ROME – Yield improvements and higher production intensity will enable meat and poultry producers to expand supplies, according to the Agricultural Outlook 2019-2028 annual report by the Organisation for Economic Co-operation and Development (OECD) and the UN's Food and Agriculture Organization (FAO).

But uncertainties such as shifting consumer tastes, uncertainty surrounding global trade agreements and other factors have added to producers’ risks.

“These include disruptions from trade tensions, the spread of crop and animal diseases, growing resistance to antimicrobial substances, regulatory responses to new plant-breeding techniques, and increasingly extreme climatic events,” OECD-FAO said in the report. “Uncertainties also include evolving dietary preferences in light of health and sustainability issues and policy responses to alarming worldwide trends in obesity.”

Protein prices and production

Meat prices will continue to decline in real terms over the medium term, according to the report. Slower growth in meat consumption combined with expanding supplies of meat will be the main drivers supported by low prices for feed grains relative to the past decade.

“The real price (at 2018 prices) for beef and sheepmeat are projected to decrease the most by 2028 to USD 3336/t and 3493/t carcass weight equivalent (cwe) respectively,” the report stated, “while real pigmeat and poultry prices are projected to decline to USD 1 311/t cwe and USD 1 453/t product weight (pw), respectively.”

Expansions of herds and flocks are expected to push total meat production expansion by more than 40 Mt by 2028 to 364 Mt, according to the report. Poultry will be the main driver of growth in total meat production. Developing regions will account for 74 percent of the additional output, but increases will vary by region.

“Beef production will continue to grow across the main producing countries over the outlook period,” according to the report. “In developing countries, it is projected that it will be 17 percent higher in 2028, relative to the base period. Developing countries are projected to account for 72 percent of the additional beef produced. The majority of this expansion should occur in Argentina, Brazil, China, Mexico, Pakistan and South Africa.”

The OECD-FAO projected the US cattle herd to reach a peak in 2021, then enter a declining cycle driven by declining domestic per capita consumption in the latter part of the next decade.

Global pork production is projected to decrease in the next decade due to soft demand for pork in developing nations, the report stated. Asia will continue to drive production of pork, but African Swine Fever (ASF) outbreaks have cast uncertainty over projections, the OECD-FAO cautioned.

“This Outlook assumes that production will be negatively affected in 2019 (by -5 percent),” according to the report. “For 2020, production and consumption is projected to return to the 2018 level and resume its trend in growth for the remainder of the outlook period. As a result, China will face a supply shortage and its imports are projected to increase to nearly 2 Mt in 2019.”

Import volumes of pork in China are projected to jump 75 percent over 2018 levels to reach 2.1 Mt by 2020 which would increase China’s share of world imports from 17 percent in 2018 to roughly 23 percent in 2020, the OECD-FAO explained. Brazil, Canada and the European Union are expected to provide most of China’s additional pork imports, however production volumes are expected to recover and reach the same production quantities as in 2018 by 2024, the report states.

“ASF will lead Chinese consumers to turn towards alternative sources of animal protein and, in particular, poultry meat, for which increased production is projected to supply the additional domestic demand,” the report said. “The growth in overall feedstock demand, however, is projected to slow down in the early years of the outlook period despite the increase in poultry production and, in the case of corn, decline in the first two years of the projection period, when Chinese pigmeat production is expected to be declining.”

Consumption trends

Global poultry consumption is expected to increase independent of income level with growth rates higher in developing nations, according to the report.

“In China, consumption has recovered from the AI [avian influenza] outbreaks and this outlook assumes that growth in consumption will resume in 2019 and return to its historical trend,” the OECD-FAO said in the report. “Among all the additional meat consumed over the projection period, poultry is expected to account for half.”

Meanwhile, the OECD-FAO expects global sheepmeat consumption to marginally increase from 2019 to 2028. The report also noted that China’s consumption of sheepmeat has increased over the past two years due to animal disease outbreaks affecting the pork and poultry sectors. Consumption in the Middle East is projected to decline.

“The projection expects China to represent 40 percent of all the additional sheepmeat consumed by 2028,” the report stated. “In many Middle East countries, however, where sheepmeat is traditionally consumed, per capita consumption is projected to decline slightly. Demand growth in this region is tightly linked to the oil market, which heavily influences both the disposable income of the middle class and government spending patterns.”

Meat trade

Global exports of meat are projected to rise 18 percent compared to the base period. This represents a slowing of growth in the meat trade, the report said. Developing countries are projected to account for slightly more than half of global meat exports by 2028 before faster growth in developing nations overtakes smaller players. Asia will account for 56 percent of global meat trade with the Philippines, and members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) such as Japan, Malaysia and Vietnam accounting for the greatest increases, according to the report.

“Trade policies remain a major factor affecting the dynamics of world meat markets,” the report states. “As a result, the implementation of various trade agreements over the outlook period could diversify or consolidate meat trade considerably.”