July 1, 2004

Global Meat Output, Prices Increasing

International meat prices are surging in 2004, as animal disease outbreaks in major meat exporting countries and bans on imports from disease afflicted areas are reducing exportable supplies, the United Nations' Food and Agricultural Organization said. Expectations of higher international prices for meat came on the heels of rising prices in the previous year.

In 2003, the FAO trade-weighted meat price index already rose by 16 percent, as limited meat production gains lifted prices by 42 percent for poultry, 19 percent for beef, and eight percent for pork.

"Animal diseases, rising feed prices, and considerable uncertainty about consumer demand for meat products are slowing the expansion in global meat output in 2004," the FAO said in its report. FAO expects global meat production to rise by one percent to 253.6 million metric tons, one of the slowest growths registered in FAO's database.

The impact of the avian influenza, which led to increased poultry mortality/culling throughout Asia and parts of North America, and the finding of bovine spongiform encephalopathy in North America, has disrupted global meat shipments. In Asia, meat output is expected to increase less than two percent, half the average rate of the past five years.

Output gains in developed countries are expected to remain stable with a slight increase in North America offset by a decline in Europe. At the world level, per capita meat consumption is expected to remain at 39.9 kg per capita, constrained by high overall meat prices and consumer concerns about the safety of eating poultry, particularly in Asia.

Import bans on meat produced in disease-afflicted countries in early 2004 affected approximately one-third of global meat exports, or 6 million metric tons. While the bans have been temporary, global meat trade, originally forecast to rise in 2004, is now anticipated to slide by four percent to 18.4 million metric tons.

If confirmed, this would be the first drop in meat trade since the mid-1980s. Over the past four years, alternating disease outbreaks and recoveries have resulted in rapid shortages/increases in exportable meat supplies and considerable international meat price variability.