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FAO Food Outlook June 2013

28 June 2013

World meat production, is anticipated to grow modestly in 2013 to 308.2 million tonnes, an increase of 4.3 million tonnes or 1.4 per cent compared with 2012, according to the Food and Agriculture Organization (FAO) of the United Nations.

Moderate Meat Production Growth; Trade to Slow

In many countries, producers continue to struggle against elevated feed prices; however, although remaining high by historical standards, they began to fall during the second half of 2012 and have continued to diminish during 2013.

This has offered greater scope for profitable meat production, particularly in the pig and poultry sectors, which are the most dependent on concentrated feed. Meat production is anticipated to grow the most vigorously in the developing countries, which are the main centres of demand growth.

Figure 1. Gains in global meat trade in 2013

Meat prices have remained at historically high levels since the early part of 2011. The FAO Meat Price Index averaged 179 in May 2013, having moved within the narrow band of 177 to 179 since October 2012. Export reference prices for the different types of meat have followed varying directions so far this year, rising marginally for poultry and pork, remaining largely stable for beef, and falling for ovine meat.

Table 1. World meat market at a glance
  2011 2012 2013 Change 2013
over 2012 (%)
WORLD BALANCE (million tonnes)        
Production 297.6 303.9 308.2 1.4
Bovine meat 67.3 67.6 68.1 0.9
Poultry meat 102.1 104.6 106.4 1.8
Pig meat 109.0 112.5 114.2 1.5
Ovine meat 13.5 13.6 13.8 1.2
Trade 29.2 29.9 30.2 1.1
Bovine meat 8.1 8.2 8.6 4.6
Poultry meat 12.8 13.1 13.3 1.5
Pig meat 7.3 7.5 7.2 -4.1
Ovine meat 0.7 0.8 0.9 5.8
Per capita meat consumption        
World (kg/year) 42.5 43.0 43.1 0.4
Developed countries (kg/year) 78.7 79.1 79.3 0.3
Developing countries (kg/year) 32.5 33.1 33.3 0.7
FAO MEAT PRICE INDEX (2002-2004=100) 2011 2012 2013 Jan-May Change Jan-May 2013
over Jan-May 2012 (%)
  177 175 179 0.9

Meat trade is expected to grow more slowly in 2013 than in recent years due to adequate national supplies in a number of importing countries and a reduction in production among some of the major exporters. Global meat exports are anticipated to rise to 30.2 million tonnes in 2013, an increase of 1.1 per cent over 2012.

Figure 2. Limited supplies and elevated feed costs sustain meat prices

Pig Meat

Growth in Asia to sustain world pig meat production

Production of pig meat is expected to grow by 1.5 per cent to a record level of 114.2 million tonnes in 2013. However, the rate of growth will be slower than in the previous year, as a result of higher slaughter rates in 2012 in response to the elevated price of feed and, in some cases, abundant stocks, which depressed prices.

Almost two-thirds of pig meat production originates in the developing countries, which is where most of the increase in output is forecast. Conversely, composite production by the developed countries is expected to show a small decline. Asia is the principal region, accounting for almost 60 per cent of world pig meat production. Strong consumer demand and government support policies are anticipated to result in China’s pork output reaching 53.8 million tonnes, or almost half of the world total. Recovery from FMD-depletion should boost production in the Republic of Korea. Elsewhere in Asia, listed by magnitude of production, output is forecast to be moderately higher in Viet Nam, the Philippines, Japan, Thailand and Indonesia – in some instances, growth in the sector is being limited by competition from other types of meat.

In the Americas, Brazil, the world’s fourth largest producing country, is expected to see pig meat output increase, stimulated by improved pig prices. In Mexico, production continues to expand, underpinned by improved genetics and productivity, which are translating into more piglets per litter and higher animal weights.

In the EU – at 22.4 million tonnes, the second most important pork producer after China – compliance with animal welfare requirements relating to the housing of sows is expected to depress output for a second year, with an anticipated fall of two per cent.

In the United States, the third largest producing country, lower feed costs and increased slaughter, associated with an expansion of the breeding herd could lead to limited growth. In Canada, producers’ struggles to remain profitable have resulted in a number ceasing operations – consequently a small decrease in output is anticipated.

In the Russian Federation, where a sustained four per cent growth is forecast, the industry is being assisted by reduced feed prices and is benefiting from government policies favouring large-scale farms

Pig meat trade stalls in the face of reduced demand in Asia and lower export availability

FAO reports that reduced output among some of the principal exporting countries and a decrease in demand by several major importing countries are expected to result in a decline in pig meat trade during 2013. Shipments are anticipated to fall by four per cent to 7.2 million tonnes.

Pig meat imports by Asian countries, which as a group represent approximately half of world demand, are expected to fall for a second year: after being down by four per cent in 2012, a six per cent decrease is anticipated for 2013. Procurement by the Republic of Korea is forecast to register a substantial drop for the second year in a row, decreasing by around 150,000 tonnes, or 30 per cent. This reflects a build-up of stocks and a fall in domestic prices stemming from a strong recovery of production following the 2011 FMD outbreak. Japan, the largest importer, is anticipated to cut purchases by 2.5 per cent, reflecting expanding production and strong competition from poultry and imported beef. Imports by China are expected to be stable, following notable growth in recent years, as a consequence of a rise in production.

Elsewhere, the Russian Federation, Mexico, the United States and Canada are anticipated to maintain purchases at a similar level to last year, while Ukraine’s purchases may fall due to restrictions on imports established in favour of national producers.

In terms of exports, reduced availability in the United States, the EU and Canada – which account for 75 per cent of world trade – is expected to constrain sales, especially in the EU, where shipments are anticipated to fall by 10 per cent. Brazil, the fourth largest exporter, is facing restrictions on pig meat trade in some markets, such as the Ukraine, and thus may also see a decline in sales.

Moderate growth in shipments by smaller scale exporting countries will go some way to counterbalance reduced exports by the main trading countries, according to FAO. Sales by non-traditional exporters, such as Chile and Mexico, are expected to rise, especially in Mexico due in part to its newly recognised status as free of Classical Swine Fever. Shipments from Belarus are also set to increase, facilitated by a newly negotiated customs union with the Russian Federation.

Poultry Meat

Production growth continues despite disease outbreaks

Global poultry production is anticipated to increase 1.8 per cent to 106 million tonnes in 2013. While growing, output remains constrained by the cost of feed, although this may fall further during the year. Unlike bovine and pig meat, production growth is foreseen in both developing and developed country groupings.

Competitive pricing of poultry relative to other meats is an important element in its momentum.

Estimating 2013 output for China – currently the second largest producer but on trend to replace the United States as the main producing country in the next few years – remains difficult because of culling and limitations on the retail sale of live poultry following an outbreak of H7N9 influenza strain in March. Furthermore, consumer confidence in poultry meat has diminished and sales are reported to have suffered. Consequently, China’s poultry output has been provisionally set as unchanged from 2012, in contrast with the 2.6 per cent increase originally projected.

An outbreak of the H7N3 strain in Mexico in April is also causing concern.

In the United States, a 1.6 per cent increase in output is anticipated as production has recovered from the 2012 slump, aided by improved prices and a reduction in feed costs.

Elsewhere, production growth is anticipated for the EU, Brazil and the Russian Federation, which collectively account for 26 per cent of world production.

Continued rapid expansion is forecast for India, where output may rise by eight per cent.

Among the top 20 producing countries, apart from the uncertainty surrounding China, only Japan is expected to register a fall in output, which could decline by 0.7 per cent in response to oversupply and associated reduced prices stemming from a sharp increase in production in 2012 and a subsequent build-up of stocks.

Trade slows

Poultry, the most traded category of meat, represents almost 45 per cent of world commerce. Although the volume of sales doubled over the past decade, growth has stalled since 2010. This slowdown is expected to continue in 2013, when trade is forecast to increase by 1.5 per cent to 13.3 million tonnes.

Purchases by Asia, the main importing region, are anticipated to increase by 0.6 per cent, due to growth in purchases by Saudi Arabia, Vietnam, Iraq, the United Arab Emirates and Kazakhstan, among others. However, abundant domestic supplies in Japan and the Republic of Korea, and concerns over avian influenza that have led to decreased consumption in China, are expected to curb imports.

Compared to other regions, imports for Africa as a whole are forecast to show strong growth in 2013, increasing by six per cent. Among the main importing countries, South Africa, Angola, Benin, Ghana and Egypt are all anticipated to purchase more, as income growth strengthens demand. In Egypt, culling associated with avian influenza, combined with FMD-induced high beef prices, will provide an additional stimulus to imports.

Deliveries to the Russian Federation in 2013 are expected to increase moderately, in part due to the recent customs agreement with Ukraine and Belarus. Imports by the Federation remain at less than half what they were in the mid-2000s, because of a considerable increase in domestic production. Rising poultry production within the European Union could lead to reduced purchases in 2013, while imports by Mexico and Canada are anticipated to change little, amid stable domestic demand.
Subdued import demand and reduced margins are expected to restrain overall world poultry exports; however, a rising trend in medium-sized exporting countries’ trade is discernible.

The most important trading countries, Brazil, the United States and the EU, which together account for almost three-quarters of global trade, have had little expansion in sales in recent years.

Instead, most growth has come from second-tier exporters, including Thailand, China, Argentina, Turkey, Chile, the Ukraine and Belarus. This pattern is expected to be maintained for 2013, with the exception of China. Shipments from Thailand to the EU are forecast to rise vigorously, supported by competitive pricing and EU’s lifting of an eight-year AI-induced ban on fresh and chilled products. Likewise, exports from Turkey, which have benefited from a rising regional demand, especially from Iraq, are forecast to grow by over 15 per cent. Government investments are supporting record Argentine exports, particularly to regional markets, including Venezuela and Chile.

Milk and Milk Products

Trade is forecast to grow 1.9 per cent with Africa and Asia combining to take 70 per cent of the global dairy market.

International dairy products prices registered strong growth during the first four months of 2013, particularly in March and April. Although prices fell back in May, they remained at elevated levels, substantially above a year earlier. The main cause of the leap in prices was a steep fall-off in New Zealand’s milk production. The FAO Dairy Price Index reached 259 points in April, close to its historic peak in late 2007, before dropping to 250 points in May. The absence of substantial growth in milk output in the principal exporting countries implies that supplies to the international market will be finely balanced until at least the latter part of 2013, indicating that the current elevated prices are likely to remain for some months.

World milk production in 2013 is forecast to grow by 2.2 per cent to 784 million tonnes – a similar rate to recent years. Asia and Latin America and the Caribbean are expected to account for most of the increase, with only limited growth elsewhere. World trade in dairy products is expected to expand in 2013; however, supply limitations are anticipated to stem growth. Consequently, trade is forecast to increase by 1.9 percent, compared with an average of 7 percent in recent years, to reach 54.7 million tonnes of milk equivalent. Asia will remain the main market for dairy products, accounting for some 54 percent of world imports, followed by Africa, with 16 per cent.

June 2013

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