Bennett's law, China, meat consumption, income elasticity, vector error correction model (VECM), projection, Agricultural and Food Policy, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, C22, Q11, Q13,

Goldsmith, Peter D.

Masuda, Tadayoshi

English

Research Papers in Economics

 
 
 
 
 
China’s Meat Consumption:  
An Income Elasticity Analysis and Long-Term Projections  
 
 
 
 
 
Tadayoshi Masuda
1 and Peter D. Goldsmith
2  
 
 
 
1National Soybean Research Laboratory  
University of Illinois at Urbana-Champaign  
Email: tmasuda@illinois.edu  
 
 
2Department of Agricultural and Consumer Economics  
University of Illinois at Urbana-Champaign  
Email: pgoldsmi@illinois.edu  
 
 
 
 
 
Poster prepared for presentation at the Agricultural & Applied Economics Association 2010  
AAEA, CAES, & WAEA Joint Annual Meeting, Denver, Colorado, July 25-27, 2010  
 
 
 
 
 
Copyright 2010 by Tadayoshi Masuda and Peter D. Goldsmith.  All rights reserved.  Readers 
may  make  verbatim  copies  of  this  document  for  non-commercial  purposes  by  any  means, 
provided that this copyright notice appears on all such copies.  
 
   China’s Meat Consumption: 
An Income Elasticity Analysis and Long-Term Projections 
Tadayoshi  Masuda* and Peter D. Goldsmith**
*National Soybean Research Laboratory and **Dept. of Agricultural and Consumer Economics,  University of Illinois 
Introduction
Bennett (1941) suggests that the ratio of cereal-
potato calories to total food calories is itself a rough
(inverse) index of income status, and a rougher index
of quality diet. In the light of what is called the
Bennett’s law, China (Mainland China + Hong Kong
+ Macau)’s per capita income growth as well as
population growth and urbanization fuel the increase
in meat consumption per capita and in total (Figures
1, 2, 3). During the half century, China’s per capita
real GDP (constant US dollar in 2000) increased 14.3
times and its total population 1.9 times.
Methods
We deal with time series of China’s domestic meat
supply quantities for food (in metric tons) as meat
consumption from 1961 to 2008. We employ the
concept of income elasticity of demand using the
per capita meat consumption and per capita real
GDP. Data sources are FAOSTAT (FAO) and WDI
Online (World Bank).
Vector Error Correction Model (VECM) is
employed to estimate the cointegrating equations
or long-term income elasticities. Gonzalo (1994)
shows that Johansen’s (1988) maximum likelihood
approach clearly has better properties. Following
Johansen (1995), the trend parameters are either
set to zero or unrestricted to improve fitness. The
damped-trend linear exponential smoothing model
(Gardner and Mckenzie, 1985; Gardner, 1985) is
Figure 2. Shifts of Meat1 Consumption Quantity2
Share of China3, USA, Brazil and Continents 
Figure 1. China’s Ratio of Meat Calories to Total 
Food Calories (1965-2005) 
Commodity Elasticity Std. Err. Log L # of lags Period # of Obs.
Pig meat 0.151 0.048*** 169.556 3 1964 -2008 45
Poultry meat 1.057 0.087*** 168.582 3 1964 -2008 45
Bovine meat 1.560 0.143*** 154.035 3 1964 -2008 45
Mutton & Goat 0.882 0.045*** 169.507 3 1964 -2008 45
Other meat 0.944 0.088*** 132.126 3 1964 -2008 45
Table 1. Long-term Income Elasticity of 
Meat Consumption in China 
Note. ***Denotes significant at 1%. 
Source: Estimation by authors. 
1999/01 2010 2020 2030
Meat Consumption, Total (MMT) 62.6 81.6 111.8 136.3
-- Pig meat 41.0 48.7 54.9 58.3
-- Poultry meat 12.9 19.0 31.6 42.0
-- Bovine meat 5.2 7.7 15.8 23.8
-- Mutton & Goat meat 2.7 4.4 6.7 8.5
-- Other meat 0.8 1.8 2.8 3.6
Per Capita Meat Cons. (kg/capita/year) 49.2 59.9 77.7 92.6
-- Pig meat 32.2 35.8 38.2 39.6
-- Poultry meat 10.1 14.0 21.9 28.6
-- Bovine meat 4.1 5.6 11.0 16.2
Table 2. China’s Meat Consumption: Projection Summary 
6% 8% 9% 10% 12% 16% 21% 26% 27%
24% 23% 21% 20% 18% 17%
16%
15% 15% 3% 3% 3% 3% 4% 4%
5%
6% 6%
51% 50% 52% 51% 50% 48% 43% 38% 37%
9% 9% 9% 9% 9% 8% 8% 9% 9%
76
92
107
124
141
165
191
218
244
0
50
100
150
200
250
0%
20%
40%
60%
80%
100%
China
USA
Brazil
Eurasia excl. China 15% 13% 12% 14% 16% 17% 19% 20% 22%
3500 100%
Objectives
1) to estimate the long-term income elasticity of
demand for meat by commodity (pig meat,
poultry meat, bovine meat, and mutton & goat
meat) in China and discuss the differences;
2) to project the long range meat consumption by
commodity through 2030 in China; and
3) to discuss the policy and business implications
regarding China’s livestock industry and
international feed grain and oilseeds markets.
(Gardner and Mckenzie, 1985; Gardner, 1985) is
applied to estimate per capita GDP beforehand.
Given the estimated income elasticities and per
capita income, China’s meat consumption
quantities are projected using a recursive form
through 2030.
Results, Projections, and Discussion
-With respect to income increase, pig meat
consumption is inelastic (0.151), mutton & goat
meat and poultry meat are rather unity (0.882 and
1.057, but bovine meat consumption is elastic
(1.560) (Table 1).
-As GDP grows annually at 4.9% in 2010-20 and
2.8% in 2020-30, total meat consumption increases
at 3.2% and 2.0%, respectively, and reaches 136
mil. metric tons in 2030 (Table 2).
- China’s per capita meat consumption (54 kg/ca/yr
in 2006-07) is already above the world average
(41) and will exceed the current Brazil’s per capita
meat consumption (81) in 2020s.
- China is a top importer of feed crop (soybean)
and now meat importer (Table 3).
-As food policy, China needs to consider self-
sufficiency and distribution of protein foods.
- International meat and feed crop markets will be
affected by China’s livestock industry.
Notes: 1. Meat = Bovine Meat + Mutton & Goat Meat + Pig Meat + 
Poultry Meat + Other Meat. 
2. Domestic supply quantity for food (million metric tons). 
3. China = Mainland China + Hong Kong + Macau. 
Source: FAOSTAT and authors’ calculation. 
Notes: 1. China = Mainland China + Hong Kong + Macau. 
2. Meat = Bovine Meat + Mutton & Goat Meat + Pig Meat + Poultry Meat + Other Meat. 
3. Other Animal Products include offals, animal fats, eggs, milk, aquatic products. 
4. Other Vegetal Products include sugar crops, sugar & sweeteners, honey, pulses, tree nuts, 
oilcrops, vegetable oils, vegetables, fruits, stimulants, spices, alcoholic beverages. 
Source: FAOSTAT and authors’ calculation. 
Figure 3. China’s Meat Consumption and Its 
Composition (1961-2005) 
Notes. Meat Consumption = Domestic Meat Supply for Food / 
Population.  Carcass retail weight loss is not considered. 
Source: FAOSTAT and authors’ calculation. 
-- Bovine meat 4.1 5.6 11.0 16.2
-- Mutton & Goat meat 2.1 3.2 4.7 5.8
-- Other meat 0.7 1.3 1.9 2.4
GDP (billion constant 2000 USD) 1,372 3,276 5,302 6,956
Per Capita GDP (cons. 2000 USD/capita) 1,077 2,406 3,683 4,728
Population, Total (million people) 1,274 1,362 1,439 1,471
1999/01-2010 2010-20 2020-30
Meat Consumption, Total (CAGR %) 2.7% 3.2% 2.0%
-- Pig meat 1.8% 1.2% 0.6%
-- Poultry meat 4.0% 5.2% 2.9%
-- Bovine meat 4.0% 7.5% 4.2%
-- Mutton & Goat meat 5.0% 4.4% 2.5%
-- Other meat 7.6% 4.7% 2.6%
Per Capita Meat Consumption (CAGR %) 2.0% 2.6% 1.8%
-- Pig meat 1.1% 0.6% 0.4%
-- Poultry meat 3.3% 4.6% 2.7%
-- Bovine meat 3.3% 6.9% 4.0%
-- Mutton & Goat meat 4.3% 3.8% 2.2%
-- Other meat 6.9% 4.1% 2.4%
Gross Domestic Product (CAGR %) 9.1% 4.9% 2.8%
Per Capita GDP (CAGR %) 8.4% 4.4% 2.5%
Population, Total (CAGR %) 0.7% 0.6% 0.2%
Note. 1. Projection starts from 2009. 
2. CAGR = Compound Annual Growth Rate. 
Sources: FAOSTAT, World Bank WDI, and estimation by authors. 
Element World China USA Brazil India
Production (million metric tons) 269.9 71.6 41.5 21.1 6.4
Net Import (million metric tons) - 0.7 -3.0 -5.8 -0.5
Dom. Supply (million metric tons) 269.9 72.3 38.5 15.3 5.9
Per Capita Supply (kg/capita/year) 40.7 54.2 125.5 80.8 5.1
Population, Total (million people) 6,631 1,332 307 189 1,156
Table 3. Meat Supply Balances in China, USA, Brazil 
& India (2006-07 year average) 
Source: FAOSTAT and authors’ calculation. 
America excl. USA & Brazil
Africa
Oceania
World Meat Consumption (MMT, right)
76% 81% 81% 80% 82% 80% 73% 67% 65%
17% 12% 12% 13% 11% 12%
16% 20% 20%
60.0
6.5
9.5 10.5 12.1
16.8
23.3
33.7
45.5
51.4
0.0
15.0
30.0
45.0
0%
25%
50%
75%
100%
Pig meat (%, left)
Poultry meat (%, left)
Bovine meat
Other meat
Total Meat Consumption (kg/capita/yr, right)
Mutton & Goat meat
4% 4% 5% 6% 7% 8% 11% 14% 15% 2% 2% 2% 2% 3% 3% 5% 6% 7%
78% 81% 81% 78% 75% 72% 64% 60% 56%
1799 1854 1932
2167
2469
2704
2842 2901 2970
1500
2000
2500
3000
0%
25%
50%
75%
1965 1970 1975 1980 1985 1990 1995 2000 2005
Meat Total (%) Other Animal Products (%)
Cereals & Starchy Roots (%) Other Vegetal Products (%)
Total Food Kcal/capita/day (Right)  Poster #11972, Masuda and Goldsmith, 2010 AAEA 
 
Figure 1. China’s Ratio of 
Notes: 1. China = Mainland China + Hong Kong + Macau. 
2. Meat = Bovine Meat + Mutton & Goat Meat + Pig Meat + Poultry Meat + Other Meat. 
3. Other Animal Products include offals, animal fats, eggs, milk, aquatic products. 
4.  Other  Vegetal  Products  include  sugar  cr
vegetable oils, vegetables, fruits, stimulants, spices, alcoholic beverages. 
Source: FAOSTAT and authors’ calculation. 
   
4% 4% 5% 2% 2% 2%
78% 81% 81%
15% 13% 12%
1799 1854
0%
25%
50%
75%
100%
1965 1970 1975
Meat Total (%)
Cereals & Starchy Roots (%)
Total Food Kcal/capita/day (Right)
Masuda and Goldsmith, 2010 AAEA Annual Meeting in Denver
Page 3 of 11 
Ratio of Meat Calories to Total Food Calories (1965
China = Mainland China + Hong Kong + Macau.  
2. Meat = Bovine Meat + Mutton & Goat Meat + Pig Meat + Poultry Meat + Other Meat.  
3. Other Animal Products include offals, animal fats, eggs, milk, aquatic products.  
4.  Other  Vegetal  Products  include  sugar  crops,  sugar  &  sweeteners,  honey,  pulses,  tree  nuts,  oilcrops, 
vegetable oils, vegetables, fruits, stimulants, spices, alcoholic beverages.  
Source: FAOSTAT and authors’ calculation.  
5% 6% 7% 8% 11% 14% 15% 2% 2% 3% 3%
5% 6% 7%
81% 78% 75% 72% 64% 60% 56%
12% 14% 16% 17% 19% 20% 22%
1932
2167
2469
2704
2842 2901
1975 1980 1985 1990 1995 2000 2005
Other Animal Products (%)
Cereals & Starchy Roots (%) Other Vegetal Products (%)
Total Food Kcal/capita/day (Right)
Denver   
Meat Calories to Total Food Calories (1965-2005)  
 
tree  nuts,  oilcrops, 
15%
7%
56%
22%
2970
1500
2000
2500
3000
3500
2005
Other Animal Products (%)
Other Vegetal Products (%)  Poster #11972, Masuda and Goldsmith, 2010 AAEA 
 
Figure 2. Shifts of Meat
1 Consumption Quantity
Notes: 1. Meat = Bovine Meat + Mutton & Goat Meat + Pig Meat + Poultry Meat + Other Meat. 
2. Domestic supply quantity for food 
3. China = Mainland China + Hong Kong + Macau. 
Source: FAOSTAT and authors’ calculation. 
   
6% 8% 9%
24% 23% 21%
3% 3% 3%
51% 50% 52%
9% 9% 9%
76
92
107
0%
20%
40%
60%
80%
100%
China
USA
Brazil
Eurasia excl. China
America excl. USA & Brazil
Africa
Oceania
World Meat Consumption (MMT, right)
Masuda and Goldsmith, 2010 AAEA Annual Meeting in Denver
Page 4 of 11 
Consumption Quantity
2 Share of China
3, USA, Brazil and Continents 
Notes: 1. Meat = Bovine Meat + Mutton & Goat Meat + Pig Meat + Poultry Meat + Other Meat. 
for food (million metric tons).  
3. China = Mainland China + Hong Kong + Macau.  
ors’ calculation.  
9% 10% 12% 16% 21% 26% 27%
21% 20% 18% 17%
16%
15% 15% 3% 3% 4% 4%
5%
6%
52% 51% 50% 48% 43% 38% 37%
9% 9% 9% 8% 8% 9%
107
124
141
165
191
218
China
USA
Brazil
Eurasia excl. China
America excl. USA & Brazil
Africa
Oceania
World Meat Consumption (MMT, right)
Denver   
, USA, Brazil and Continents  
 
Notes: 1. Meat = Bovine Meat + Mutton & Goat Meat + Pig Meat + Poultry Meat + Other Meat.  
27%
15%
6%
37%
9%
244
0
50
100
150
200
250  Poster #11972, Masuda and Goldsmith, 2010 AAEA 
 
Figure 3. China’s Meat Consumption and Its Composition (1961
Notes. Meat Consumption = Domestic Meat Supply for Food / Population.  
considered.  
Source: FAOSTAT and authors’ calculation. 
   
76% 81%
17% 12%
6.5
9.5
0%
25%
50%
75%
100%
Pig meat (%, left)
Poultry meat (%, left)
Bovine meat
Mutton & Goat meat
Other meat
Total Meat Consumption (kg/capita/yr, right)
Masuda and Goldsmith, 2010 AAEA Annual Meeting in Denver
Page 5 of 11 
. China’s Meat Consumption and Its Composition (1961-2005) 
Meat Consumption = Domestic Meat Supply for Food / Population.  Carcass retail weight loss i
Source: FAOSTAT and authors’ calculation.  
81% 80% 82% 80% 73% 67% 65%
12% 13% 11% 12%
16%
20% 20%
10.5 12.1
16.8
23.3
33.7
45.5
51.4
Pig meat (%, left)
Poultry meat (%, left)
Bovine meat
Mutton & Goat meat
Other meat
Total Meat Consumption (kg/capita/yr, right)
Denver   
2005)  
 
Carcass retail weight loss is not 
65%
20%
51.4
0.0
15.0
30.0
45.0
60.0  Poster #11972, Masuda and Goldsmith, 2010 AAEA 
 
Figure 4. China’s Population Shift from Rural to Urban
Source: FAOSTAT and authors’ calculation. 
   
82% 82% 82% 80%
18% 18% 18% 20%
720
820
916
986
1059
0%
25%
50%
75%
100%
19651970197519801985
Rural population (%, left)
Total Population (million, right)
Masuda and Goldsmith, 2010 AAEA Annual Meeting in Denver
Page 6 of 11 
China’s Population Shift from Rural to Urban (1965-2030
Source: FAOSTAT and authors’ calculation.  
77% 72% 68% 64% 59% 55% 50% 47% 43%
23% 28% 32% 36% 41% 45% 50% 53% 57%
1059
1148
1218
1274
1320
1362
1404
1439 1462
198519901995200020052010201520202025
Rural population (%, left) Urban population (%, left)
Total Population (million, right)
Denver   
2030)  
 
43% 39%
57% 61%
1462 1471
500
750
1,000
1,250
1,500
20252030  Poster #11972, Masuda and Goldsmith, 2010 AAEA Annual Meeting in Denver   
Page 7 of 11 
 
Table 1. Long-term Income Elasticity of Meat Consumption in China  
commodity  Elasticity  Std. Err.     Cons.  Std. Err.  Log L  # of lags  Period  # of Obs. 
Pig meat  0.151  0.048  ***  -  -  169.556  3  1964 -2008  45 
Poultry meat  1.057  0.087  ***  -4.706  -  168.582  3  1964 -2008  45 
Bovine meat  1.560  0.143  ***  -8.572  -  154.035  3  1964 -2008  45 
Mutton & Goat  0.882  0.045  ***  -5.761  -  169.507  3  1964 -2008  45 
Other meat  0.944  0.088  ***  -6.566  -  132.126  3  1964 -2008  45 
Note. ***Denotes significant at 1%.  
Source: Estimation by authors.  
     Poster #11972, Masuda and Goldsmith, 2010 AAEA Annual Meeting in Denver   
Page 8 of 11 
 
Table 2. China’s Meat Consumption: Projection Summary  
   1999/01  2010  2020  2030 
Meat Consumption, Total (million metric tons)  62.6  81.6  111.8  136.3 
-- Pig meat  41.0  48.7  54.9  58.3 
-- Poultry meat  12.9  19.0  31.6  42.0 
-- Bovine meat  5.2  7.7  15.8  23.8 
-- Mutton & Goat meat  2.7  4.4  6.7  8.5 
-- Other meat  0.8  1.8  2.8  3.6 
Per Capita Meat Consumption (kg/capita/year)  49.2  59.9  77.7  92.6 
-- Pig meat  32.2  35.8  38.2  39.6 
-- Poultry meat  10.1  14.0  21.9  28.6 
-- Bovine meat  4.1  5.6  11.0  16.2 
-- Mutton & Goat meat  2.1  3.2  4.7  5.8 
-- Other meat  0.7  1.3  1.9  2.4 
GDP (billion constant 2000 USD)  1,372  3,276  5,302  6,956 
Per Capita GDP (constant 2000 USD/capita)  1,077  2,406  3,683  4,728 
Population, Total (million people)  1,274  1,362  1,439  1,471 
 
   1999/01-2010  2010-20  2020-30 
Meat Consumption, Total (CAGR
2 %)  2.7%  3.2%  2.0% 
-- Pig meat  1.8%  1.2%  0.6% 
-- Poultry meat  4.0%  5.2%  2.9% 
-- Bovine meat  4.0%  7.5%  4.2% 
-- Mutton & Goat meat  5.0%  4.4%  2.5% 
-- Other meat  7.6%  4.7%  2.6% 
Per Capita Meat Consumption (CAGR %)  2.0%  2.6%  1.8% 
-- Pig meat  1.1%  0.6%  0.4% 
-- Poultry meat  3.3%  4.6%  2.7% 
-- Bovine meat  3.3%  6.9%  4.0% 
-- Mutton & Goat meat  4.3%  3.8%  2.2% 
-- Other meat  6.9%  4.1%  2.4% 
Gross Domestic Product (CAGR %)  9.1%  4.9%  2.8% 
Per Capita GDP (CAGR %)  8.4%  4.4%  2.5% 
Population, Total (CAGR %)  0.7%  0.6%  0.2% 
Note. 1. Projection starts from 2009.  
2. Compound Annual Growth Rate.  
Sources: FAOSTAT, World Bank WDI, and estimation by authors.  
     Poster #11972, Masuda and Goldsmith, 2010 AAEA Annual Meeting in Denver   
Page 9 of 11 
 
Table 3. Meat Supply Balances in China, USA, Brazil & India (2006-07 year average)  
Element  World  China  USA  Brazil  India 
Production (million metric tons)  269.9  71.6  41.5  21.1  6.4 
Net Import
1 (million metric tons)  -  0.7  -3.0  -5.8  -0.5 
Domestic Supply
2 (million metric tons)  269.9  72.3  38.5  15.3  5.9 
Per Capita Supply
3 (kg/capita/year)  40.7  54.2  125.5  80.8  5.1 
Population, Total (million people)  6,631  1,332  307  189  1,156 
Notes: 1. Net Import = Import – Export.  
2. Domestic Supply = Production + Net Import.  
3. Per Capita Supply = Domestic Supply / Population.  
Source: FAOSTAT and authors’ calculation.  
     Poster #11972, Masuda and Goldsmith, 2010 AAEA Annual Meeting in Denver   
Page 10 of 11 
 
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China's Meat Consumption: An Income Elasticity Analysis and Long-Term Projections

China's Meat Consumption: An Income Elasticity Analysis and Long-Term Projections

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