US cattle Inner Mongolia

♠ Posted by Emmanuel in ,, at 9/28/2007 02:04:00 PM
One of the truisms in development is that food demand increases as a country becomes increasingly prosperous. Nowhere is this dynamic more apparent than in the PRC. One of the (rather Westernized) habits that the Chinese have picked up is an appetite for beef, AKA heffers. So, enterprising American cattle ranchers have decided to set up shop near the booming Chinese market--in Inner Mongolia. However, big operations modeled after American methods will likely bring social (smaller farmers put at a disadvantage), environmental (carbon emissions and water pollution), and political (growing political-economic clout of big operators) dislocations. File this one under "what hath McWorld wrought?" From TIME:
Kevin Timberlake digs the toe of his cowboy boot into the caked earth and gives the coffee-colored dirt a scuff. Some 70 acres of scrubby land spread out in front of him under the washed-out blue sky. "See the soil. This is junk," Timberlake says. Under his breath, he counts a thin herd of cattle hanging their heads over the weeds. Once a horse trainer and breeder in Missouri, Timberlake now spends his days thinking about cows, and this time next year, he and his employer, Western Cattle Company, would like to see about 10,000 more living on this land. "I'd be taking the ground and turning it into something," he says.

Timberlake's dusty patch is not in Missouri — it's in China. Earlier this year, Western Cattle started to raise Holsteins on an American-style ranch and feedlot built in the wide open spaces of Inner Mongolia. Their goal: deliver truckloads of well-marbled beef to the waiting plates of urban China's growing middle class. With a target herd of 75,000, U.S.-based Western Cattle has the potential to be the leading company in the third-largest beef-producing nation in the world. And if the company's Western take on raising cattle catches on in the East, it could kick start the consolidation of China's disorganized beef-production chain, bringing to Inner Mongolia all the high-volume efficiency — and social and environmental concerns — that go with big agriculture.

A few years back, China wasn't much of an attraction for cattlemen. The Chinese traditionally serve beef sparingly, usually in stir-fried dishes, stews and hot pots for which tough, lean meat suffices. But the rise of McDonald's in China in the 1990s is credited with popularizing the all-beef patty, and today upscale restaurants and hotels in major cities commonly put steak on the menu. Consumption has risen 31% in the past five years alone, according to the U.S. Department of Agriculture. "The beef market is exploding," says Western Cattle president Jim Mueller. He's not exaggerating. Owing to soaring demand, China could face beef shortages as early as next year, says the Asian Agribusiness Research Center, a situation exacerbated by a dramatic decline in pork production brought on by an outbreak of blue-ear disease earlier this year. And for now, Mueller doesn't have to worry about competition from back home. Imports of beef from America — a top global supplier — have been banned in China since mad cow disease appeared in Washington State in 2003.

Mueller and his partners chose to set up their first feedlot outside Hohhot, Inner Mongolia's capital, partly because of the local government's aggressive pro-investment policies. Among other things, officials helped the company find land and provided introductions to potential business partners. Ultimately, though, it came down to the fact that Hohhot is a cow town. Two of China's biggest dairies, Mengniu and Yili, have headquarters in the area, and buy milk from thousands of farmers who raise dairy cows in their front yards. There are more than a million cows around Hohhot; the bustling city is plastered with garish advertisements for yogurt and ice cream, and nearby farming villages have developed de facto affiliations with whichever dairy buys their milk. By offering the farmers more money for milk than they earn for crops, the dairies have helped breathe life into Inner Mongolia's struggling economy.

Western Cattle is counting on the same farmers to help them push their agenda for beef. The private company doesn't breed cows; it buys them, fattens them up on a feedlot and then trucks them off to the slaughterhouse. Today, the half million male calves born every year around Hohhot are mostly sold to blood-serum companies that render the animals' plasma into products such as cosmetics. Timberlake, who is the on-site manager for Western Cattle in China, has been going head to head with serum companies since he arrived six months ago, hitting the dairies and villages with competitive offers for calves. The rangy 48-year-old, who has a salt-and-pepper moustache and shock of white hair, says he thinks he's offering the farmers a good bargain, but the deals he makes have got to be win-win. "We're here to do a service and to make money," he says. "We're not over here for our health, or I wouldn't be breathing smog."

Farmers are no less pragmatic about their relationship with the cattle buyers and big dairies. In the village of Bingzhouhai, the whims of the market rule the daily rhythms of life. Every morning, farmers who live in courtyard-style homes walk their cows past the patches of lettuce and squash gardens to the small milking station that Yili operates there. Before dairy became a local industry, people used cattle to plow the fields, but there was a better living to be made selling milk than grain. Now, that seems to be changing. "The price of feed is going up, but the milk price is stable," says He Erwen, a farmer who lives in Bingzhouhai with his family of seven. Though his cows cost more to feed now, he's keeping them with hopes that milk prices will climb, restoring his profits. As for the prospect of selling his surplus male calves to a newcomer like Western Cattle, He laughs. "Depends on the price."

Some worry that the livelihoods of small farmers will be threatened as Inner Mongolian agriculture modernizes. Western Cattle is providing farmers with an additional source of income, and the farmers are providing the company with inexpensive labor. But big feedlots in the U.S. are essentially factories, much larger than the biggest in China today, maintaining herds of tens of thousands of animals supplied by dedicated cattle ranches. As the industry grows, farmers could be squeezed out. Even now, they are at the mercy of middlemen like the dairies, which have some control over pricing. The farmers have none. "Only the big companies have the power," says professor Jiang Gaoming, a plant biologist with the Chinese Academy of Sciences.

No one expects China's beef industry to be transformed overnight. Others have tried Western production methods and failed. Steffen Schindler, a German butcher who runs two Beijing restaurants and a small meat plant, oversaw the first feedlot and slaughterhouse to sell hamburger meat to McDonald's in China. That joint venture went under after a local company set up a competing operation nearby. But as China keeps growing, Schindler thinks it's inevitable that the mom-and-pop industry will coalesce into large operations. "You cannot meet the demand if you're doing it the old-fashioned way," Schindler says.

Still, if more feedlots like Western Cattle's crop up around the country, communities can expect to deal with a new set of problems. Disease outbreaks in concentrated animal populations can be devastating. Even if the cows and their meat are well monitored and safe, feedlots foul the air and can be a source of water pollution. Growing the massive amount of corn needed to feed herds also means fertilizer and pesticide runoff in water supplies, and trucking feed and meat around the country is a big carbon emitter. Wen Bo, China program director with the NGO Pacific Environment, acknowledges that China's cattle industry needs modernization, but says slapping an American model onto the Chinese landscape won't work. "The situation in China is completely different," he says. "In many rural areas, they do not have the infrastructure for environmental treatment." To mitigate damage, Wen says, big companies and governments will need to invest in the communities they're developing, including funding for programs that help displaced farmers find new lines of work. Without investment, "the booming beef and cattle industry would mean the destruction of the community and environment they rely on," says Wen.

Officials in Hohhot don't see it that way. In the past seven years, the city has almost doubled in both population and physical size, a trend that's in keeping with Inner Mongolia's recent double-digit growth rates. Officials welcome Western Cattle's feedlots as a way to use marginal land, create jobs and produce more food. "If we have a very good feedlot here, it will help people become wealthy," says Teng Guiyuan of Hohhot's Bureau of Investment Attraction. "Small farmers want to make money, but they aren't powerful enough. They need a big company to lead the way."

The whole of China is wrangling with how to develop industry responsibly. But for a farmer like He, the question gets drowned out by how his seven cows are going to make the most money for him and his family. Officials like Teng are busy trying to figure out how to ensure their province does not get skipped in China's race to prosperity.

Timberlake, meanwhile, is buried in the day-to-day realities of getting a business off the ground — choosing a new site for the next feedlot and ranch, getting the word out that he's in the market for cattle, and preventing disease outbreaks in the herd. "Every time you try something new, you have your naysayers," Timberlake says. But he insists Western Cattle is offering Inner Mongolian farmers a better way of life — and some nice, juicy steaks, too.