November 30, 2006 

 

Meat consumption to experience slower growth in the next ten years

 

 

Meat consumption would continue to be strong but would experience slower growth in the next ten years, a report by the OECD-FAO said.

 

The OECD-FAO agricultural outlook projects agricultural developments from 2006 to 2015. 

 

It assumes that a resumption of normal market conditions after the animal disease induced shocks would cause meat prices to decline until 2015 by 23 percent for beef, 21 percent for poultry and 18 percent for pork.

 

The report said the price trend would be caused by projected real price declines in feed inputs and productivity gains, particularly in the poultry sector.

 

Over the projection period, poultry's share of global meat trade is projected to move up from 34 percent in the mid-1990s to 39 percent  by 2015, surpassing that of beef, which is expected to fall from 42 percent  to 35 percent over that time.

 

The report also highlighted a change of consumer preferences over the past 15 years.

 

Consumers and retailers now are requiring a broader diversity and higher quality of meat cuts, more ease in preparation and safety assurances.

 

More are also concerned about the ways in which meat is produced, thus driving certification requirements, product safety guarantees and rising demand for animal welfare and environmental standards, the report noted.

 

Critical to the medium term outlook are government policies, the nature and duration of the outbreaks and the long term impact on investment in the sector, the report said. 

 

These factors, along with demographic changes and urbanisation, would  be increasingly important drivers of meat consumption.

 

This is particularly true in developing countries where, over the past decade three-quarters of the growth in global meat production and consumption has taken place.

 

The medium term outlook for meat markets and prices is set against a background of major market instability in recent years due to outbreaks of animal diseases such as FMD in Europe and South America and mad cow in North America, a region which supplies one-quarter of global meat exports.  Bird flu meanwhile, led to the loss of export markets for regional suppliers and led, in 2004, to an unprecedented 8 percent decline in poultry trade.

 

These outbreaks have led to major meat price rises, bans and control measures in many countries. Countries that were spared these outbreaks moved to fill the gap in supplies and international beef prices increased by over 40 percent between 2002 and 2005, the report noted.

 

Pork prices increased by 50 percent in 2004, but this growth was reversed in 2005 as consumers moved back to poultry and beef consumption, despite higher prices. Poultry prices in international markets rose by 43 percent when compared to the year 2002, the report said.

 

As consumers in non-OECD countries adopt more western diets, nearly four-fifths of the growth in meat consumption would  occur in these regions, the report predicted.

 

The outlook for growth in consumption is positive but with stark regional variations. Developing countries in Asia, benefiting from economic growth and rising supplies due to investment in integrated operations, are expected to account for nearly 60 percent of the global growth in consumption.

 

A large share of this increase would be fuelled by the emerging middle-class of China. As a result, China's per capita meat consumption would be up 23 percent  from 2005 to 2015.

 

Meanwhile, the increase in consumption in developed countries is slowing and some 43 percent of this increase occurs in North America. Per capita meat consumption in North America past the mark of 100 kg/capita by 2015,  three times higher than the global average.

 

Poultry and pig meat would  account for almost three-quarters of growth in consumption, as prices for these meats remain low relative to those for beef and sheep.

 

In OECD countries, most of the growth in meat consumption would  be in poultry, which would  account for 56 percent  of the total. In developing countries, where beef accounts for less than one-quarter of total meat consumption, the composition of the growth in meat consumption would  be spread more evenly, with pork taking 38 percent  of the total increase, compared to 31 percent  for poultry and 25 percent  for beef.

 

Changes in the livestock industries, including improved genetics, animal housing, and enhanced management, are expected to allow growth in meat production to keep pace with consumption.

 

Increased farrowing and a rising number of pigs per litter are driving pig meat production growth in North America to nearly double that of other developed countries, according to the article.

 

As mad cow-concerns abate and as cattle cycles goes through a rebuilding stage, slow growth in beef production is expected, reversing the decline over the past decade, the report predicted.

 

Global meat trade is expected to grow by 2.2 percent  annually over the projection period. While still ahead of consumption, this is a slow-down to half the growth rate seen in the previous decade.

 

Growth in poultry and pork exports would  account for two-thirds of the total increase in meat exports from now until 2015. Poultry would account for over 40 percent of total meat trade growth.

 

The degree of concentration in the world meat market remains high, with 5 countries accounting for nearly three-quarters of global exports.

 

However, the report said developing countries is expected to increase their share of the meat trade. In 1996, meat exports from developed countries accounted for more than 71 percent of global trade, this fell to 54 percent by 2005, the report said.

 

Developing countries, as a group, are projected to develop a net export position over the projection period and are set to capture 61 percent  of global export growth over the period, with nearly three quarters of the global export growth from Brazil, Argentina, and Uruguay.

 

Countries such as Mexico, Chile, the Philippines and Argentina are expected to increase exports as well.

 

Meat imports are projected to grow in South Korea (up 62 percent ), Mexico (54 percent ), and Japan (34 percent ).

 

However, if Brazil and Argentina are excluded, the group of developing countries becomes a net meat importer. The deficit of nearly 6 million tonnes in 2005 is projected to expand to 8.7 million tonnes in 2015, triple the 2.7 million tonnes deficit in 1996 for this group.

 

The trade deficit of the least developed countries would double, particularly those in West and Southern Africa as well as in Central America and the Caribbean due to strong consumption gains, the report said.

 

Their import dependency is projected to be 14 percent  by 2015, from 10 percent currently and 4 percent  in 1996. The report notes that as meat prices decline, it becomes harder for these countries to develop their livestock industries.

 

The article also touches more on the effects of animal disease outbreaks.

 

For more of the article, please click here.