Feed Bussiness Worldwide: December 2015
 
An American red meat renaissance
 
by Eric J. BROOKS
 
 
At a time of high livestock prices and falling grain prices, North American agribusiness's profitability has clearly shifted from feed crops to red meat. What makes this interesting is that beneath this medium-term trend for cattle to become more profitable than chickens, subtle market changes are challenging long-held assumptions about North America's meat and livestock sector.
 
Ever since the 1970s, one fact has held roughly constant: North America's red meat production has stagnated, its livestock inventories in a multi-decade plateau.
 
From 1975 to 2015, US pork output increased 110% but the number of hogs only increased 21%. In a similar vein, America will produce as much beef in 2015 as it did in 1974 –but with 31% or 13.5 million fewer beef cattle.
 
With exports roughly offsetting drops in domestic beef consumption but carcass yields increasing, it took fewer and fewer cattle to keep US beef output on a gently falling, four-decade plateau. For pork, an average 1.7% annual increase in output from 1975 to 2015 was sustained by average hog inventory increases of 0.5%.
 
Now, however, in both America and Canada, per capita consumption of beef and pork shows signs of levelling off and not falling below its current 20kg to 25kg range. At the same time, at 360 million people, the combined populations of Canada and the United States are growing at a 1% annual rate, the fastest pace of any wealthy countries. With beef and pork exports expected to grow several times more quickly, North America's red meat production looks set to grow by 2% annually for the first time in decades.
 
Feed costs are low, livestock prices are high. With foreign demand growing faster than domestic consumption, the sector's trade dynamics are also shifting. Canada led the way in the 1990s, with both its beef and pork exports exceeding those of America by the early 2000s. The Canadian model, however, came of age at a time when the Canadian dollar was at its lowest levels in the country's history.
 
When Canada's currency rose back to its normal, historical levels versus the US dollar, America became the engine of North America's meat exports, overtaking its northern rival.
 
 
The full article is published on the December 2015 issue of FEED Business Worldwide. To read the full report, please email to inquiry@efeedlink.com to request for a complimentary copy of the magazine, indicating your name, mailing address and title of the report.
Video >

Follow Us

FacebookTwitterLinkedIn