NZ lamb goes to pot in China, giving fast-food chains plenty to chew over

Thu Feb 6, 2014 4:10pm EST
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By Naomi Tajitsu and Colin Packham

WELLINGTON/SYDNEY (Reuters) - At a sprawling plant run by New Zealand's biggest meat processor, rows of lamb carcasses hang from meathooks on their way to a cutting room to be chopped, trimmed and shipped out in increasing quantities to China.

But instead of the French racks, legs and tenderloins prized by Western consumers, China is taking secondary cuts such as caps and flaps -- heavily fat-marbled and taken from around the belly of the lamb -- that were previously much cheaper or even destined for the pet food market.

When the cuts arrive in China, they are rolled, semi-frozen and sliced paper-thin, and sold to hot pot restaurants. The popularity of the traditional Asian shared dish, offering cost-conscious diners healthy, homegrown fare -- slivers of meat and vegetables served in a broth -- is giving McDonald's Corp, Yum Brands Inc and others a run for their money in China's $174 billion fast food market.

The explosion in demand for these secondary cuts helped drive New Zealand's sheepmeat trade to China to $550 million in 2013, up around fivefold from 2010, and a big boost for a farm sector that has seen sluggish demand from traditional markets in Europe.


China is the world's largest sheepmeat producer with a flock estimated at nearly 140 million in 2011, but output has been declining as farmable land shrinks due to urbanization. Lamb has traditionally been consumed mainly in China's northeast, but a growing urban middle class in expanding cities wants more protein and has broader tastes.

A Mintel survey of 3,000 people in December found that almost two-thirds of respondents ate at least once a month at hot pot restaurants. Food safety scandals in China have also made meat imports from countries like New Zealand and Australia more attractive.

"If you look at the fundamentals for China, they have declining red meat supplies, and food safety concerns, so the key would be for Australian and New Zealand processors to be able to guarantee the supply chain," said Rabobank animal proteins analyst Matt Costello.   Continued...

A worker prepares meat at Alliance Group's meat plant in Levin December 2, 2013. REUTERS/Naomi Tajisu