Sector Report – Frozen

Traditionally the mainstay of food manufacturing, other segments have over time taken to frozen meat. ISA Q TAN and the Asian Agribiz team look at the latest developments in the frozen meat subsector across various Asian markets, and assess what is in store for the coming year.

Vietnam pork imports climb

One of the world’s biggest producers and consumers of pork, Vietnam has been watching its output drop as its pig industry battles ASF. As a result, it has turned to imports to fill the gap.

According to Ho Chi Minh City’s Customs Department, the city’s pork imports jumped 155% in volume and 154% in value last October, compared to the previous year.

Frozen pork imports are mainly used by meat processors, street restaurants and institutional kitchens. Brazil is the top supplier, accounting for over half of total import volume, followed by Poland, the US, Belgium and Spain.

Though these countries have traditionally imported the most pork, supplies have been difficult to come by over the past few months due to competition from China.

“China’s meat demand is much larger than Vietnam’s, and buyers there offer a higher purchase price. This makes it difficult to find suppliers for Vietnam at this time,” Joachim Breton, Business Development Director of World Wide Food Distributions, told Asian Meat Magazine.

“Pork prices in Vietnam will increase at least 30% soon and suppliers will then reorder based on their priorities,” he added.

Pork hangs on

While most of the Philippines’ meat imports are used for processing, some meat types, like premium beef cuts, are sold in retail shops.

To take pressure off its pig industry and keep prices in check, Vietnamese authorities have been encouraging consumers to switch to other proteins and frozen meat. But while demand for the likes of chicken, duck and fish have grown, the shift has still been slow.

Vietnamese eat an average 33kg of pork per year, accounting for 65% of their total meat consumption. At that rate, replacing pork with other meats will not be easy.

“People will always go back to pork, even when the price increases,” Nguyen Tri Cong, Chairman of Dong Nai Livestock Production Association, told Asian Meat Magazine.

For now, pork prices will continue to rise, at least until the second half of this year, he said, adding that it would take at least 3-5 years for the pig industry to start restocking. Recovery may take even longer.

Meat protein options

Gordon Butland, Director of G&S Agriconsultants, predicts that what has been happening in China will replay in Vietnam, which already saw a “strong price reaction in mid-2019”. Consumers will continue to shift to broiler, fish and eggs.

“In the long term, there will be a permanent increased demand for all other varieties, including beef and sheep meat. No imports can fill the gap in supply in 2021 when consumption could bottom out,” he said.

Meat imports up in the Philippines

In the Philippines, data from the Bureau of Animal Industry show that total meat imports are up 2.8% on the year, to about 613,000 tons in the first nine months of 2019.

Pork accounted for about 42% of the total, followed by chicken (37%), beef (17%) and carabeef (4%). Moreover, beef and chicken volumes grew 19% and 12% from the year before, while carabeef and pork imports fell 22% and 8%.

Jess Cham

Jesus Cham, President of the Meat Importers and Traders Association, told Asian Meat Magazine that the bulk of imports go to the meat processing sector. Mechanically deboned chicken meat, which accounts for up to 70% of overall chicken imports, is a key raw material for processors. The same is true for fats, offal, and skin and rinds.

“You need to make a distinction. Local meat producers think we, the legal importers, are competing against them, but that is not the case. We are serving the segments that they don’t serve,” he said.

While there may be some overlaps, these are very small. Some of the imported edible pork offal is consumed by lower-income classes, which make up about 85% of the population.

Sourcing difficulties

Traditionally, the Philippines sources most of its meat from North America, Australasia and Western Europe, with small supplies from Brazil and Argentina. Carabeef comes exclusively from India.

Like Vietnam, the country is feeling the pinch from the impact of ASF, which has made China a formidable competitor, not only for pork imports but for other meat types as well.

“The Philippines is price sensitive,” noted Mr Cham. “Because of ASF, prices in the global market have gone up by as much as 50%, so it is a price game. Our traditional meat suppliers prefer to sell to China, which is willing to pay higher prices. So for us, supplies are drying up.”

“Daging Kita” carabeef from Bulog, sold online in Indonesia.

If global prices continue to rise, he said he hopes the government will try to mitigate their effect by lowering import duties, which currently stand at 40% for chicken, 30% for pork and 10% for beef. It has done this at previous times of meat scarcity to bring back some stability to the market.

Price dictates

With the country’s pig industry hit by ASF, demand for pork is down and up for chicken. However, most industry stakeholders feel this will be temporary and that once issues related to ASF is addressed, pork demand will rise again.

Mr Cham said that Philippine meat demand is determined more by price than type of meat. For most of the population, the meat they buy will be whatever is most affordable.

Carabeef disrupts Indonesia’s beef market

Buffalo meat imported from India, known as carabeef, is expected to further disrupt the beef market in Indonesia. Because it is cheaper than cattle beef, consumer demand for it has been growing.

The Indonesian government imported Indian carabeef to stabilize the price of beef that had previously touched USD 8.90/kg in the household market segment.

Even when sold at USD 5.3/kg, many were skeptical about consumers’ acceptance of frozen carabeef due to their continuing preference for fresh warm meat. But in the end, price has spoken.

Suhandri

Indonesia began buying Indian carabeef in 2017, when it received 55,000 tons, according to Bulog, a state-owned importer.

In 2018 and 2019, the quota was pegged at 100,000 tons. Today more state-owned companies, including Bulog, Berdikari and Perusahaan Perdagangan Indonesia, are allowed to import carabeef.

Suhandri, Secretary-General of the Indonesian Meat Importers Association, estimates that carabeef now accounts for almost 65% of the household and MSME segments, which were previously dominated by local beef and imported secondary cuts.

Indonesia mostly imports frozen boxed beef from Australia.
Brazil is the top supplier of frozen pork to Vietnam.

GEA spiral freezer at home in SE Asia

The S-Tec spiral freezer, with Callifreeze, provides continuous control of the frozenness of food products.

Since its launch in Southeast Asia last June, GEA’s S-Tec spiral freezer has made significant market share gains.

The S-Tec spiral freezer, which features the Callifreeze control system, is designed for a wide range of meat, poultry and fish, as well as bakery, dairy products and ready meals.

It has a capacity of up to 6000 kg/hour and promises efficient airflow and a hygienic design.

Unique control system

Callifreeze is the award-winning, continuous freezer control system that has been proven to reduce energy consumption, improve product quality and reduce wastage by automatically controlling and monitoring the level of frozenness (LOF) of products at the freezer exit.

Mathieu Nouhin, GEA’s Product Manager for Freezing, said that there is no point in continuing to cool a product beyond 100% frozen but, until now, there has been no way of checking the LOF of products as a continuous part of the process.

“Callifreeze uses GEA’s unique sensing and control technology to measure the LOF of every product in the spiral. It then adjusts the machine to achieve perfect freezing in line with each customer’s requirements,” he said.

Even before the introduction of Callifreeze, the S-Tec was already a market leader in the areas of hygienic design and operating efficiency.

Product advantages

GEA spiral freezers offer pure horizontal airflow, which provides a consistent airflow and temperature distribution across all products wherever they are in the spiral.

This ensures a small temperature differential within the machine, reducing product dehydration, significantly improving the yield and keeping power usage to a minimum.

The S-Tec uses a fully welded construction for the whole of the product-contact belt area. It is also available with a fully welded modular floor that does not require floor heating. This eliminates any dirt traps that would be created by a bolted structure and provides a perfect surface for cleaning.

It can be configured with a choice of enclosure and floor types, single or twin-drum configurations, and a selection of infeed/outfeed options. It also has a range of cleaning options.

With its application center in Singapore, GEA’s regional service personnel are involved at the commissioning stage of the equipment, allowing them to build close relationships with each customer and provide maintenance, spare parts and operational advice throughout the lifetime of the equipment.

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Negative impact

The Indonesian Cattle and Buffalo Farmers Association said that carabeef imports have negatively affected local farmers.

Nonetheless, Mr Suhandri estimates that carabeef imports will reach around 80,000 tons in 2019, and believes India will ask for a higher allocation for 2020.

Allana is a prominent carabeef exporter to Indonesia.

“The import of carabeef is directly related to our crude palm oil exports, for which India is Indonesia’s big importer.

“If we push our palm oil more strongly, India will surely want to sell more of its carabeef. I think they will ask for at least around 150,000 tons for the import allocation,” he told Asian Meat Magazine.

Beef shift

If that happens, Mr Suhandri believes that while total consumer demand will remain steady at around 250,000 tons, the beef market will see a shift. The foodservice segment will try to use carabeef because of its abundant supply and cheaper price. Carabeef sellers will also campaign to promote frozen meat.

He said local farmers should redefine their positioning and perhaps focus on making money during Muslim religious festivals. This repositioning will apply too to beef exporting countries.

“Australian beef imports may decline but I believe they will grow in the premium market,” Mr Suhandri said.

Indonesia sources around 55-65% of beef imports from Australia, followed by the US, New Zealand and Spain. Imports consist mostly of prime and secondary cuts, and offal.

“Secondary cuts make up the bulk because they go to households,  MSMEs and meat processors. Imports of prime cuts for the foodservice segment has been stable so far,” said Mr Suhandri.

He anticipates beef imports will have stood at around 150,000-160,000 tons for the last year, roughly the same as for 2018.

Chicken and beef top in Malaysia

With a 98% self-sufficiency in poultry production, Malaysia is a net exporter in this category.

Chicken is the most consumed meat in the country, with per capita consumption of 46.7kg in 2018. Fresh, frozen and chilled varieties are supplied by big companies such as Leong Hup and QSR brands. The latter has captured a large market share through its KFC restaurant chain.

Malaysia’s large Muslim population also consumes a lot of beef, 70% of which comes from India, and the rest from Australia, Pakistan and Bangladesh. Of the country’s overall meat imports, beef is top with sheep and goat coming in at 3%, according to a 2018 report from Meat and Livestock Australia.

Beef imports are expected to increase this year on the back of a frosty political climate. A tiff has led to India refusing to buy Malaysian palm oil unless Malaysia concedes to more beef imports.

Frozen carabeef cuts at a supermarket in Bogor, Indonesia.

As for frozen premium meat such as wagyu beef, local importer AAH Nippon’s Managing Director Ajwad Abu Hassan said: “We saw the wagyu consumption trend pick up this year but the market is still new, which has prompted us to set up a processing plant to offer smaller cuts in yakiniku or shabu-shabu portions.

“But I feel the market is too saturated when it comes to premium beef, and I foresee its consumption lessening in 2020.”

Pork imports

With self-sufficiency in pork at 92%, fresh pork meat is freely available. Nevertheless, Malaysia also imports pork products mostly in the form of frozen sausages, bacon and pork balls. Since September 2018, all pork meat and products from ASF-affected countries has been banned, and the government has not yet announced any changes to its import strategy.

Frozen pork products continue to be stocked in supermarket refrigerators, though these come only from ASF-free countries such as Australia and Germany.

Premium meat preferred in Singapore

No other market in this region is more reliant on imported meat than Singapore, which ships in everything from poultry to pork.

It also imports USD 11 million worth of live pigs from Sarawak every year and has banned all pork meat and related products from ASF-affected countries.

The small island nation is big on food safety, and has started to open up its pork market to countries including Belgium, which has just been declared FMD-free.

Its population is not just health conscious but it also cares about sustainability, making Singapore a hotbed for carbon-free meats such as the Borrowdale free-range pork, as well as Five Founders beef.

A recent meeting in Australia to entice Singapore food companies to sample organic and carbon-free products means more premium-branded frozen meat is on its way to the country.

Meanwhile, Brazil is Singapore’s main source of frozen poultry meat, though Malaysian brands are also present in the market, including Kee Song and Aqina. As in Malaysia, poultry is Singapore’s most consumed meat, with annual per capita consumption of 34kg.

More beef in Bangladesh

Shamim Ahamed

South Asia has had a mixed relationship with frozen meat, with many countries preferring their protein fresh and locally produced. Over the last few years, however, frozen meat imports have crept into various niche markets to cater for changing consumer behavior.

In Bangladesh, frozen meat imports have been steadily growing over the last five years, Shamim Ahamed, President of the Halal Meat Importers Association of Bangladesh, told Asian Meat Magazine.

In 2017-18, meat imports stood at 1800 tons; by 2018-19, they had grown to 5000 tons, he said. The country mainly imports frozen buffalo meat from India.

“It is cheaper than local meat, so many like to buy it,” said Mr Ahamed.

The imports have also grown since Bangladesh banned the smuggling of live cattle from across the border in India.

Keells frozen chicken sausages.

He noted that it was Bangladesh’s poultry industry that dominates the market though many consumers prefer to eat beef.

“People do not eat much beef because they cannot afford it. Only 2-3 local companies are selling frozen red meat and they are not doing that well,” he said.

Meat imports from Australia, New Zealand, Korea and Japan have also entered Bangladesh’s premium markets. Mr Ahamed expects imports to help boost meat consumption in the country.

Pork shortage in Sri Lanka

In Sri Lanka, meat imports have been stable with some gaps in pork supplies due to ASF in China.

Nirosh Lalantha, Head of Quality Assurance and Research and Development at leading meat processing company Keells Food Products, told Asian Meat Magazine that a large quantity of beef, lamb, mutton, duck and seafood are imported on a needs basis for the country’s foodservice and tourism industries. Of these, beef imports have shown a downtrend, but the others remain stable.

Though Australia and Brazil are traditional exporters to Sri Lanka,  Keells has more recently been looking to China for its pork. But “with the current disease threats we had to stop Chinese imports, so there is a short-term gap in pork supply,” Mr Lalantha said. He expects this supply gap to adjust itself by mid-2020.

The local frozen pork industry has also seen an increase in demand as more people consume pork. This has put some pressure on companies like Keells, which also re-exports pork to overseas markets including India.

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