Livestock & Feed Bussiness Worldwide: December 2017
Beef is back in demand, but can supply keep up?
by Eric J. BROOKS
Is beef coming back into fashion? Not exactly, but the world market for this pricey red meat has not been this interesting for decades.
In a world with limited arable land and a constantly growing population, beef’s unfortunate status as the most feed inefficient, land-hungry protein line puts it at a disadvantage relative to other meats. Based on USDA statistics, this continues to be true: from a 1.1% annual expansion rate in the 1988-98 decade, world beef output rose by only 0.8% from 1998-2008, then slowed down to 0.5% from 2008-18.
Per capita beef consumption fell from 9.2kg in 1988 to 8.5kg in 2008 to just under 8kg this year but the quality and quantity of this consumption is changing. The West is self sufficient in beef but its consumption has been flat for decades.
On the other hand, led by China, Southeast Asia and the Middle East, the beef consumption of emerging economy nations incapable of raising their own cattle is skyrocketing.
As a result, world beef consumption is tracking population growth but the distribution of this consumption is undergoing a profound change: East Asia, Southeast Asia and the Middle East have gone from 6% of world beef consumption in 1988 to an estimated 25% in 2018.
The rise of beef consumption in these emerging economy nations makes the market interesting for several reasons.
First, unlike traditional western consumers, they must import most of the beef they eat. Moreover, from the Middle East to China, consumers in emerging economy beef importing nations show a high propensity to eat expensive beef cuts, whereas in mature markets like America, low-value ground beef makes up over half of consumption.
This has profoundly boosted beef demand, cattle rearing returns and beef's price, with the most expensive cuts leading the way. Thus, while beef production is rising more slowly than ever, emerging market demand is causing consumption to jump ahead of output. Moreover, the proportion of beef that trades on the world market and fetches the highest price possible is skyrocketing.
World beef exports rose at a meager 0.5% annual rate in the twenty years up to 2007. Beef exports then grew more rapidly, rising 1.4% annually from 2007 through 2012 inclusive. This accelerated to a 3.7% annual increase in beef exports in the five years from 2012 through 2017 inclusive.
By comparison, exports of pork and chicken meat grew by 2.6% and 1.9% respectively over these same five years.
Despite this bright consumption forecast, beef supplies are too strained to meet demand. With 2017’s top two exporters incapable of boosting their output, 2018 exports are climbing 2.7%, to 10.56 million tonnes, from 9.80 million tonnes this year. They would have climbed even faster, were it not for the supply-side constraints we describe in our articles on Australia and Indian beef cattle.
The full article is published on the December 2017 issue of LIVESTOCK & FEED Business. To read the full report, please email to firstname.lastname@example.org to request for a complimentary copy of the magazine, indicating your name, mailing address and title of the report.