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LMC Report: Looking 10 Years Ahead For Beef Trade

09 September 2010

NORTHERN IRELAND, UK - Earlier this week at InvestNI headquarters in Belfast Richard Brown of Gira presented a new report: Long Term Strategic Trends in World Meat Markets.

Gira is a leading international food industry consultant and this multi-client report aims to measure the impact of recent changes and crises on world meat markets into the coming decade. The report is a valuable contribution to the global food industry in that it provides forecasts on production, consumption, imports and exports for 2015 and 2020. While there is huge uncertainty about this type of long term forecasting, it is nonetheless valuable for producers engaged in any kind of long term planning or investment. InvestNI, on behalf of the NI meat industry have contributed towards the funding for this study. In the Bulletin this week, we provide a brief synopsis of some of the main points from the report, looking mainly at beef.

Global Meat Consumption expected to rise

Gira is predicting a substantial increase of 40 million tonnes (+14 per cent) in meat consumption on a global basis over the next ten years, driven mainly by a combination of population growth and increases in GDP. It is likely that the largest increases in demand will be for poultry (+25 per cent) and pork (+10 per cent) between 2010 and 2020. Beef and lamb consumption growth is forecast to be relatively more subdued between now and 2020, with an increase of only six per cent predicted. One of the recurrent themes in the report is the fact that beef and lamb are expensive proteins relative to substitute products such as pork and poultry and the indications are that this will remain the case over the next 10 years with beef perhaps continuing to become less of an everyday protein and more of an “eating experience” product for consumers.

China and Middle East Growth areas for Beef Exports

Over the next 10 years, the key growth areas for beef consumption are China, USA and the Middle East / North Africa (MENA). USbeef consumption is expected to increase by nearly 0.5mt cwe over the next 10 years, while consumption in China and MENA is expected to increase by 0.7mt and 0.6mt cwe respectively, creating improved opportunities for export growth to those regions.

Beef Production to grow in Americas and China

Gira suggests that growth in beef consumption is limited by supply with a global increase in production of only 6 Percent forecast over the next 10 years. The largest increase in beef output is forecast for export-focussed Brazil, where the potential to increase production is seemingly greater than elsewhere in the world. Strong growth in consumption is also markets by incresaing production. However, the potential for increased global beef production will remain generally restricted due to limitations associated with the availability of suitable land, profitability, and inefficient production systems / structures.

Brazil to remain World's major exporter

Brazil remains the big low cost supplier to export markets and it is likely that it will continue to expand its exports to the Middle East, EU and Russia over the next 10 years. However, the likelihood is that it will not be doing so with the same competitive force that it was in the last decade. Brazilian competitiveness has been stifled by a strong currency and higher cattle prices over the last year and Gira suggests that the Brazilian Real is likely to remain strong relative to the US Dollar. It is also suggested that the Brazilian industry may need to become more sensitive to the specific needs of export customers if they are to make the most of opportunities abroad.

Reduced Beef Production forecast in EU

Looking closer to home, Gira forecasts that over the next 10 years, there will be little change in aggregate EU beef consumption. These forecasts suggest that pigmeat and poultrymeat will gain an increased share of the EUmeat market while beef and lamb will lose share with overall consumption remaining stagnant. It is also forecast that beef production will decline over the next 10 years in the EU. This has the potential to be positive from a price perspective, although Girapredicts that increased import access through World Trade Organisation talks or free trade agreements will compensate for the reduced availability and will keep a lid on prices. However, while imports are likely to increase, Gira stresses that the EU market is not likely to become a “free for all” for global beef exporters.

Further Reading

- You can view the full report by clicking here.

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