US livestock sector to grow until 2019

 

 

Further growth is expected in American livestock industry, but all segments will not reach the strong growth figures achieved in the past years.

 

The livestock sector continues to make adjustments in the first several years of the projections in response to high grain and soymeal prices in 2007 and 2008, followed by weak meat demand caused by the global economic recession, according to the USDA's 10-year outlook report.

 

With producer returns squeezed, production incentives will fall, leading to declines in total US meat and poultry production through 2011. These production adjustments combine with strengthening meat exports to reduce domestic per capita consumption through 2012. The result is lower production at higher prices, which improves net returns and provides economic incentives for moderate expansion in the sector later in the projection period.

 

Poultry production fell in 2009 but is projected to increase the most among the meats over the next decade, as poultry is the most efficient feed-to-meat converter. Growth will remain below rates of the past decade.

 

Continuing near-term production reductions in the livestock sector, along with some recovery in meat and poultry exports, result in higher consumer prices and lower per capita consumption. Annual consumption of red meats and poultry will fall from over 221 pounds per capita in 2004-07 to less than 206 pounds in 2012. As production increases over the remainder of the projection period, per capita consumption of red meats and poultry is expected to resume growth, but will only rises to about 215 pounds by 2019.

 

Due partly to higher feed conversion rates and a shorter production process, the poultry sector has adjusted faster than red meats to the combination of higher feed costs and reduced demand. As a result, poultry production is projected to resume growth in 2010. As producer returns improve, production strengthens further. Per capita consumption rises through the end of the projection period and, in contrast to red meats, surpasses levels of the past decade.

 

After the price declines seen in the livestock sector in 2009, largely due to recession-related effects on meat demand, prices rise over the projection period. A moderate pace of expansion combined with improving domestic and export demand support prices in the projections.

 

Reduced demand resulting from the global recession lowered overall US meat and poultry exports in 2009 by more than 7%. After 2009, exports are projected to rise as global economic growth resumes and the US dollar depreciates. With this growth, exports account for a growing share of US meat use, although the domestic market remains the dominant source of overall meat demand.

 

After declining in 2009-11, US broiler exports will rise through the rest of the projection period. Major US export markets include China and Mexico. Longer term gains in these markets reflect their economic growth and increasing consumer demand.

 

Demand for poultry also remains strong because of its lower cost relative to beef and pork. US producers will continue to face strong competition from other major exporters, particularly Brazil. For most of the projection period, exports from bird flu-affected countries are expected to be limited to fully cooked products.