Opening of Chinese market to Kenyan meat exports could prove timely
08 October 2012
According to press reports, an agreement has been reached between the Kenyan Ministry of Livestock and two private companies, Mercbima International of Kenya and Loyalty International Trading Company of China, to export meat products to China. Joe Mutambo, CEO of Mercbima, said the company ‘will buy various products including beef from KMC [Kenya Meat Commission] and export to China through Loyalty’. In addition to beef, pork from Farmers Choice and chicken products from Kenchic will be exported to China under a deal estimated to be worth 500 billion Kenyan shillings over the next 5 years. The Chinese firm, for its part, will supply assorted livestock feed via the Ministry of Livestock.
According to a report carried by China Xinhua News Network Corporation (CNC), data from Kenya's Ministry of Agriculture indicate that annual red meat production was ‘430,000 tons against a domestic consumption of 330,000 tons’ in 2010 and white meat production was ‘40,000 tons against a consumption of 36,600 tons’. With global beef prices ‘projected to remain high throughout the next decade’ (see Agritrade article ‘ Beef sector trends in the EU and globally’, 9 September 2012), sustained efforts are under way to open up new export markets for Kenyan meat products.
According to KMC’s website, some 500 tonnes of fresh and frozen meat and meat products are exported every week to destinations in the Middle East (United Arab Emirates, Kuwait, Qatar, Saudi Arabia) and Africa (Egypt, Tanzania, Uganda, DRC, Sudan) . However, media reports in April 2012 put meat exports at the considerably lower level of around 100 tonnes per month, with export sales accounting for ‘20 percent of total annual turnover’. The EU market at present remains closed to Kenyan meat exports due to a failure to meet SPS and food safety requirements.
The possible commencement of exports to China could prove timely, since press reports indicate that Kenyan meat risks being locked out of Dubai, following the discovery of fraudulent documentation and licences for products that fail to meet food health standards and Islamic dietary guidelines. Pricing issues also arise, with some potential importers in targeted markets claiming that Kenyan meat prices are higher than those of competitors.
Editorial comment
While export markets are being explored, it should be noted that approximately 25–30% of red meat consumed in Kenya is sourced from the informal cross-border livestock trade with Kenya’s neighbours, mainly Ethiopia, Tanzania and Somalia. If this trade were to be more strictly regulated with regard to SPS standards, then official red meat imports would increase substantially. At present, livestock inspection and veterinary controls are unevenly applied across Kenya.
It is unclear which specific Chinese markets for meat are to be targeted by Kenyan exporters. This makes it difficult to determine the likely relative competitiveness of Kenyan meat exports compared to large-scale meat exporters such as Brazil, Argentina, Australia and New Zealand, which have far more advanced livestock sectors.
The issue of commercial prospects for Kenyan meat exports also needs to be seen in the light of the stiff competition faced on regional and Middle Eastern markets from suppliers in Ethiopia, Sudan and Djibouti.
Kenya has yet to develop and implement a livestock sector plan that would ensure a sustained supply of livestock numbers from Arid and Semi-Arid Lands (ASALs), which are the main livestock-producing parts of the country. Lack of infrastructure, feed, water, and holding grounds currently lead to high costs of production, which together with the prevalence of livestock diseases represent major constraints on expanded livestock production and trade. Ensuring the sustainability of supplies is also complicated by the increasing frequency of droughts, which often decimate livestock herds.
It is also unclear how the proposed supply from China of feed for livestock would operate in practice, since the Kenya Ministry of Livestock Development has no capacity to trade in animal feeds.
