EBLEX study of the sheep industry in

Northern China

Complied by

Jean-Pierre Garner and Chris Lloyd, EBLEX,

Phil Stocker, NSA

Charles Sercombe, NFU

8-13th September 2014

EBLEX study of the Sheep Industry of Northern China

Background

In June 2014 the UK and China Governments signed a Memorandum of Understanding which,

following appropriate checks and negotiations, should allow UK sheep meat into Mainland China.

EBLEX attended two big food exhibitions earlier this summer, SIAL and CAHE and were invited to visit

the key sheep producing area of Inner Mongolia by companies which import lamb and beef into

China. Consequently a study trip to Inner Mongolia and the Heilongjiang region was organised by

EBLEX in early September. The trip was coordinated by Jean-Pierre Garnier EBLEX Export Manager

and Holly Chen (EBLEX representative within the Britain China Business Council), Chris Lloyd, EBLEX

Head of Knowledge Transfer, Phil Stocker CEO of the National Sheep Association, and Charles

Sercombe as NFU Livestock Board Chair. The objective of the trip was firstly to better understand the

Chinese sheep industry and its structure. Secondly to start the long journey of building relationships

with Chinese processors of lamb and beef who might be interested to work with UK companies in

the future and to better understand their supply chains and specifications.

The trip focused on three areas, Hohhot City, the capital of Inner Mongolia in the central northern

part of China, and its surrounding area, including some of the expansive grazing areas of the region.

Secondly Harbin, in the Heilongjiang region of North East China and finally Beijing itself.

Hohhot City, Inner Mongolia

Day 1, Monday the 7th Sept, was ‘Mid-Autumn day’ and a bank holiday in China. The day had been

cloudless and as the full moon rose and dark crept in it made an incredible sight along with a carpet

of fireworks across the city. Firstly to welcome us to the hotel we had ‘mooncakes’ in our rooms –

these are a traditional way of giving gifts to celebrate this time of the year. We ate only some 15

mins walk from the hotel and as we entered we passed a large table outside the restaurant with

large moon cakes and other foods left for the ghosts. Supper was traditional Mongolian fare with

sheep stomach soup, sheep feet, beef ribs, lamb and carrot pasta parcels, salad and cabbage, pork

and beans, sheep meat kebabs. – All very spicy and very good too.

The following morning we met the Inner Mongolian Chamber, an autonomous region of the China

Council for the promotion of international trade. There we were met by Wei Hong the Foreign

Liaison and Law Division Director and a team of officials from the livestock bureau and were given an

overview of sheep production in Inner Mongolia:

The human population of Inner Mongolia is 24 million

Livestock form 50% of the regions total production

There are 80 million hectares of grassland and this accounts for 74% of total land area

Within Inner Mongolia there are 33 ‘counties’ that are totally focused on livestock

production and 21 counties that have mixed farming half livestock and half cropping.

There are 100 million pigs, cattle and sheep plus a small number of camels. These are

looked after by 10,000 livestock herders.

Annual meat production from the region is 2.3 million tonnes, 9 million tonnes of milk, and

100,000 tonnes of wool and cashmere. Virtually all meat produced in Inner Mongolia is

processed in the region – except wool that is less important economically and is processed

outside the region.

Inner Mongolia is number 1 region in China for meat, wool, and milk production and

contributes 1.6 trillion RMB to the China economy. The region produces a third of all Chinas

meat and milk.

50% of farmers have 500 sheep or more (which is unusual for China with small flocks and

subsistence production common place in other regions. There is a mix of Gov’t and industry

investment into developing agricultural production. Concerns and in some areas the reality

of overgrazing has put a limit on livestock numbers so increased output has to come from

genetic and management improvements rather than an increase in livestock numbers.

Productivity is key but this has to be done on the basis that the environment is not affected.

Inner Mongolia’s grasslands are ecologically important and the state oversees stocking

levels. Most grass in permanent pasture but there are new grass varieties and Alfa Alfa

being planted.

The industry is developing markets for cuts as opposed to simply carcasses.

Sheep breeds consist of local indigenous Mongolian sheep but development is being done

with the Dorset, Dorper (both of which lamb out of season) and Suffolk used as crossing sires

on native breeds to increase carcase weight and quality. Merino genetics have also been

used where wool production is important. Most lambs are killed at around 6 – 8 months old

and around 40 – 50kgs liveweight (18 – 20kgs carcass). Many of the indigenous breeds have

fat tails, apparently to prevent infection getting into the animal via the anus.

There are 259 breeding companies in Inner Mongolia developing sheep breeding. Most of

these have close relationships with the processors.

There are 400 companies processing lamb with a turnover of over 500RMB each. These 400

process around 200,000 tonnes beef and 500,000 sheepmeat. There also many smaller local

abattoirs servicing the local community.

6 main companies are killing 200 – 300,000 sheep each per year but normal capacity if

100,000. Many plants are seasonal in operation slaughtering for 3 – 4 months.

Sheep health – It seems China take food safety and livestock health seriously. There is a

national programme of vaccination for Foot and Mouth with neighbouring Outer Mongolia

having outbreaks. The aim is to try to eliminate F&M. Outer Mongolia hasn’t got export

approval into China due to Foot and Mouth disease.

Wool – cashmere is important although has reduced. There used to be 500 companies

processing cashmere wool but this has reduced a lot. For sheep farmers wool is not very

important, most income comes from meat. Cashmere is valued at 300RMB /kgs (Approx.

£30/kg).

Farmers don’t pay a levy/tax to any development agency. Asked whether farmers get

support it seems they get Gov’t assistance for technical advancement at a rate of 800RMB

(£80) per animal. This encourages greater productivity.

We left the Chamber of Commerce and drove for 2 hours north stopping for a traditional lunch on

route of spiced cooked meats, pancakes, and vegetables. This journey showed the massive scale of

Inner Mongolia and China and once we were up in the plains they stretched for as far as the eye

could see and then further – in fact it appeared never ending. We passed through two towns and

both of these (along with Hohhot, Harbin and Beijing) showed the investment that is happening in

housing and road building which we assume is common place across China. One statistic we heard

was that China has used three times more concrete in the last 10 years than the US has since the

end of the Second World War Building projects and new roads on a scale that is almost

unimaginable left you wondering what is driving this investment – there were certainly large scale

energy projects going on (solar and wind) but we were told that much of the economy is driven by

farming and food production – with many other industries supporting it. There is a contrast of the

modern world rapidly taking over the old order. China is undoubtedly a country of contrasts –

apparent poverty and traditionalism at one end and great wealth, investment and western

materialism at the other.

This region of China would have seasons similar to our own, although the summer is often drier and

winter longer and colder. The region had apparently suffered a drought this year which was evident

with little visible herbage and what was there looked dry and brown. The stocking level allowed in

the open grasslands is 1 ewe per 2 hectares which sounds low but is set to preserve the native

grasslands for long term sustainability and to take account of the low average rainfall which is

around 500mm/yr.

Mid-afternoon we arrived at a breeding farm and embryo transfer site owned by Sainuo Sheep Co

Ltd, a privately owned breeding company. They are working with mainly Dorper genetics and some

Suffolk (looking very NZ Suffolk like). We first visited the embryo transfer site where the donor ewes

are kept – there were around 1000 ewes in the nucleus flock. We saw a pen of some 50 rams that

had just been imported from Australia at £2000 each. They have imported 700 rams and 800 ewes

from Australia since 2004. The nucleus flock is used primarily to generate embryo’s to multiply the

imported genetics. They transfer embryos into around 2000 recipients’ ewes each month sponging

and using hormone injections so as to lamb all year round. Each ewe produces around 30 embryos

(5 – 6 per cycle) in a continuous programme of synchronisation, until she is effectively burnt out

after 2 – 3 years. There are a number of associated satellite farms that rear the breeding stock and

we met a number of these farmers dressed in traditional Mongolian clothes. Choosing the donor

ewes is done by the use of pedigree and weight recording via a ‘record book’. The breeding farms

then cascade the Dorper and Suffolk genetics out to farms to cross with native breeds the off spring

of which go into feedlots for finishing.

The site is privately owned and has a relationship with processors where they sell their finished stock

to and through those processors.

Relating to Gov’t subsidies the breeder farms get supported by Gov’t and the farmers buying the

stock get support too.

We then travelled on to a Sainuo finishing feedlot for lambs around an half an hour south back

towards Hohhot. This unit was finishing 3 batches of 10,000 lambs per year. Lambs come from

feeder farms covering a 50km catchment arriving at 3 months at weaning (it seems there is quite a

lot of hormone use to encourage out of season lambing to feed this year round finishing system),

and they stay a further 2 – 3 months to be finished. Diets are ad lib nuts made from app 60%

Lucerne and 30% maize with some soya. Lambs also have hay available seemingly ad lib. This is

imported into the region.

We were told they put on around 300 gms per day and are 60kgs when finished (so heavier than told

in the morning) but they certainly looked relatively heavy. They are worth around £130 - £140 a

head when finished. Lambs are in open feedlots during the summer and fully housed in the winter

due to the cold. Sainuo have another farm the same a few miles away and there are other similar

finishing units, some that are bigger.

On entry to the site lambs are all blood tested (for bacteria, brucellosis possibly?), they are weighed,

wormed and showered (for something that sounded like ringworm??).

It was unclear how many sheep are spring lambed and how many might lamb out of season –

traditionally lambing is March to May, but this is a system where the processors and breeder and

finishers are working closely together in a supply chain which also supports the traditional

commercial sheep farm. Supplying farmers are contracted to supply at 3 months of age at weaning

and contracts are given to provide supply all year round. Contracts pay 1 -2 RMB per kg (10-

20p)over the standard market price to secure supply. Additional lambs are sourced from wherever

they can be found to keep numbers up.

The following morning, Wednesday, we left the hotel and travelled south to meet with the Mongolia

Sheep Company Ltd, an integrated farming, processing and marketing company at one of their 4

new abattoirs in the region. The company has only been established for 3 years and there are 4

plants almost identical to the one we visited. The company also own a breeding farm and 27

commercial farms where they produce 50 -60,000 sheep a year each in 5 – 6 batches of 10,000

lambs. They only kill and process their own lambs and the aim is to produce all these from birth

themselves although they are not achieving this yet. The plant we visited was only established a

year ago and the level of display, product development and interpretation was impressive with a

glass fronted viewing gallery right throughout the plant. Turnover for the plant in its first year was

0.64B RMD and they aim to double the throughput in the second year going from around 1800 -2000

sheep per day to 5000 – the plant capacity. The limiting factor is a shortage of lambs coming

through. The company have 250,000 sheep on their farms ‘in stock’ and kill 50,000 lambs a week, so

a constant supply is imperative to run an efficient operation. This is a Halal plant with no pre-

slaughter stunning. The hygiene was very good and lambs passed through ultraviolet disinfection

and then acidification after skinning to avoid surface contamination and bacteria. Each lamb is then

weighed and pressure washed. Lambs passing through were 17 – 23 kgs in range. No carcass

classification is done although we were told the fat only varies minimally (0.25kgs?).

The Mongolian sheep breed is Inner Mongolia’s No 1 sheep breed, it is a relatively narrow sheep

with a small fat tail. The plant produces up to 120 different products from a sheep carcass – an

impressive range of cuts and other products, mainly further processed, was on display. They sell half

their products frozen, and half chilled and even organic lamb, all Halal certified.

The display area included CCTV camera displays showing what was happening on a range of their

farms and throughout the plant.

We then were escorted to their breeding farm where genetic improvement is being carried out.

They are also investing heavily in genetics imported from Australia, using AI and ET from their

Dorper’s and White Suffolk’s into recipient Mongolian ewes – 5,000 of which were on this farm.

Indigenous Mongolian rams were being used as teasers and to identify ewes on heat. They were

also planning to do some work with Charollais and Border Leicester tups from Australia.

The risks they saw to their plans were minimal – low weights of lambs was one they cited, as were

the genetics of sheep in China. But there is a great and growing demand in China and this brings

many opportunities. The future for sheep in China will be increased production but increased

imports too as China will be limited to the volumes of sheep it can rear on its land. They also said

there was a serious shortage of red meat in Southern China.

Harbin, Heilongjiang.

Our hosts in Harbin were Garand Farms. GF was established in 1982 and is an integrated company

dealing with imports and exports. It calls itself a company sourcing from ‘eco-agriculture’ and

dealing with industry. The key words it uses are; ‘Food certification; Branding; High quality; valued

brand; largest lamb transformation in the world. They process imported and locally sourced beef

and lamb as well as slaughter beef. They have a range of their own shops and are developing within

supermarket counters. They also sell to the trade and catering outlets.

On arrival in Harbin we were hosted at dinner by the daughter of Grand Farms President Jiao Jiao

Chen. We experienced a traditional sharing hotpot that included some of their own lamb in thinly

sliced cuts that each participant continuously fed into the hot pot, eating after about 5 minutes of

cooking. The welcome and hospitality was better than anyone would hope for. The following

morning we visited the Grand Farm site just outside Harbin. We started by seeing their deep freeze

store that was holding products at -20C and had a capacity to hold 10,000T of frozen beef and lamb.

Grand farms have 4 stores in total. They also have a new building on this site that is in the process of

being fitted out as a cutting plant – the line will be able to cut 200 tonnes a day meaning 60,000

tonnes a year. The company is going through massive expansion that will enable a tripling of output.

Beef throughput at Grand Farms is currently 70% sourced from China and 30% from imported

supplies. – They are making moves to increase throughput of Chinese lamb and expect the balance

in the future, with increased capacity, to be 50:50. Grand Farm do not currently slaughter lambs but

they have a new plant being planned in Inner Mongolia that will slaughter, store and process beef

and lamb with a capacity for 3 million lambs and 200,000 cattle a year. However, other sources told

us that the building of the new abattoir was not fully confirmed. This large number of lambs would

also be difficult to source and certainly change supply patterns in the region. All Grand Farm lamb is

Halal but is pre slaughter stunned. The lambs being cut at this plant had semi fat tails and the fat

cover was very white in colour – most lamb we saw was likely to be feedlot and cereal fed.

Grand Farms kill cattle at around 18 months to 3 yrs of age with the carcasses we saw quite small at

around 250 kgs. As cattle enter the slaughter plant they are quarantined for 48 hrs, and blood

tested prior to slaughter. The Chinese seem to put considerable emphasis on food safety and animal

health but the controls overall are inconsistent particularly beyond the initial abattoir and cutting

plant!

Grand Farm has concessions in supermarkets, and claims a string of 100 dedicated outlets in Harbin

alone. As well as being a major economically driven company they also boast of social responsibility

and have invested in road building, child cancer charities, schools and environmental projects. They

provide three meals a day, company transport from Harbin, and accommodation for staff who prefer

to stay at the plant rather than travel. Staff work 6 days a week. They are of the opinion that

integrated connections will make China stronger in the future. 600 staff work in the imported lamb

department and next year it will be 1,200. There are 6 supervisors on the floor checking the quality

of the cutting staff who all work on small square tables separating cuts into different containers. All

cutting staff/butchers are on piece rate. The product we saw being processed looked like low value

cuts such as flaps imported frozen, which was thawed to allow excess fat and bone to be trimmed

and the remaining product then rolled into a tube approx. 75 mm in diameter for the hot pot

market.

Grand farm produce over 100 different products from lamb and it is worth bearing in mind that few

houses in China have an oven for cooking – they cook in other ways which affect the cutting

specifications of lamb, traditionally in barbecues and hot pots. Cuts include rolled flank, boned

rolled shoulder, mince and lamb balls, kebabs etc.

We moved from the plant outside Harbin into the city where we went to visit one of the Grand Farm

shops. This shop had been open for 4 years and the company own a total of 100 shops in Harbin

(Harbin has a population of some 10 million people). Harbin has two main supermarkets, Carrefour

and Walmart, and then a number of smaller locally owned supermarkets. Grand Farm has

concessions in many supermarkets, an area designated purely to their branded products. In the

afternoon we met with Daniel Zhang, International Trade Director for Grand Farms. He explained

that they want to develop long term and stable relations with supplying nations they can trust to

provide them with the products they need. In particular they want product from October to June

and can offer fixed price contracts. He agreed that their doubling production means it would make

sense to create trading relations with UK companies. They currently have a 14 year long association

with NZ South Island Company Alliance from whom they import the majority of their lamb. As with

Alliance they would be interested in building brands together. We discussed lamb quality and that

we have the breeds that could help Chinese production. In addition to exported meat products it

would make great sense to explore opening trade agreements for embryos and semen into China.

We all offered to welcome Grand Farm to the UK to further our relationships. To summarise Daniel

said:

1. China need to import sheep meat

2. UK could complement existing imports particularly from NZ and Australia

3. UK has the quality that Grand Farm is looking for

4. Govt’s should be encouraged to work to open up the route for genetic material in advance

of meat

It was clear from what we saw in Inner Mongolia, with sheep population limitations due to grassland

type and importance, and Grand Farms plans to move into the area with a massive slaughtering

plant, that there will be increased competition for lambs in Mongolia, and indeed across the whole

of China due to the supply chains in place. This will mean 2 things – encouragement to increase

production in China but also a need to import lambs securely and consistently from trusted partners.

Much lamb is frozen so the import supply doesn’t have to be continuous and China may be able to

take advantage of seasonal supply. Most lamb is eaten heavily spiced so the eating quality appears

to be less important. However, there is increasing demand for high quality UK type cuts, branded

lamb with assurance and provenance. The result could be that we have 2 quite different supply

options – high quality and value with provenance and identification, and more seasonal general

supply that concentrates on lower value cuts and 5th quarter products.

Beijing

Finally, on Friday morning we flew to Beijing and met with The Chinese Meat Association, a trade

body representing the main meat processors. JP Garnier explained that this delegation involving

EBLEX, the NFU and NSA had come to learn about the Chinese sheep industry and market. In June

2014 the UK government had signed a memorandum of understanding that should lead to agreed

access to China for red meat and that it was now appropriate to begin talking to companies about

opportunities for UK product to come to China. Li Shuilong, Chairman of the Chinese Meat

Association responded by saying since the last world meat congress so many countries had come

and met with the aim of following up leads. China is now the number 1 producer globally in Pork

and lamb. Chinese consumption per capita for beef is 4.9kgs ‘hd/yr. whereas for sheepmeat it is

3kgs. In China there are 185 million sheep producing some 4.08 million tonnes of meat [numbers are

subject to caution]. The UK is the 3rd largest exporter and by far the largest producer in the EU. Mr

Li felt that as long as it is meat and at a good price then china will consume it. The demand for

premium beef is increasing and the demand for sheepmeat generally is increasing too.

No one in the world is producing more sheep than China but demand is growing there will be a

major redistribution of lamb trade around the globe. (UK supermarkets will find more competition

for lamb in the future). The UKs disease status is crucial in maintaining trade routes. The UK can

almost guarantee that once trade routes are open the UK will be the third biggest supplier into

China. To sum up Mr Li said that there is great demand and a huge market in China, however

potential for increased production will be limited. Hopefully the UK can supply lamb to China.

Politically there is still work to be done and we both need to work where we can to open this trade

as quickly as we can.

The following morning, we visited 2 huge whole sale markets in Beijing. First a frozen market and

second a fresh market where the widest range of products were on offer. This market is supported

by wholesalers who distribute around Beijing and there were products on offer that wouldn’t be

seen in the UK. The conditions would certainly have raised the eyebrows of a UK meat inspector and

much of the cutting fitted the types of dishes served in China. Few parts of an animal are wasted.

General facts and observations.

Holly Chen from CBBC was our guide and interpreter for the week, she was a mine of information

and we learnt several facts from her which included:-

There is still a strong birth control policy in China to limit population growth. Families

wanting a second child have to pay a financial tax equivalent to a multiple of your annual

salary so it is a strong disincentive. China doubled its population from 546,815 in 1950 to

1,118,650 by 1989. It peaked at the end of the sixties when it was adding an extra 20

millions people to its population every year. Although the one child policy as meant growth

in population has slowed it has settled at an annual growth of a little over 6 million people

per year for the last 9 years. There is also a growing imbalance in the age profile of the

population with the proportion of older people increasing.

The transition from rural to urban living was clearly evident. All land is state owned and

farmers lease it for 30 years. Farmers can sub lease to other farmers but also have land

compulsorily taken away from them for development (which is significant) in return for

financial compensation. The level of construction in Hohhot was staggering with countless

new high rise buildings for accommodation and huge infrastructure projects such as four

lane motorways within and around the city.

Most homes are again leased from the state (leasehold arrangements) often for 70 years. In

this way the land is never owned by individuals even though the property is.

Children start school at 7 and do 2 6 year stints at primary and secondary level finishing at

19.

Agriculture is receiving government investment with extension workers and new technology

in things such as seeds and livestock, yet much of the farming is based on subsistence. Holly

grew up on a typical farm in NE China (near Harbin) that was 2.5 ha in size and grew maize

and soya beans, as well as some sorghum and millet in earlier years. Pigs and chickens were

also kept and the produce fed the family as well as being sold locally. Holly spoke a lot about

the urban move affecting the values of young children – as in the UK there is a feeling that

advancement is not beneficial in every way and there are some values downsides!

Our thanks go to Holly Chen for her caring attention and generally looking after us, to JP Garnier for

stimulating the trip and helping show us around.

Key Summary:

In June 2014 the UK and China Governments signed a document of understanding, which

after the appropriate checks and negotiations have been done, should provide the trade

agreement platform to allow UK beef and lamb directly into China. If things go as expected

this might allow trade to commence as early as 2016. There is enthusiasm amongst the

industry in China and the UK to see this process progress as quickly as possible.

China has a huge population, 1.3billion and rising. Beijing alone has a population of 20

million, a third the size of that of the UK (Shanghai 24 million). Despite Government policy to

limit the numbers of children a family can have, this rising trend is expected to continue. In

addition the transition of people from rural to urban areas with the lifestyle change which

brings a reliance on food being provided rather than producing is highly evident.

All land is state owned and farmers lease it for 30 years, farmers can sub lease to other

farmers and can also sell the leases (or it is compulsorily taken back) for building

development (the scale of which is significant). The numbers of new high rise

accommodation in all the areas we saw was staggering. Demand for food in China is

increasing due to population growth and increased meat consumption with growing

wealth. It is widely accepted this trend will continue for the foreseeable future

The sheep flock in China has tripled in the last 50 years. China has a sheep flock of 185

million sheep and slaughters in the region of 135 million animals a year. Per capita

consumption of lamb is approx. 3kg / person / yr.

Government and private companies are investing heavily in Agriculture. This investment

relates to increasing productivity and efficiency, with extension workers and new technology

in things such as seeds and livestock genetics. However, a large element of farming in China

is still based on subsidence and it will take decades to turn this around. Officials and farmers

talked to us about over grazing which in some severe cases had led to land degradation. This

has led to the capping of stock numbers in some areas and polices to farm with more

environmental sensitivity. This will limit the potential for a national flock expansion so the

drive to increase production is through greater efficiency and improved output without

impact on the environment. In the areas we visited there is widespread use of imported

genetics of breeds like the Dorper and the Australian Suffolk to increase growth rates. The

Govt provides assistance for technical advancement at a rate of 800RMB (£80) per animal.

We saw huge investment through the use of imported embryo’s in large scale breeding

companies.

Inner Mongolia is reputed to be China’s most significant livestock region with some 24

million sheep. Livestock form 50% of the regions total agricultural production and the region

produces one third of all Chinas meat and milk. There are 80 million hectares of grassland

and this accounts for 74% of total land area. In total the region has 100 million pigs, cattle

and sheep plus a small number of camels. These are looked after by 10,000 livestock

herders. Annual meat production from the region is 2.3 million tonnes, 9 million tonnes of

milk, and 100,000 tonnes of wool and cashmere. Virtually all meat produced in Inner

Mongolia is processed in the region. Inner Mongolia’s grasslands are ecologically important

and the state oversees stocking levels at around 2 ewes per hectare. Most grass is of

indigenous species but there are new grass varieties coming through and alfa alfa is being

used. Wool is of less importance economically and is processed outside the region. 50% of

farmers have 500 sheep or more. Breeds consist of local indigenous Mongolian sheep but

major breeding companies are importing and multiplying genetics from Australia with the

Dorset, Dorper (both of which are being encouraged due to their ability to lamb out of

season), Merino, and Suffolk. Most lambs are killed at around 6 – 8 months old and

weighing 40 – 50kgs liveweight (18 – 20kgs carcass). Lamb finishing feedlots are increasing

and we heard of number (at least 8) finishing 3 – 6 batches of 10,000 lambs a year. There

are efforts to increase the number of lambs finished through the year and out of season

production using appropriate breeds and hormones is widespread in the region.

There are 259 sheep breeding companies in Inner Mongolia. Most of these have close

relationships with the processors. There are 400 companies processing beef and lamb with

an average turnover of over 500RMB each, collectively they process around 200,000 tonnes

beef and 500,000 tonnes sheepmeat. 6 main companies are killing 200 – 300,000 sheep

each per year but the average is killing 100,000 lambs. Additionally there are smaller plants

slaughtering small numbers of animals for local supply. Although there are four clear

seasons with a long cold winter, many plants operate for just 3 – 4 months.

Although we were led to believe some carry on production throughout the year, with

animals housed over winter and feedlots used for finishing animals on bought in feed. The

processing industry is supplying cuts to markets and not simply carcasses. The whole animal

is utilised with around 120 different products with much investment into product

development and food preparation. The plants we saw were slaughtering to Halal standards

and one was not pre stunning. Carcasses were plain in conformation and variable in fat

generally, suiting the cutting techniques although meat yield probably suffered. There is an

expansion of large abattoirs and meat cutting facilities in Inner Mongolia and the biggest

challenge they face is supply of livestock in the future.

All agreed that consumption will not be met by China alone.

Imports of lamb come mainly from New Zealand and Australia and almost all in frozen form.

Given that NZ is already a supplier into China our key opportunities lie during our peak

supply period of July – December, with 5th quarter products all year round possibly. Frozen

products suit this market well. Much has been talked about the increase in demand of

higher value cuts in China and it seems this is right – however this should be kept in

perspective with traditional products still very much the main form of consumption, utilising

offal’s, and poor quality cuts. There seems to be a market for UK product but price

competiveness will be the issue. Opportunities do exist for some high end quality where

products are likely to be branded/quality assured/with provenance into high end outlets.

However the volume demand is for lower value cuts. Chinese visits to the UK and meetings

with UK processors should be progressed so that understanding can be optimised and

planning in place in advance of trade opening. UK processors and retailers should be

challenged to broaden the range of cuts developed from lamb carcasses.

There is significant interest in importing genetics to complement their local breeds and

speed development. Genetics are already coming in from NZ and Australia mainly in the

form of Dorper, Suffolk, and Dorset breeds. There is interest in and potential for UK genetics

trade with China, particularly for hardy terminal sires. We believe there would be interest in

UK genetics and we need to show case our breeds and genetics through visits to the UK.

Additionally we should explore whether we can open up opportunities for this trade

alongside the trade for meat.

Sheep health – Even though there is a different perception of health and food safety we

were told that China takes food safety and livestock health seriously and indeed we were

asked about UK controls. There is a national programme of vaccination for Foot and Mouth

with neighbouring Mongolia having outbreaks. Outer Mongolia hasn’t got export approval

into China due to Foot and Mouth disease. The UK needs to work hard to maintain and

promote its disease status and also to resolve the TSE and carcass splitting issue to avoid

casting a cloud over its image. We need to ensure that when their veterinary delegations

visit UK plants they see our professional industry and are convinced by our controls (which

will be more thorough but different to theirs).

We need to communicate with UK Govt vets to ensure they are aware of the importance

of this work.

Farmers need to be informed of our visit and expectations managed to give realistic

confidence for the future. The trip and its findings need to be used with UK retailers to

explain the pressure which is likely to be placed on UK supplies in the future and to

encourage them to take steps to ensure UK supply commitments.