Moderate Meat Production Growth; Trade to Slow

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. 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.

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

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.

Further Reading

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June 2013