09 February 2012

China SignPost™ (洞察中国) #54–Supersize Me: Rising Fast Food Sales Suggest China Will Keep Driving a Global Farm Commodity Boom

Gabe Collins and Andrew Erickson, Supersize Me: Rising Fast Food Sales Suggest China Will Keep Driving a Global Farm Commodity Boom,” China SignPost™ (洞察中国), No. 54 (9 February 2012).

China SignPost™ 洞察中国Clear, high-impact China analysis.”©

Chinese consumers are rapidly changing their diets as disposable income rises and fast food items from Western companies like Yum Brands are playing a centerpiece role in the shift. The company reports that it now operates in more than 700 Chinese cities. Importantly for policymakers and investors alike, Yum’s China menu is, with the exception of breakfast, dominated by meat-intensive items. As such, the burgeoning growth of Yum and other fast food sellers in China highlights how meat-hungry Chinese consumers are likely to help sustain a global boom in demand for corn, wheat, chicken and other agricultural commodities for some time to come.

Iron ore and base metals may be under the gun as construction slows down in China, but with China’s domestic farm sector already hard pressed to feed the country, continuing demand for grain-intensive meats is great news for farmers in breadbaskets like Brazil, Argentina, the U.S., and Ukraine. At the same time, higher food prices are bad news for Chinese policymakers who are attempting to restrain inflation while still maintaining reasonably robust economic growth rates. …