Global meat, poultry consumption expected to increase 45 percent by 2030
U.S. meat and poultry producers are in a position to capitalize on growing global markets, according to an industry analyst for the Knowledge Exchange Division of CoBank. Trevor Amen tells producers the global gross domestic product (GDP) is expected to increase to $38 trillion from now through 2030.
“Based on historical data, that number is highly correlated to an increase in meat consumption. Based on that figure, global meat and poultry consumption is projected to increase 45 percent,” Amen says.
The increase is being attributed to emerging global markets, which are growing at a rapid pace. Most of the growth is expected in the Asian-Pacific region, where the middle class population continues to increase.
According to a study Amen shares from 2017 for the next five years, 160 million people are expected to enter the global middle class. The definition of the global middle class is a daily income of $10 to $100 in U.S. currency.
“They definitely have a different lifestyle than we have here, but as their incomes increase, they will be looking for better sources of protein in their diets,” he says.
In the U.S., consumers spend only a small fraction of their per capita income on the high-quality food they purchase, but other countries spend a high percentage of their income on food. In fact, during an economic downturn in the U.S. economy in 2009, the first thing consumers stopped spending their money on was high-end restaurants.
“During the recession, U.S. consumers shut down 30 percent of the fine dining restaurants here in the U.S., as they traded down their shopping preferences for lower-priced cuts,” he explains.
Amen feels it is important for producers to understand the interaction between beef, pork and poultry, because in consumers’ minds, it represents the meat case.
“On the price side, price pressures will naturally drive prices down,” he explains. “We are going to get bearish inventory reports all year long.”
“The Cattle on Feed reports over the next months are expected to show supplies are building. Naturally, that will drive prices down, which makes the demand side of the market that much more important moving forward,” he says.
Amen tells producers 2017 was a good example of how demand can be a surprise.
“Supply was growing and prices were going up, which is the exact opposite of conventional economics,” he states. “It has created cautious optimism in the industry. There will be more beef in the next three years, as the expansion cycle continues.”
“It will create some thresholds, short-term, that are somewhat alarming,” he explains.
From 2008-14, high energy and input costs stifled production growth in the U.S.
“Since then, growth has been steady because of low grain and energy costs and a good economy around the world,” he says.
In 2014, Amen says short supplies lead to high beef prices because the world was fighting over the small supply of beef.
“Prices skyrocketed, and it showed us there really was a willingness to pay for beef. That spurred the expansion phase we are in now,” he says.
The U.S. has a growing dependence on exports as production continues to increase.
“In 1990, we hardly exported any beef as a percentage of production,” he says. “But in the last 25 to 30 years, the U.S. has become more dependent on exports. In any given month, 10 to 12 percent of U.S. beef is exported.”
“What that says is we still have a very strong consumer base. About 88 percent of the beef we produce is still consumed here. When consumers are happy with the economy and have more jingle in their pockets, they buy more beef,” he notes.
Amen tells beef producers they should consider themselves fortunate.
“In some months, almost a third of the pork produced in the U.S. is exported. The beef industry is a little more insulated than the pork or poultry industry,” he adds.
The more beef that is exported, the higher risk the industry is taking.
“New Zealand exports 90 percent of their product,” Amen says. “It would be devastating to them if the world shut them out. They are taking a lot of risk.”
“We are fortunate in the U.S. to have a strong consumer base,” he adds.
Markets in Canada, Mexico, Japan, South Korea and China represent over 80 percent of the beef exported from the U.S.
“The U.S. recently passed Australia as the number four supplier of beef to China. There is huge market potential there,” he says.
The U.S. beef industry has been successful at creating demand in other countries for beef cuts and other products, like variety meats and offal, that aren’t as popular with U.S. consumers.
“It has been a great way for us to add value to the beef carcass,” he says.
“Growing exports creates a lot of opportunity for us, but it still heightens supply risk,” Amen says. “If there is any disruption in the market, the product still has to move through, but it will do so at a lower price.”
“There is a lot of incentive out there to grow our supply. Now, that is all dependent on demand. We are the lowest cost, most efficient, unique producer of beef in the world. Our grain-fed beef is the most superior,” he states. “Our competitors, like Brazil and Australia, lack genetics, experience in feeding systems and the trade infrastructure to be more competitive with us. They are years behind us.”
“The U.S. is, by far, the largest beef producer in the world,” he continues. “We are the most efficient when we look at reproduction, average daily gain numbers and carcass weights. We are very advanced in beef production, with our genetic and feeding systems.”
“Our export infrastructure, which is the roads, railway and horse, that we use to get our product to the rest of the world, is unmatched. Some of our competitors have the product but not the infrastructure to handle that demand,” he continues.
Amen addressed producers during Beef Day at the Colorado Farm Show, held in Greeley, Colo.
Gayle Smith is a correspondent for the Wyoming Livestock Roundup. Send comments on this article to email@example.com.