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What do China’s rising meat demand and industrialization of the livestock sector mean for its vegetable oil market?

Bo Xiong (Department of Social Services, California Department of Social Service, Sacramento, California, USA)
Fujin Yi (College of Economics and Management, Nanjing Agricultural University , Nanjing, China)
Yaling Li (College of Economics and Management, Nanjing Agricultural University , Nanjing, China)

China Agricultural Economic Review

ISSN: 1756-137X

Article publication date: 2 May 2017

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Abstract

Purpose

The purpose of this paper is to investigate the implications of the China’s rising meat demand and industrialization of the livestock sector for the vegetable oil market.

Design/methodology/approach

An equilibrium displacement model is constructed to analyze the interactions between meat consumption and vegetable oil market through the development of livestock sector modernization. Parameters derived from the 2006 to 2009 data are first used to produce the counterfactual growth rate of the non-soybean vegetable oil to validate the model. Then the authors use the second set of parameters derived from the 2010 to 2013 data to forecast the changes in the vegetable oil market in China.

Findings

Soybean oil, as a co-product of soybean processing, tends to crowd out other vegetable oils. In particular, the authors find that the market for non-soybean vegetable oils may shrink as long as the rapid industrialization pace above 10 percent within China’s livestock sector continues. Although their production takes up only 8.5 percent of all agricultural lands in China, oil crops remain as important cash crops for farmers contributing over 10 percent to the overall farm income in some provinces. The authors’ analysis suggests that stakeholders in these regions should closely monitor the structural changes within the livestock sector and consider the information for crop selection.

Originality/value

The authors’ analysis contributes to the literature on China’s meat demand by highlighting its implications for other agricultural markets involved in the food system.

Keywords

Acknowledgements

The authors gratefully acknowledge the financial support by National Science Foundation of China (Grant Nos 71673137, 71303115, 71333008), Nanjing Agricultural University (Grant No SKCX2015004), Priority Academic Program Development of Jiangsu Higher Education Institutions (PAPD), China Center for Food Security Studies at Nanjing Agricultural University, Jiangsu Rural Development and Land Policy Research Institute, and Jiangsu Agriculture Modernization Decision Consulting Center. All remaining errors are the authors.

Citation

Xiong, B., Yi, F. and Li, Y. (2017), "What do China’s rising meat demand and industrialization of the livestock sector mean for its vegetable oil market?", China Agricultural Economic Review, Vol. 9 No. 2, pp. 303-316. https://doi.org/10.1108/CAER-04-2016-0057

Publisher

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Emerald Publishing Limited

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