Determinants of meat consumption in China

Hongbo Liu, Claus Deblitz Determinants of meat consumption in China Working Paper 40, December 2007 Asian Agribusiness Research Centre (AARC) Charles Sturt University Leeds Parade Orange NSW 2800 Australia T +61-2-6365-7777 F +61-2-6365-7590 www.csu.edu.au/research/aarc cdeblitz@csu.edu.au

Determinants of meat consumption in China Summary The remarkable economic changes occurring within the People s Republic of China since 1978 have resulted in striking alteration in food consumption patterns, and one marked change is the increasing meat consumption. Given China s large population, a small percentage change in per capita meat consumption could lead to a dramatic impact on the production and trade of agricultural products. Such changes have major implications for policy makers and food marketers. This paper focuses on both at-home and away-from-home meat consumption in China, aiming to provide a deeper insight into the changing meat consumption patterns and their determinants in China. Data were collected in 2005 from two separate consumer surveys one urban and one rural. A censored linear approximate Almost Ideal Demand System (LA AIDS) model was employed in the study, and major economic parameters were estimated for different meat items. A Tobit model for away-from-home meat expenditure, and a system of multivariate Tobit equations were estimated. This enabled an examination of the links between at-home and away-from-home meat consumption. Moreover, it may be more important than it seems, and under-recording of away-from-home consumption could partly explain the widening gap in official statistics between China s livestock production and meat consumption. AARC Working Paper 41 is going to provide a deeper insight into the specific beef consumption patterns in China.

Determinants of meat consumption in China 1 Introduction 1.1 Background China is the country with the world s largest population and China s rapid economic development has attracted much attention (Chow 1984; Fan, Cramer and Wailes 1995; Rozelle et al. 1997; Zhou et al. 2003). With rapid economic development, many changes are occurring in Chinese society, and one marked change in food consumption is the increasing meat demand that has occurred during the last two decades (Fan, Cramer and Wailes 1995; Wang, Zhou and Cox 2005). Given the massive potential purchasing power embedded in its large population, the increase in meat consumption in China has great implications for policy makers and business planners of both China and overseas (Samuel, Li and McDonald 1996; Carter 1997; Liu and Chern 2001, Zhang 2002; Zhou et al. 2003). 1.2 Why is this question important? Changes in food consumption in China have a great impact on food supply policy, because to provide nutritionally adequate food for 22% of the world population has always been an essential goal of the Government of China. Also, updated information on meat consumption is an essential component of effective industry planning, market access negotiations, and successful marketing programs for various industries within or outside China. In addition, to meet the increasing meat demand, structural adjustments in employment to expand the livestock industry are required (Johnson 2000). Consequently, the expansion of the livestock industry will involve different use of land, greater dependence on pesticides and artificial fertilizers, and a big increase in agricultural waste (Tian 2003, Zhou and Tian 2005). Such an expansion of the livestock industry has contributed significantly to pressing environmental problems, such as climate change, land degradation, air and water pollution, and loss of biodiversity (Steinfeld et al. 2006; Tickell 2007). Therefore, the changes taking place in recent years in Chinese meat consumption have attracted the attention of policy makers, researchers, and international agricultural food analysts (Brown 1995; Paarlberg 1997; Cai et al. 1998; Wu 1999; Rae and Hertel 2000; Veeck and Veeck 2000; Zhang 2004; Zhou and Tian 2005). Although many researchers have published numerous papers on Chinese household consumption issues since the 1980s (Lardy 1984; Garnaut and Ma 1992; Fan, Wailes and Cramer 1994; Wu 1999; Zhou and Tian 2005), these studies have either tended to focus on the broader segment of household food consumption or used outdated data and have not explained meat consumption issues in China convincingly. For example, no clear differentiation between at-home and away-from-home meat consumption patterns is evident in earlier studies; and studies examining meat consumption changes in a systematic way are scarce. 1

In addition, since consumer behaviour varies over time, earlier studies, which largely based on data of the 1990s, can hardly reflect the situation in the 2000s. Therefore, most recent information on changes of meat consumption patterns will be valuable for policy makers and business planners of various industries, with China facing the prospect of becoming the fastest growing food market in the world. The purpose of this paper attempts to fill the gap in the existing literature by addressing the most recent changes in meat consumption in China with a comprehensive analytical framework and identify the determinants of meat consumption. This study helps to provide updated information on meat consumption in China for food and nutrition policy planning, overcoming the ineffectiveness of data used by earlier studies. Also, it draws useful implications for the business planning of relevant industries from both China and other countries, who want to explore the massive Chinese market. The paper is based on the Phd-thesis of Hongbo Liu (2007, in print). 2 Production and consumption of meat in China China s rapid economic growth, population growth and urbanisation since 1978 are resulting in profound changes in food demand and are posing challenges for China s domestic agricultural industries in meeting that demand (Huang, Rozelle and Rosegrant 1999; Zhu 2006). With the increase in per capita income in the past two decades, a simultaneous increase in demand for meat occurred (Garnaut and Ma 1992; Huang, Rozelle and Rosegrant 1999; Guo et al. 2000; Wang, Zhou and Cox 2005). China has met most of the growing domestic demand by increasing its livestock production. As the result of the growth in the livestock industry, China has emerged recently as the largest animal product producer in the world (Longworth, Brown and Waldron 2001; Tian 2003). The output of meat (pork, beef and mutton) has risen from 8.60 (1978) to 61.58 million tonnes (2005) (Figure 1). The output of poultry meat rose even faster than other meat items, jumping from 1.50 (1984) to 14.64 million tonnes in 2005 (NSB 2006a). million tonnes 70 60 50 40 30 20 10 0 Original Revised 1975 1980 1985 1990 1995 2000 2005 Source: Own calculations based on Tian 2003 and NSB 2006a. Revised means the adjusted output level to overcome the inaccurate data problems between 1985 and 1997. Figure 1: Output of red meat 1975 2005 (million tonnes) 2

Changes in China s agricultural production mix and levels of production not only reflect efforts to improve the use of resources, but also an increasing demand for agricultural products and changing pattern of consumption. At the same time, per capita meat consumption in China increased from 1985 to 2005. Per capita total meat consumption (including red meat and poultry meat) in urban areas increased from about 23 to 33 kg, whereas that in rural China increased from about 12 to 21 kg (NSB 1986; 2006a). That is because (1) the wide availability of agricultural products has widened consumers choice of food items, especially some relatively expensive ones, such as animal products; (2) the improved livestock productivity and deregulated market has enabled the prices of animal products to remain relatively low and stable in recent years, which has encouraged the consumption of animal products (Wang, Zhou and Cox 2005). 3 Particularities of Chinese meat consumption Although food grains and vegetables were the main food source in the traditional Chinese diet, with improvements in agricultural productivity, people began to increase the consumption of high protein foods such as animal products (Rae 1998). For Chinese consumers, pork still was the dominant meat consumed in China (Chen, Tan and Liu 2006), followed by poultry products and aquatic animal products (Figures 2, 3). However, per capita consumption of pork in urban China declined slightly in the 1990s (from 18.5 kg in 1990 to 15.3 kg in 1997), whereas per capita consumption of poultry meat increased (from 3.4 kg in 1990 to 4.9 kg in 1997). After 2000, per capita poultry meat consumption increased even faster than in the 1990s (from 5.4 kg in 2000 to 9.2 kg in 2003). Nevertheless, consumption of poultry meat fell to 6.4 kg per capita because of the outbreak of avian influenza in 2004 (Bean and Zhang 2006), and then increased to 9.0 kg in 2005. kg / capita / year 25 20 Pork Beef and mutton Poultry Eggs Aquatic products 15 10 5 0 1985 1990 1995 1996 1997 1998 2000 2001 2002 2003 2004 2005 Source: China Statistical Yearbook (1986; 1990; 1995; 2000a; 2006a) Figure 2: Annual per capita consumption of animal products in urban China 1985-2005 3

kg / capita / year 18 16 14 12 10 8 6 4 2 0 Pork Beef Mutton Poultry Eggs Aquatic products 1994 1995 1996 1997 1998 2000 2001 2002 2003 2004 2005 Source: China Statistical Yearbook (1986; 1990; 1995; 2000a; 2006a) Figure 3: Annual per capita consumption of animal products in rural China 1994-2005 As mentioned previously, pork dominates meat consumption in China. Why then do Chinese consumers prefer pork? The access to aquatic animal products in ancient times was restricted because of an inadequate transport system. As a result, such products were available only to those living near rivers, lakes, and the sea. Likewise, beef and mutton were prevalent in areas where flocks of sheep and herds of cattle and grassland were available (You 2004). To a majority of farmers, who made a living from the crop industry, the fertile fields for crops had greater relevance than grassland for flocks of sheep and herds of cattle (Dong and Fan 2000; Anderson 2003; Li 2004). Usually, farmers were unwilling to turn to beef or mutton production discarding their prevalent lifestyles; in addition, cattle protecting ideology in the traditional culture due to the heavy reliance on cattle as sources of working power throughout the history was another predominant feature (Longworth, Brown and Waldron 2001; Wei 2004). On the contrary, for the Chinese household production system, raising pigs was a more realistic and ideal choice practice, because it avails the full use of subsidiary family labourers and scattered feed sources generated from household production and consumption. For example, use can be made of various by-products of food processing, such as table scraps and straw. The Chinese household production system would provide not only meat and other products such as offal, blood and skin (these are traditional Chinese foods), but also their excrement could be used as fertilizer for crops contributing to a sustainable system (Tian 2003). As a result, in a society where farming remained a priority, raising pigs gained popularity. Different animal product consumption patterns exist between urban and rural areas. For example, the per capita meat consumption in urban regions was 32.9 kg, whereas that in rural areas was only 20.8 kg in 2005 (NSB 2006a). Difference exists in not only meat consumption level, but also the composition of meat consumption. Therefore, in the following section, animal product consumption patterns in urban and rural China, respectively, are presented. 4

4 Data base and methods 4.1 Data base Analysis of China s animal product consumption pattern is often challenged by uncertain accuracy in China s official statistics (Zhong 1997; Aubert 1999; Ma et al. 2004; Zhou, Wu and Tian 2005). China s official statistical agency, called the National Statistical Bureau of China (NSB) or the State Statistical Bureau (SSB), conducts annual surveys of urban and rural household and reports China s national accounts, in addition to reporting industrial and agricultural statistics. Although in recent years data collection seems to have been improved, data quality remains a major constraint for research. Moreover, data used in many previous studies are out of date. In such a dynamic market like China, quantitative estimates of market parameters such as income and price elasticities derived from historical data need to be examined carefully before used as a guide to future market behaviour (Longworth 1983). Therefore, updated information is more than necessary. To get the updated data, a meat consumption survey at household level was performed. The survey was conducted by the author as part of research collaboration between Meat and Livestock Australia (MLA) and the Faculty of Rural Management, the University of Sydney. Two separate household surveys, one urban and one rural, were carried out in the period September December 2005. A stratified data sampling method was applied to draw samples. The survey covered five provinces (Jiangsu, Shandong, Inner Mongolia, Liaoning, and Sichuan) representing different food cultures of eastern, central, north, northeast, southwest, and south China and those vary in their geography, economic development, ethnic group, food culture, and lifestyle (Figure 4). Heilongjiang Xinjiang Uygur aut. region Tibet aut. region Gansu Qinghai Ningxia Hui aut. region Sichuan Shaanxi Guizhou Yunnan Inner Mongolia aut. regi o n Shanxi Henan Jilin Liaoning Hebei Beijing Tianjin Shandong Jiangsu Hubei Anhui Shanghai Hunan Jiangxi Zhejiang Fujian Guangdong Source: Own illustration Guangxi Zhuang aut. region Hainan Figure 4: Location of the five survey areas in China (in red bold) 5

To monitor the trends in changes in meat consumption patterns, questions posed addressed weekly meat expenditure (including at-home, and away-from-home), the price of meat items, and demographic and socio-economic status of each household and its members. Questions also elicited detailed expenditure information on meat use during important Chinese festivals and holidays, since the survey tried to obtain accurate information on meat consumption for the entire year, and some meat items are usually consumed unevenly during a year. For rural consumers, special questions covered the meat consumption of household produce, considering the effect of joint consumption production decision making. Weekly meat consumption data provided detailed information on consumer behaviour as well as changing behaviour patterns. The related outcomes were assessed by measuring changes in clusters of household and individual economic, demographic, and social factors. 4.2 Models Based on the literature, at-home and away-from-home food consumption are two principal components of total food consumption. Given the different circumstances of at-home and away-from-home meat consumption, it must be dealt with differently. A censored LA AIDS model is used to identify the main factors that influence at-home meat consumption in China, and to estimate market parameters (such as expenditure, and price elasticities) of different meat items, taking zero expenditure into consideration. The reason why away-from-home meat demand cannot be included into the LA AIDS model is the inability to estimate the price of meat consumed away-from-home. Therefore, a Tobit analysis is used for the analysis of away-from-home meat consumption. As a third part to the analysis, it was decided to explore the interrelationship between at-home and away-from-home meat consumption, since they constitute a complete meat demand system. 5 Survey results Overall, 340 complete questionnaires were obtained (280 from interview, 60 from mail survey). The returned questionnaires have been tested, and no obvious differences exist in terms of meat consumption level, income, and demographic information among the households surveyed by mail or interview. The total number of responses from urban areas was 232 households. The total number of responses from rural areas was 108 households (Table 1). A sample of 340 was considered appropriate to ensure validity in this exploratory study, and the sample size obtained from each area was more than 30. Sampled households differed in age, education, income level, and ethnic group. Characteristics of the sampled households, disaggregated by urban and rural residents, are reported in Table 2. Most of the means of the key variables generated in the sample were consistent with those in NSB (2006a; 2006b). For example, per capita annual income of the urban sample was 11,202 RMB Yuan, and that of NSB (2006a) was 10,493; family size in the sample was 3.1, while that of NSB (NSB 2006b) was 3.4. Therefore, compared with NSB data, the survey data appear to be representative and reasonable, indicating that the survey provides a reliable source for further estimation. 6

Table 1: Household indicators of survey samples by provinces Province Households Household Age Education size No. No. people Years Years Urban Rural Inner Mongolia 56 3.1 42.9 12.4 Liaoning 46 2.9 43.2 13.0 Shandong 40 3.0 44.6 12.4 Sichuan 30 3.0 44.3 13.4 Jiangsu 60 3.4 45.9 11.8 Jiangsu 39 3.3 44.6 9.6 Liaoning 35 3.2 45.7 7.0 Shandong 32 2.7 43.4 8.6 Note: Household size average household size. Age the average age of meal planner of the household. Education the average years of education, which the meal planner has attained. Source: Own survey Table 2: Characteristics of the surveyed households Urban Rural All n=232 n=108 n=340 Size and age Average household size 3.1 3.1 3.1 Age 44.2 44.6 44.0 Maximum age 79 77 79 Minimum age 22 20 20 Education (% of the sample) Less than primary school 10.8 33.3 17.9 Middle school graduate 17.2 42.6 25.3 High school graduate 32.3 24.1 29.7 College graduate 38.8 0.0 26.5 Postgraduate 0.9 0.0 0.6 Ethnic group (% of the sample) Han Chinese 92.5 91.7 92.1 Non-Han Chinese 7.5 8.3 7.9 Annual household income (% of the sample) Less than 6000 2.2 28.7 10.6 RMB 6000 10000 3.0 28.7 11.2 RMB 10001 20000 22.0 26.9 23.5 RMB 20001 30000 28.5 9.3 22.4 More than RMB 30001 44.4 6.5 32.4 Note: Age average age of meal planner of the household surveyed. Education the education level, which the meal planner of the household surveyed has attained. Source: Own survey 7

Differences in at-home-meat consumption patterns also exist between rural and urban China (Table 3). Consumers in rural areas spent proportionally more money on pork than those in urban areas, indicating a strong preference for pork in rural areas. This could be due to (1) the cost of pork production is low in household or backyard production systems, and it is a practice common in Chinese rural households; and (2) rural China is more strongly influenced by traditional Chinese culture than urban China. Hence the rural residents use traditional recipes, which involve pork. Table 3: Distribution of at-home meat expenditure across meat items and regions (%) Region Pork Poultry Beef Mutton Aquatic products Overall Jiangsu Liaoning Shandong Urban Urban Urban Urban 35 37 35 38 19 17 13 17 13 14 15 12 10 4 12 7 23 28 25 26 Rural Rural Rural Rural 49 50 51 47 14 16 13 14 10 7 10 13 9 4 12 9 18 23 14 17 Inner Mongolia Urban 27 18 15 25 15 Sichuan Urban 36 28 11 2 23 Note: Percentages represent meat consumption in terms of money value. Source: Own survey A preference for beef and mutton existed in urban areas because consumers are exposed to a diversified food culture, such as different cooking methods or cuisines from different regions (such as hot pot, meat strings, steaks, and hamburgers). The consumption of poultry is proportionally similar in both rural and urban areas. The survey results show that, in rural areas, the consumption of mutton is more popular than beef. The relatively greater proportion of consumption of pork, poultry and mutton in rural China reflect different sources of meat items consumed. Some meat items, such as pork, poultry and mutton (which are from small animals) are often produced by the household, whereas beef is often procured from outside. In addition, the beef distribution system is not well developed in rural areas due to the limits of transportation infrastructure and cold storage facilities. In addition, the relatively low beef consumption level also reflects that, to some extent, a cattle protecting ideology still exists in rural areas due to the fact that cattle have traditionally been used as working animals in China. The consumption level of aquatic products in urban China (23%) is slightly higher than that of rural areas (18%). This may be due to a better distribution system enabling greater availability of aquatic products in urban areas, coupled with better recognition of their nutritional values. Moreover, differences in meat consumption patterns exist across regions. This can be explained by diversity in preferences and eating habits. For example, people in Inner Mongolia 8

traditionally consumed more beef and mutton than those in other provinces because this area, being predominantly grassland, enables sufficient supply of these meat items. The easy accessibility of aquatic products helps explaining why people living either in coastal areas or near lakes and rivers (Jiangsu, Shandong, and Liaoning provinces) spend a greater proportion of money on aquatic products than inland provinces (Inner Mongolia). Table 4: Annual per capita at-home and away-from-home meat expenditures Households consuming away from home Away-from-home meat expenditure At-home meat expenditure Households not consuming away from home At-home meat expenditure All households At-home meat expenditure Total meat expenditure (Yuan) 437 1062 788 1050 of which (%) Pork 15 40 52 37 Poultry Beef Mutton Aquatic Products 18 20 20 19 23 11 8 12 25 8 6 10 17 21 14 22 Note: Expenditure on meat is measured in Chinese currency (RMB Yuan). Of 340 surveyed households, there are 266 households that consumed food away from home during the study period. Source: Own survey Table 5: Statistics of respondents on away-from-home food expenditure Variable Mean Standard Deviation Annual household income ( 1000) 29.60 20.80 Household size 3.10 0.81 Number of males 1.34 0.57 Employment status of woman (wife) 0.55 0.50 Age (%) less than 30 9.70 0.30 between 30-60 77.06 0.42 Education (%) middle (less than 12 years) 54.41 0.50 high (more than 12 years) 27.35 0.45 % of chance to access collective cons. 13.53 0.34 % of presence of Child 33.24 0.47 % of urban households 68.24 0.47 Note: The age of child is less than 14-year-old. Source: Own survey 9

Generally, at-home and away-from-home meat consumption patterns of households are distinctively different in terms of share of meat expenditure (Table 4 on previous page). As mentioned earlier, not all households in the survey consumed a meal away from home. Information on households which consumed food away from home during the survey period is presented in Table 5 on previous page. Tables 4 and 5 indicate that the following households are likely to spend more money on meat consumed away from home: households with working wives, living in urban areas, and having chance to access collectivised consumption. Descriptive analysis shows that differences exist across regions in away-from-home meat consumption patterns (Table 6). Consumers spent a higher proportion of money on beef and mutton when eating away from home than at home. This could be due to two reasons: (1) variety-seeking behaviour of consumers, e.g., people want to try things different from what they eat at home; and (2) Chinese consumers unfamiliarity with the preparation of beef and mutton, e.g., people do not know how to cook beef and mutton. Therefore, they preferred dishes consisting of processed beef and mutton products while eating away from home. Consumers living in Inner Mongolia, Shandong, and Liaoning provinces, showed a preference for beef and mutton by spending a higher proportion of money on these meat items (Table 6), which could be due to not only the Northern Chinese preferring beef and mutton, but also because the hotpot restaurants (people consume mainly beef and mutton in this type of restaurants) are popular in these localities. Table 6: Allocation of away-from-home meat expenditure across meat items and regions (%) Region Pork Poultry Beef Mutton Aquatic Products Overall Jiangsu Liaoning Shandong Urban Urban Urban Urban 16 18 17 15 18 22 5 12 21 18 25 22 25 24 28 31 20 18 25 20 Rural Rural Rural Rural 18 15 18 18 23 24 13 15 20 19 25 20 25 27 21 28 14 15 23 19 Inner Mongolia Urban 11 11 35 28 15 Sichuan Urban 16 22 18 20 24 Note: Percentages represent meat consumption in terms of money value. Source: Our survey Moreover, households with higher incomes spend more money on meat items when they eat away from home (Table 7). In terms of composition of away-from-home meat consumption, higher income households consume more non-traditional meat items, such as aquatic products, and mutton than the lower income households. 10

Table 7: Per capita annual away-from-home meat expenditure and the composition by monthly income Household monthly income 500 501-1700 1701-4500 4501 Away-from-home meat expenditure (Yuan) 195 315 489 591 Of which (%) Pork 21 16 15 14 Poultry 21 18 17 16 Beef 20 25 25 20 Mutton 25 27 25 30 Aquatic products 13 14 18 20 Note: Away-from-home meat expenditure is measured in Chinese currency (Yuan). Source: Own survey 6 Model results The regression results of these empirical models show that at-home and away-from-home meat consumption are determined by different factors, as shown in Table 8. The results of the regression allow the conclusion that Chinese consumers income is expected to keep on rising, and therefore meat consumption will continue to increase in the future, because on average, meat is a normal product in China at present. However, the speed of increase among different meat items varies and it can be expected that meat consumption will become more diversified. Consumers are likely to move to more non-traditional meat items, such as beef and mutton (which accounted for 19% of meat expenditure in the consumer survey). This could be due to consumers variety-seeking behaviour, which is possible with greater disposable income. They also show that price is still an important consideration when consumers decide what kind of meat items to eat at home, while it is not very important when people eat away from home. In addition, the results show that social and demographic factors (such as urbanisation, education, and presence of a child, safety, preference, changing lifestyles, and health concerns) have a significant effect on at-home meat consumption in China. This lends support to findings derived in earlier studies, for example, Pollak and Wales (1981), Lewbel (1985), Huang and Rozelle (1998), Rae (1998), and Huang and Bouis (2001). Similar to at-home meat consumption, away-from-home meat consumption is also affected by income level, age, urbanisation, presence of a child. In addition, it is influenced by gender, employment status of the woman (wife), opportunity to access collectivised consumption as well. 11

Table 8: Determinants of at-home and away-from-home meat consumption in China Factors At-home meat consumption Away-from-home meat consumption Income Age Price of meat Safety Preference Health concerns Changing lifestyles Urbanisation Education Presence of a child Employment status of woman (wife) Access collectivised consumption Number of males in household Note: Stars indicate the level of importance / significance of single factors. Source: Our survey In the third analysis we are attempting to link at-home and away-from-home meat consumption. It shows when eating out, consumers are seeking variety, and looking forward to trying something different from what they eat at home, in terms of variety of foods, and also special cooking methods. The model also shows that pork consumption is popular in China and it may have reached a saturation point, so that any increase of its at-home consumption reduces its away-from-home consumption. On the contrary, the positive relationship between beef and mutton consumption at-home and away-from-home indicates that Chinese consumers are only just becoming familiar with the variety of dishes that can be prepared with beef and mutton. The consumers can always find some new and attractive cooking methods at restaurants, although they can cook beef and mutton at home as well. Limited by time and budget, it was impossible to obtain details of different types and prices of what people consumed under the label aquatic products in the survey, while in fact, aquatic products are far from homogeneous commodities in China. As a tractable alternative, aquatic products was used as a single composite commodity rather than treating each market segment separately. This generalisation may not be realistic in the estimation process, but it is a practical choice that was necessary to facilitate the survey. Provided that the relative sizes of these various sub-markets remain constant over time, the aggregation approach may produce reliable and useful estimates. But this may not have been the case as we have seen in the meats analysed here. In addition, due to the limitations of estimation techniques and datasets, the multivariate Tobit model relating at-home to away-from-home meat consumption did not perform well in terms of a small pseudo R² and the insignificant estimates of some explanatory variables. However, this study provides a rationale and basis for further research on interrelationships between at-home and away-from-home meat consumption. 12

7 Conclusions and recommendations As China s economy has been developing over the last two decades, and per capita income increasing, diet patterns have changed. Given the large population and massive potential purchasing power embedded in it, China s meat consumption has become a crucial issue for both China and livestock-surplus countries. Since the demand situation and influential factors vary over time, this study attempted to provide the most recent information on patterns of meat consumption in China. The present study shows that the rising income and urbanisation are the determinants which have had the strongest impact on increasing meat consumption in China since the 1980s. As income increased, besides consuming more meat at home, consumers have eaten more frequently in restaurants and other food facilities than before. Away-from-home meat consumption has become an increasingly important part of the total meat consumption pattern. However, at-home and away-from-home meat consumption have been found to be different and influenced by different mechanics. For at-home meat consumption, price, safety, preference, changing lifestyles, and health concerns were revealed to be the influencing factors determining what the consumers eat, and how much meat they would consume at home, measured against the factors: income and urbanisation. The main parameters estimated from the econometric models show that at-home meat consumption will increase if income keeps rising; however, this increase will not be distributed evenly among all meat items. As a result, a greater variety, better and healthier meat items should be in higher demand for at-home consumption in the near future than the present. This finding provides greater opportunities for some segments of the meat market, such as beef and mutton, with the aid of new cooking methods. In addition, consumers with a busy lifestyle prefer either fully processed or semi-processed meat products for at-home consumption. For away-from-home meat consumption, in addition to income and urbanisation, other factors, such as the employment status of the woman (wife), number of males in the household, and the presence of children affect total away-from-home food consumption in different ways. Consequently, these factors would affect the quantity and variety of meat items consumed when eating out. Variety-seeking and the Chinese tradition of hospitality and generosity mean that consumption of certain meat items does not necessarily impact negatively on the other meat items to be consumed at a restaurant. That is, they tend to order different kinds of meat items at the same meal, and the Chinese cooking makes this possible. Also, the present study has found that the consumption of certain meat items, such as beef, is influenced by the types of food facilities consumers accessed. In fact, when eating out, consumers are not only consuming food, but also utilising various other services, and sometimes pursuing a symbol of higher social status. In addition, collectivised consumption has been found to be an important factor increasing away-from-home food consumption in China, especially in urban areas. The study on the interrelationships between at-home and away-from-home meat consumption shows that at-home pork consumption reduces its away-from-home consumption, but this is not true for beef and mutton consumption. This is because pork consumption in China may have reached a saturation point whereas the consumption of beef and mutton has 13

still remained at a relatively low level, and has enough room for increase. However, if the total meat consumption was to continue to rise, sooner or later it would reach its limit, so that the increase in away-from-home meat consumption will reduce the at-home meat consumption and vice versa. Updated information on meat consumption in China provided by this study is valuable for planning marketing activities for this large and dynamic market, since the nature of the meat market is changing over time. In addition, the results derived from the present study have implications for agricultural, nutritional, environmental and trade policies. This is a study, which provides both a theoretical discussion and a practical reference, providing a basis on which the policymakers could make a decision for the future. In summary, with rising incomes and urbanisation, the demand for meat will continue to increase in the future, but it will turn towards greater variety, quality-assured and easily prepared meat products for at-home consumption. If the per capita income continues to increase, the present study offers a promising picture for the future of the Chinese catering industry. References Anderson, E 2003, The Food of China (Chinese version), Jiangsu People' s Publishing House, Nanjing, China. Aubert, C 1999, Food consumption and food production in China: statistical uncertainties, educated guesses and reasoned optimism, China Rural Economy, no. 12, pp. 16-21. Bean, C and Zhang, JP 2006, People's Republic of China, livestock and products, semi-annual 2006, Gain report CH6004, United States Department of Agriculture. Brown, L 1995, Who Will Feed China?, Norton & Company Inc, New York. Cai, H, Brown, C, Wan, G and Longworth, J 1998, Income strata and meat demand in urban China, Australian Agribusiness Review, vol. 6, pp. 100-120. Carter, C 1997, The urban-rural income gap in China: implications for global food markets, American Journal of Agricultural Economics, vol. 73, issue. 5, Proceeding issue, pp.1410-1418. Chen, C, Tan, T and Liu, H 2006, Study on the efficiency of pork supply chain in China (in Chinese), Journal of Nanjing Agricultural University (Social science edition), vol. 6, no. 2, pp. 54-58. Chow, G 1984, The Chinese Economy, Harper and Row, New York. Dong, K and Fan, C 2000, History of the development of science and technology in China-Agronomy, in J Lu (eds), History of the Development of Science and Technology in China, Science Press, Beijing. Fan, S, Cramer, G and Wailes, E 1994, Food demand in rural China: evidence from rural household survey, Agricultural Economics, no. 11, pp. 61-69. Fan, S, Wailes, E and Cramer, G 1995, Household demand in rural China: A two-stage LES-AIDS model, American Journal of Agricultural Economics, vol. 77, pp. 54-62. Garnaut, R and Ma, G 1992, Grain in China, Australian Government Publishing Service, Canberra. 14

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