FAO Food Outlook Forecasts Rise in Meat Production15 November 2013
The UN Food and Agriculture Organization (FAO) forecasts 2013 global meat production is to expand by more than one per cent according to its latest 'Food Outlook' report.
Meat and Meat Products
Moderate production growth; trade mixed
World meat production is anticipated to expand modestly in 2013 to reach 308.3 million tonnes, an increase of 4.2 million tonnes, or 1.4 per cent, compared to 2012, according to the FAO's Food Outlook report in November 2013. Growth will be concentrated in the developing countries, which are also the main centres of rising demand.
At the international level, prices have remained high by historical standards for the past two years. The FAO Meat Price Index (2002-04=100) averaged 184 in October 2013, little changed when compared to October 2012. So far this year, a reduction in feed costs has facilitated some price decrease for poultry; however, prices of the other categories of meat have remained either static, in the case of bovine and ovine (sheep) meat, or increased, in the case of pig meat.
International meat trade is forecast to reach 30.1 million tonnes in 2013 – representing 10 per cent of global production. Overall, trade is predicted to increase by 1.1 per cent, a slower pace than in 2012, and well below the rates of six per cent and seven per cent seen in 2010 and 2011, respectively. This is a reflection of improved national supplies in a number of importing countries and a fall in production in some of the principal exporters.
There are marked differences in trade in the different varieties of meat, with moderate growth forecast for bovine meat and a substantial increase for sheep meat, while poultry may remain unchanged and pig meat decline.
Growth in Asia to sustain production
Continuing several years of expansion, production of pig meat is expected to grow by 1.7 per cent to a record level of 114.6 million tonnes in 2013. Most of the increase is forecast to come from developing countries, where almost two-thirds of production originates. Conversely, the developed countries overall are expected to face a small decline.
Asia is the leading pig meat producing region, accounting for almost 60 per cent of the total. Strong consumer demand and government support policies are anticipated to result in China's output reaching 54.8 million tonnes, nearly half of world output. Recovery from FMD depletion continues to boost production in the Republic of Korea. Elsewhere in Asia, slight to moderate growth is forecast in Viet Nam, the Philippines, Japan, Thailand and Indonesia – in some instances, limited by competition from other types of meat.
In the Americas, Brazil - the world’s fourth largest producer, is set to increase output, stimulated by improved prices. Steady growth is also anticipated for Mexico, underpinned by improved genetics and productivity, which are translating into more piglets per litter and higher animal weights.
In the EU, at 22.5 million tonnes, the second most important producer after China, compliance with animal welfare requirements relating to the housing of sows is expected to depress output for a second year.
In the United States, lower feed costs and increased slaughter, associated with an expansion of the breeding herd, mean that it is on track to register growth, albeit limited. Producers in Canada have struggled to remain profitable and a number have ceasing operations – consequently a small decrease in output is anticipated.
In the Russian Federation, reduced feed prices and government policies favouring large-scale farms are expected to prompt a four per cent expansion.
Reduced output among some of the principal exporting countries and a decrease in demand by several major importing countries are projected to lead to a decline in 2013 pig meat trade with shipments dropping by two per cent, to 7.4 million tonnes.
Imports by Asian countries, representing half of total trade, are set to record a decrease of 2.4 per cent. Procurement by the Republic of Korea is forecast to register a substantial drop for the second year in a row, falling by around 100,000 tonnes, or 20 per cent. This sharp decline is consequent on a build-up of stocks and low domestic prices following a strong recovery of production after a Foot and Mouth Disease (FMD) outbreak in 2011. Japan, the largest importer, is anticipated to cut purchases by four per cent, due to expanding production and competition from poultry and imported beef. Imports by China are expected to rise six per cent as domestic production has been unable to keep up with demand.
In Europe, deliveries to the Russian Federation fell by 15 per cent in the first eight months of this year and are expected to finish the year well below 2012, reflecting growing production, a fall in domestic prices and animal health-related import restrictions. In Ukraine, after imports more than doubled in 2012, animal disease and public health restrictions introduced during the first part of the year have led to a sharp fall off in purchases, now anticipated to finish the year 30 per cent lower. Imports are also down substantially in Belarus, mainly due to restrictions on trade with the Russian Federation related to outbreaks of African swine fever in some regions.
Elsewhere, purchases by Mexico and the United States are anticipated to decrease, while some smaller-scale importers, including Australia and Angola, could see imports grow.
In terms of exports, limited availability in the EU, the United States, Canada and Brazil, which account for 85 per cent of world sales, represents a constraint to trade. Additionally, Brazil has faced health and animal disease-based access restrictions in some markets. As a group, the above four countries are anticipated to record a three per cent reduction in sales. This will be counterbalanced to a limited extent by larger shipments by smaller-scale exporting countries, including China, Chile, Mexico and Thailand. Sales by Mexico, in particular, have risen substantially so far this year, assisted by its newly recognised status as free of Classical Swine Fever.
Production: China weighs on growth
Global poultry production is anticipated to rise by 1.8 per cent to 107 million tonnes. Unlike bovine and pig meat, 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. However, while production has been stimulated by lower feed costs in many countries, disease concerns in China have limited overall growth.
Estimating 2013 output for China – currently the second largest producer but on trend to replace the United States as the major producing country in the coming years – remains difficult because of culling and limitations on the retail sale of live poultry following an outbreak of H7N9 influenza strain in the early part of the year. Furthermore, consumer confidence in poultry meat has diminished and sales 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.
The outlook is more positive for the rest of the world. In the United States, a 2.4 per cent increase is anticipated as production recovers from stagnation in 2012, aided by improved profitability.
Elsewhere, growth is forecast for the EU, Brazil and the Russian Federation and continued rapid expansion is anticipated for India. Among the top 20 producing countries, apart from the uncertainty surrounding China, only Japan might register a fall in output, of 0.7 per cent, in response to oversupply and associated reduced prices.
Poultry is the most traded category of meat, representing almost 45 per cent of total trade. While the volume has doubled over the past decade, growth slowed in 2012 and is forecast to be little changed this year.
Imports for Africa as a whole are forecast to rise by some four per cent. Among the main importing countries, Angola, Benin, Ghana and Egypt are all anticipated to purchase more, as income growth strengthens demand, while imports of South Africa are forecast to remain unchanged. In Egypt, culling associated with avian influenza, combined with FMD-induced high beef prices, have provided an additional stimulus to imports.
Imports by Asian countries, the main trade destination, are forecast to be little changed.
While slight to moderate growth is foreseen for Saudi Arabia, Viet Nam, Iraq, the United Arab Emirates and Kazakhstan, among others, imports by China are forecast to be static as consumer concerns over H7N9 have weighed on demand. In Japan and the Republic of Korea, abundant domestic supplies have reduced demand for imports.
In Europe, deliveries to the Russian Federation are expected to fall by three per cent. Imports by the Federation remain at less than half of what they were in the mid-2000s because of a considerable increase in domestic production. Likewise, rising poultry production in the European Union is forecast to prompt a drop of five per cent in imports.
In the Americas, Mexico is anticipated to decrease its imports, while those of Canada may rise slightly.
The four leading exporters - Brazil, the United States, the EU and China - which together account for almost three-quarters of global trade, have seen little expansion in sales in recent years. Instead, most growth has come from second-tier exporters, including Argentina, Turkey, Ukraine, Belarus, Iran and the Republic of Korea.
Of the big four, the United States is expected to see sales remain unchanged while the others are anticipated see a fall in trade.
In the second grouping of countries, some should maintain growth, for example Argentina, Turkey and Ukraine, while the others are anticipated to see either no increase or a decline, as a result of stagnant or falling import demand from their principal markets.
Exports from Turkey, which may be up a much as 20 per cent for the year, have benefited from rising regional demand, especially from Iraq and Syria. Exports by Argentina have risen steadily in recent years, underpinned by demand from Venezuela. Over the past five years, exports from the Ukraine have also increased substantially, directed mainly to its immediate neighbours and the Near East.
Bovine meat production is forecast to hover around 67.5 million tonnes in 2013, a mere 0.2 per cent more than in 2012. Over the past 5 years, this ?gure has changed little; in 2009, for example, it stood at 67.3 million tonnes, almost the same level as it is today. The limited upwards movement is being led by the developing countries, which collectively account for almost 60 per cent of production and where 2.0 per cent growth is anticipated. As for the developed countries, they are predicted to face a decline of 2.2 per cent, mainly due to a sharp fall in North America.
In South America, cattle availabilities and slaughter have been rising, particularly in Argentina, Brazil, Paraguay and Uruguay, following two years of herd rebuilding. For Argentina, this process has been ampli?ed in 2013 by an augmentation of slaughter rates in the face of higher production costs; consequently, output could increase by seven per cent to 2.7 million tonnes. In neighbouring Paraguay and Uruguay, strong growth is also anticipated, spurred by international demand and sustained cattle prices, and supported by excellent pasture conditions.
Brazil, the world’s second largest beef producer after the US, is on track to reach a record 9.5 million tonnes. In Asia, India, the ?fth largest bovine meat producer, is forecast to record additional growth – approximately half of production goes to export. Output continues to rise in the Republic of Korea, re?ecting government slaughter subsidies and falling pro?tability in the light of competition from lower priced domestic pork. In China, production remains around 6.5 million tonnes, a level which has been unchanged for the past four years, as the sector comes to terms with labour shortages and high costs that have obliged many small-scale producers to cease operations.
Most parts of Africa have received reasonable rainfall during the current season, which has improved pasture conditions and led to a moderate increase in bovine meat production, overall. Egypt could witness a limited recovery, after the extensive culling in 2012 due to a foot-and-mouth disease (FMD) outbreak. An exception to the trend may be South Africa, where output could be unchanged, as dry conditions negatively affected pastures, and feed and forage availability. Overall, developed countries’ production is forecast to drop by 2.2 per cent, as several of the major producers’ contract. The United States, the world’s largest producer, is on track to record a four per cent fall due to diminished slaughter – a situation that stems from a decline in the production of calves linked to drought-related herd reduction. The same factors may lead to a seven per cent drop in neighbouring Canada. In the EU, the world’s third largest beef producer at 7.6 million tonnes, the decline is expected to be more modest, only two per cent, as the long-term reduction in the Union’s cattle herd is slowing – with dairy cattle set to increase in 2013 and beef cattle showing only a small reduction. By contrast, in Oceania, a fall in feed prices have boosted production in Australia. In the Russian Federation, improved herd management should contribute to an increase in output.
Trade: China’s imports grow; Brazil retains premier export position
Despite prices being at their highest levels ever, world trade in bovine meat is anticipated to grow in 2013, by 4.9 per cent, to 8.4 million tonnes. Consumer demand, rising incomes and a shortage of domestic supplies in some countries have been important contributors to the expansion in trade.
China may see imports exceed 900 000 tonnes, representing 11 per cent of trade. Demand continues to be stimulated by rising incomes. Additionally, some consumers
have switched from poultry to other meats following an outbreak of avian in?uenza at the start of the year. Supplies in 2013 have been sourced mainly in Australia followed by Uruguay, New Zealand, Canada and Argentina.
Elsewhere in Asia, imports by Japan, Vietnam and Malaysia could increase moderately, while purchases by the Republic of Korea are anticipated to remain depressed, as a consequence of ample domestic supplies and price competition from other types of meat. Sales to the Russian Federation and the United States, the two main importers, are forecast to decrease as a result of the exceptionally high prices – and in the case of the Russian Federation, rising domestic supply. EU imports are anticipated to rise, stemming from a production decrease and high internal prices.
Growth in exports is forecast for both Brazil and Australia, by four per cent and eight per cent, respectively, in response to generally strong demand, which has also stimulated shipments by India and the United States.
These four countries together supply over 65 per cent of bovine meat trade. Elsewhere, New Zealand, Uruguay, Paraguay, Argentina and Belarus, which together represent roughly a further 20 per cent of trade, are all anticipated to see ampli?ed sales – substantially so in all cases, except New Zealand. Conversely, shipments by Canada, Mexico and Nicaragua are forecast to decrease signi?cantly and those of the EU to remain stable.