Global Meat Production to Rise While Prices Could Fall

Global meat production is expected to grow by 15 per cent over the next decade and while prices are initially forecast to fall slightly, over the medium term they will rise as consumption expands.

The OECD-FAO Outlook for 2018 to 2027 shows that overall world meat production increased by 1.25 per cent to 323 million tonnes in 2017, with moderate increases in the production of bovine and poultry meats and more modest gains in pig and sheep meat.

Much of the world meat production expansion originated in the United States but other main contributors were Argentina, India, Mexico, the Russian Federation and Turkey.

Meat production in China, the world’s largest meat producer, increased little overall mainly because of the lower growth in poultry meat production as several Avian Influenza outbreaks affected the country.

However, the OECD says that China was still the second largest contributor to the 2017 increase in meat production.

The FAO Meat Price Index shows that the monthly average for the whole of 2017 was nine per cent higher than in 2016, but 2.3 per cent lower than the average of the previous three years.

International meat prices rose in the first half of 2017, thanks to an increase in import demand for beef and pig meat.

Lower than expected availability of sheep meat for export also helped to boost global meat prices.

However, prices began to fall back from July as export supplies rose and import demand weakened.

In 2017, sheep meat prices rose by 35 per cent, and beef, poultry and pig meat increased by 7.7 per cent, 3.2 per cent and 2.9 per cent, respectively.

A slowdown in imports by China, the European Union, Egypt, Saudi Arabia, Turkey, and the United States meat global meat trade was sluggish last year.

However, meat imports rose in several countries, notably Angola, Chile, Cuba, Japan, Mexico, Korea, Indonesia, Iraq, the United Arab Emirates, Ukraine, and Viet Nam.

The OECD says that the expansion of world meat trade exports in 2017 was largely led by Argentina, Canada, India, Thailand, the United States, and Ukraine although sales from the European Union and New Zealand fell.

The OECD Outlook shows that in the short-term prices are expected to fall back as the herd rebuilding that has been seen in several countries ends.

Feed grain prices are also expected to be lower than at present, which will benefit regions such as the Americas, Australia and Europe.

Prices are expected to rise as consumption grows in regions such as South America and Asia.

By 2027, the price for beef is projected to increase to $4 000 per tonne carcase weight equivalent (c.w.e.) and to increase to $3,900 per tonne c.w.e. for sheep meat, while world pig meat and poultry prices are expected to rise to around $1,600/ per tonne c.w.e. and $1,700 per tonne product weight (p.w.) respectively.

“In real terms, prices are expected to trend downwards for all meat types, although meat-to-feed price margins will generally remain within historical levels,” the Outlook report says.

The OECD predicts that global meat consumption in the next decade will rise by 1.1kg per person to 35.4kg with a rise of 2.8kg per person in developed countries and half this in developing countries. There will also be a small increase in consumption in the least developed countries as incomes rise marginally.

Most of the 15 per cent rise in production of meat over the next 10 years is expected in developing countries.

Although poultry meat has been the main driver of growth in meat production over the last decade alongside pig meat, this is expected to slow in the 10 years to 2027.

On the other hand, demand for beef and sheep meat is expected to rise.

“Lower product prices have contributed to making poultry and pig meat the meat of choice, particularly for consumers in developing countries,” the report says.

“With income growing over the projection period, those consumers are expected to increase and diversify their consumption towards more expensive meat protein such as beef and sheep.”

The rebuilding of the cattle herd in the US is expected to put more beef on the global market and there is also forecast to be growth in the beef herds in Australia and Brazil providing additional supplies.

Pig meat production will rise, driven by an expansion of the herd in China.

Sheep meat production is expected to rise by 1.8 per cent with China, India, Nigeria, Oceania, Pakistan, Turkey and Yemen being the main contributors.

The amount of meat traded around the world will rise in volume as production increase, but will remain at about 10 per cent of production – as it is at present.

The growth in production in developing countries will not be enough to satisfy demand, hence imports will remain strong, with the most significant growth in imports coming from the Philippines and Viet Nam.

The developed countries will account for more than half of meat exports by 2027, with the US and Brazil contributing about two thirds of the rise in the world’s exports and seeing their share increase to 47 per cent.

The OECD report says that total meat production will expand by slightly more than 48 million tonnes by 2027, reaching nearly 367 million tonnes.

Developing countries will account for 76 per cent of the additional output with production continuing to be dominated by Brazil, China, the European Union, Russian, and the US.

Beef production in developing countries is forecast to be 21 per cent higher in 2027, accounting for 75 per cent of the additional beef produced. Most of this expansion will be in Argentina, China, Brazil, Pakistan, and Turkey.

The OECD says that while India is an important beef meat producer, production growth is expected to slow down as sales of cattle for slaughter remains a sensitive issue.

In developed countries, production will be nine per cent higher by 2027 with virtually all of this increase due to high growth in the United States.

The expansion in global pork production will decelerate over the next decade.

China’s production growth is expected to provide nearly half of the additional global output and the total global volume will remain in line with the recovery in demand, which will be significantly lower compared to the last 10 years.

Strong production growth rates are also expected in Brazil, Mexico, Philippines, Russia and Viet Nam. The European Union’s pig meat production is expected to fall marginally, as domestic consumption stabilises and competition from the world market increases.

Poultry will continue to strengthen its dominant position within the meat sector, accounting for nearly 45 per cent of all additional meat that will be produced over the next decade.

Production will expand rapidly in countries producing surplus feed grains, such as Brazil, the European Union and the United States. Rapid expansion is also expected in Asia, led by China and India.

Sheep meat production will see a higher rate of growth than in the last 10years, with developing countries accounting for the bulk of the additional output.

Growth I expected in domestic sheep meat production in the MENA region and China, the leading sheep meat-producing country, will contribute slightly more than 36pr cent of additional production as domestic demand continues to grow. Australia and New Zealand’s global share of sheep meat production is expected to fall slightly. The EU flock is expected to increase in the first half of the next decade, as profitability improves, followed by a marginal decline towards 2027, as competition from Oceania limits export potential.

The share of the African region in sheep meat production will slowly increase and contribute up to 26 per cent of the additional global supply.

Globally, animal disease outbreaks, such as swine fever, sanitary restrictions, and trade policies remain the main factors driving the evolution and dynamics in world meat markets, according to the OECD.

Uncertainties relating to existing or future trade agreements could impact and diversify meat trade patterns. Domestic policies could also have an impact on the meat sector such as the review in 2018 of the US Farm Bill.

Further factors that could impact the meat outlook include consumer preferences and attitudes towards meat consumption, the OECD says.

“Consumers are showing a preference for free-range meat and antibiotic-free meat products, but the extent to which they are willing and able to pay a premium for them remains unclear.”

Growth of meat production by region and meat type

2027vs2015-17

Note: c.w.e. is carcase weight equivalent, r.t.c. is ready to cook equivalent.

Source: OECD/FAO (2018), “OECD-FAO Agricultural Outlook”, OECD Agriculture statistics (database),http://dx.doi.org/10.1787/agr-outl-data-en

 

Countries with the greatest share of additional meat production by meat type

2027vs 2015-17

Note: c.w.e. is carcase weight equivalent, r.t.c. is ready to cook equivalent.

Source: OECD/FAO (2018), “OECD-FAO Agricultural Outlook”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-outl-data-en.

 

 

The full OECD FAO agricultural Outlook can be found on http://www.agri-outlook.org/.