Meat for the masses, China's next big thing

19 Mar 2006 01:04:20 GMT
Source: Reuters
 By Lucy Hornby

PINGDU, China, March 19 (Reuters) - A warm whiff of chicken is the only hint from outside of the activity at the Tianrun Meat Plant, on the Shandong plains two hours from Qingdao.

Inside, a hive of masked, pink-clad workers slice and sort chicken pieces hacked from carcasses hanging from a track mounted in the ceiling. The plant's workers pack 80,000 chickens and ducks a day into neat plastic bags for delivery to fast-food chains and supermarkets.

Provincial officials across China are hatching plans for similar meat-packing plants and large-scale livestock farms to provide jobs in the countryside. To feed its people, China wants to develop more efficient agriculture, without unleashing a flood of landless labourers into the cities.

"The nation is pushing economies of scale, and this will accelerate," Meng Qingli, head of breeding services for Liuhe Group, China's largest poultry producer, said in an interview at his Qingdao offices this month.

"If I were the minister of agriculture, I wouldn't allow farmers to raise animals at all, not even for their own dinner. Only companies. The day may come soon."

Breakneck growth in China's cities has largely left the countryside behind, and Beijing's economic plan this year seeks to redress the imbalance. From Heilongjiang in the north to Hainan in the south, officials are looking to meat to employ rural dwellers and get added value from low-margin grains.

But while local government projects are notorious for graft and inefficiency, individual Chinese farmers have trouble getting the loans or insurance coverage they need to scale up.

Beijing needs to encourage lending to rural businesses to allow secondary industries to develop, said Liu Yonghao, chairman of the New Hope Group, the largest Chinese feed company. Family owned New Hope owns a controlling stake in Liuhe.

"Of the 600 or so national-size agricultural businesses, over 80 percent are private. So the national policy towards private enterprises is very important."


Labour costs in China's more prosperous coastal regions are rising, making it more economic in the future for Shandong to develop cooking and canning plants, while poultry farms and simple meat packers move to poorer central and western provinces.

"Due to the one-child policy, people are less willing to to do dirty or dangerous work. It's already evident," said Zhao Jingquan, general manager of the Tianrun plant in Pingdu.

The Pingdu plant employs more than 2,000 people compared to 200 workers in a similar plant in the U.S., making a Chinese operation about 20 percent more expensive per chicken than a U.S. plant would be.

Liuhe, which owns the Tianrun plant and a dozen like it, is setting up satellite poultry farms within 50 km (30 miles) of each plant. Its goal is to source all poultry from contracted farms.

At one such farm, eight workers raise 1.2 million chickens a year in six long sheds, each 1,900 square metres (20,500 sq ft), under strictly controlled artificial light and temperature.

Such large-scale operations are also a defence against bird flu, which has killed at least 10 people in China. Millions of birds have been culled to contain the H5N1 virus, which epidemiologists fear could mutate to pass easily among humans.

Liuhe officials say outbreaks have been in operations raising a few thousand birds each. Farms raising hundreds of thousands of birds can be more easily controlled because outside threats, such as migratory birds that carry the bird flu virus, are shut out.

At the packing plant, visitors must travel backwards from the "clean room", where wings, thighs and cutlets are prepared for KFC and McDonald's, to the beginning of the process, the "dirty room", where heads, feet and organs are separated, stacked and weighed.

"I am not afraid of bird flu, because I understand how the virus works. And so my workers are not afraid, because we give information regularly on the disease," plant manager Zhao said.

The hanging chickens look gradually more whole as the tour progresses past vats where feathers are steamed off. Then visitors enter a small room where four workers in bloody aprons slice the throats of fluffy white birds.

"I eat chicken, but not very often," said Zhao's assistant Xue Weichun. "It kind of makes me sick."