,63
4
3
1
2
1
2001年
2002年
2003年
2004年
2005年
2006年
2007年
2008年
2009年
2010年
0
1998年
2001年
2002年
2003年
2004年
2005年
2006年
2007年
2008年
2009年
2010年
0
Source: Ministry of Agriculture
28
14
In 2025, Supply and Demand Gap will Reach 20% of Total
Consumption
 Basically, rice and wheat can achieve balance of supply and demand; for others, demand gap remains a
problem.
 Overall, the demand gap of grain, oil plant, sugar and raw milk will reach 170 million tons, about 20% of their
total consumption.
Demand gap forecast of China main agricultural products in 2025 (10k t)
8 500
4 400
3 200
600
corn
soybean
rapeseed
600
sugar
raw milk
Source: Strategy Department, COFCO
29
Table of Contents
1
Overview of China’s Food and Meat Industry
2
Outlook of China’s Food and Meat Industry
3
About COFCO
30
15
About COFCO: Basic Facts
Over
60 years history
Founded in 1949
For
20 years
the only Chinese food &
edible oil company in
Fortune Global 500;
COFCO Corporation was founded in 1949. With decades of efforts, it
has successfully transformed from simply an exporter, importer,
international trading enterprise into China's the largest
comprehensive conglomerate of agri-commodity trading, logistics,
processing, production and distribution of food and edible oil in China
With strong operating performance, COFCO continues to be a
Fortune Global 500 company and the top player in China Food
Industry
A-/A3
Rating from three
international rating
agencies
A
A-level by SASAC
from 2007 to 2012
It is one of the 53 pillar enterprises under direct administration of
the State Council
31
Rural Financial
Service
Agricultural Products Processing &
Breeding/Slaughtering
Branded
Consumables
Primary
Processing
Further
Processing
Feed
Processing
Breeding/
Slaughtering
Farm

Food Marketing
Trade
Planting
Storage &
Logistic
Agricultural Service &
Grain Circulation
Food Manufacturing
Strategic Vision: Fully Integrated Value Chain
Table
A market-oriented fully-integrated player, covering from farm to dining table

From agricultural raw materials to end products, including planting, purchasing and storage, logistics, trading,
processing, slaughtering, food manufacturing and marketing etc

To achieve overall competitiveness through systematic management of fully-integrated value chain, effective
control over the key segments and maximize synergies among value chains

To establish overall competitive advantages through offering safe, nutritious and health food products and
developing a comprehensive and sustainable business model
32
16
About COFCO: Business Structure
Board of Directors
8/13
Admin; Strategy; Finance; HR;
Audit & Discipline; Legal Service; Corporate Culture;
Quality & Safety; Nutrition & Health R&D
8 listed companies/
13 businesses
Agri-Trading, Processing & Logistics
400operating points
Covering 31 provinces
C
O
F
C
O
China
Grain&
Logistics
COFCO
AgriTrading&
Logistics
China AgriIndustries
Holdings
606.HK
（Agri- product）
COFCO
Tunhe
600737.SH
CPMC
Holdings
906.HK
（Tomato & Sugar
（Food Packaging）
Trade）
Engineeri
ng &
Technolo
gy
Branded Food
China Foods
506.HK
Mengniu Dairy
2319.HK
China
Tuhsu
(Food & Beverage)
(Dairy Products)
(Tea & Timber
Trade)
Over 120,000
employees
COFCO
Meat
Womai.
com
(E-commerce)
COFCO Real Estate
Financial Services
33
After 60 Years of Development, COFCO is Now Acting
as the Main Channel for International Trade in China
Total export-import
Over $
200 billion
Since its foundation, COFCO has set up trade channels all over the globe to
manage import and export business of agricultural products and foodstuff, such as
cereal, oil and sugar.
Total cereal, oil and
sugar import
Over
470million tons
Effectively acting as the main channel for international trade of cereal, oil and
sugar, ensuring domestic supply of cereal and oil, and defending national foodstuff
safety.
Total cereal export
Over
230 million tons
A leading role in trading of staple food like rice, wheat and corn; Top trader of
sugar, soybean and palm oil.
Cereal, oil and sugar
import in 2012
18million tons
34
17
The Leader in China’s Cereals, Oils and Foodstuffs
Market
Cereal
distribution
capacity
Cereal transfer
capacity
Total warehouse capacity over
17 million tons, domestic
grain trade at 25 million tons per year
13 docks owned, with a capacity of 31 million tons
Process capacity of over 60 million tons
Process
capacity of
agricultural
products
oils & oilseeds of 20.84 million tons, corn 6.25million tons, rice
3.98million tons, wheat 3.75million tons, feed 3.71million tons,
barley 1.03million tons, sugar crop 7.80 million tons.
over
Channel and
brand
2.3 million sales outlets selling19.8 million tons of
cereals, oils and foodstuff，with “Fortune” branded packaged
oil and rice taking up a market share of 15% .
35
Thank you!
36
18