ANALYSIS OF EAST ASIAN MEAT IMPORT DEMAND: MARKET PROSPECTS FOR ALBERTA AND CANADA

This study focuses on the demand for meat and the market vulnerabilities that apply to four selected Asian markets that are of potential importance to meat exporters. The markets identified for this purpose are Japan, South Korea, Indonesia, and Singapore. An initial overview of market prospects and vulnerabilities based on previous studies is reported. Detailed assessments of import demand and substitution between various meats for meat exports from Canada/Alberta to each of these markets was also undertaken. This required collection and analysis of extensive data relating to consumption and imports of major meat groups in the four Asian countries. Two different econometric models were applied. These included source-differentiated Almost Ideal Import Demand Systems and Multiple Competitive Interaction models. Detailed estimates are reported of the substitution tendencies, in the form of cross-elasticities between various meats (beef, pork, poultry and other) and between different sources of the various meats. Meat sources include Canada, the United States, European Union, Oceania, Developing Asia and others. Developing Asia exports reflect that Thailand, Taiwan and China are all major meat exporters to other countries in Asia; Latin America is also a significant exporter of beef to some countries in this region. Market share elasticities are negative and significant with respect to own prices in almost all cases in each of the four importing countries. Furthermore, the own price elasticities are elastic in the majority of cases except in the meat import market of South Korea. It can be concluded that the meat market in East Asia is very price responsive and that price is the most important determinant of meat market share in these countries. Cross-price elasticities may be grouped into two classes: cross price elasticities between same products from different sources (e.g., between U.S. beef and beef from Oceania in the Japanese beef import market) and cross price elasticities between goods (e.g., between U.S. beef and poultry from any source in the Japanese meat import market). Findings about cross product-price elasticities are not as conclusive as the own price elasticities. The cross-elasticities are positive only in 61 percent of the cases. In Indonesia, Japan, and Singapore, substitution relationships are more prevalent in pork import markets than in any other meat market, while in South Korea, such relationships are more prevalent in the beef import market than in any other meat market. This implies that competition is stiffer in the pork and beef markets of these countries. A combination of high expenditure elasticity for imports and inelastic own price elasticity for imports from a given exporter imply strong export potential for that export source in a given import market. The U.S. appears to enjoy such a position in Indonesia, Japan, and South Korea for most of the meats for which it is a major exporter. Canada faces elastic own price and expenditure elasticities in its pork exports to both Japan and South Korea, but inelastic own price and expenditure elasticities in the beef market of South Korea. Although East Asian meat import markets are dominated by the closely located exporters of Australia, New Zealand and some Asian countries, significant swings are observed in the market shares of these sources from time to time, particularly in Indonesia and South Korea. Thus there are real opportunities for more distant exporters, like Canada, to take advantage of these. This will require strategic planning, to build the information capacity to service these markets through knowledge of their preferences, organizations and trade practices. It will also require appropriate positioning, through aggressive, appropriately directed, effective promotion and development activities. Investment in market information is necessary to improve both capacity and positioning activities. Even so, price and quality are important features for the potential of export to these markets to be achieved. Investment in food safety provisions, and development of an associated "safe food" image is likely to be an important feature of reputation in this context.