Global meat production declined to 325 Mt in 2019, mainly due to African swine fever, which affected China.
This disease has spread to other countries in Africa and Central Europe, some countries in East Asia – the Democratic Republic of Korea, Korea, and Mongolia – and some countries in Southeast Asia – Cambodia, Indonesia, Lao People’s Democratic Republic, Myanmar, Philippines, Timor-Leste, and Vietnam.
In China, the overall meat production is estimated to have declined by 10% in 2019 due to a decline of at least 21% in pig meat production, which was partially offset by the increase in the production of other meats.
In countries where meat production continues to increase, this is mainly due to productivity gains. In the United States, for example, the increase is explained by the increase in carcass weight. In the European Union, the total meat production is also expected to increase despite the decrease in beef production. All other types of meat are expected to rise, especially pork, due to the strong demand for imports from China. In Argentina, meat production has grown mainly to meet increased foreign demand.
According to the FAO Meat Price Index, average beef prices increased by 5.6% in 2019 compared to 2018, with the largest increase recorded by pig meat (especially frozen) due to the Chinese imports jump.
Beef prices also climbed under the influence of increased Asian demand, while sheep meat prices remained high due to the limited production in Oceania. In 2020, beef prices declined due to weak demand in the United States of America, coupled with rising exports from South America, although exports from Australia decreased due to the local need for cattle for herd rebuilding.
World meat exports reached 36 Mt in 2019, an increase of 4% compared to 2018. The main explanation is the increase of imports from China following the decline in domestic production due to African swine fever. In 2019, Chinese imports climbed 62% (around 2 Mt), all types of meat combined. Export growth was primarily driven by Argentina, Canada, the United States, Thailand, and the European Union.
What is the beef production projection between 2020 and 2025?
Nominal beef prices will remain high over the next five years. In real terms, they should continue to decline because of a slowdown in consumption growth and an increase in supply driven by the weak increase in feed grain prices. The evolution observed over time will vary depending on the type of meat. In the short term, constant beef prices will decline more rapidly due to the abundance of supply in major producing countries such as Argentina, Brazil, and the United States, following rapid herd increases over the last years. However, as beef cow herds shrink and the production slows down, nominal prices are expected to slowly pick up again.
Brazil, China, the United States, and the European Union are projected to account for nearly 40% of global meat production by 2025. The abundance of natural resources, animal feed, and pastures, as well as productivity gains and, to some extent, the depreciation of the Brazilian REAL, will continue to support growth in Brazilian production. Chinese production will benefit from the increased economies of scale associated with the transformation of small production units into large commercial farms. In the United States, production will be stimulated by strong domestic demand and increased slaughter weight, in the context of low animal feed costs. In Africa, the ratification of the Agreement establishing the African Continental Free Trade Area – which provides for the exemption from customs duties of 90% of products traded on the continent – should encourage an increase in beef production.
Global beef production will increase during the next five years, particularly in the main producing countries in the Americas, such as Argentina, Brazil, and the United States. Most of this increase is expected to come from sub-Saharan Africa, Argentina (despite taxes on exports), Brazil, China, Pakistan, and Turkey. In developed countries, production is expected to increase by 2% between 2020 and 2025, mainly on the back of strong growth in Canada and the United States.
In Australia, the supply of beef will remain limited in the short term due to the drought that the country has experienced for several years. A gradual recovery in production should follow, but herd rebuilding will likely take a few years. In the European Union and the United Kingdom, beef production is expected to enter a downward phase as the number of dairy cows, which accounts for nearly two-thirds of the supply, will decline due to productivity gains in the dairy chain. Other factors limiting the growth potential of the sector in the EU are the reduction in suckler cow herds due to low profitability, increasing competition in export markets, and declining domestic demand.
Beef consumption is expected to increase to 38 Mt over the next five years and represent 8% of the total increase in meat consumption. Per capita, beef consumption in the developing world is expected to continue to be lower, by about a third by volume, than in developed countries. Asia is the only region where per capita beef consumption is forecast to increase over the next five years, albeit from a low base. Several countries where per capita consumption is high will see their level of consumption decrease in favour of cheaper meats, such as pork and poultry.
What are the uncertainties regarding the beef prices?
Trade policies remain an important factor in the dynamics of world meat markets. The implementation of various trade agreements over the projection period could result in significant diversification or concentration of trade. Besides, unilateral and/or unscheduled trade measures represent a risk factor in the projections. National policies also influence the competitiveness of meat producers. In 2018, Argentina introduced a temporary meat export tax that is expected to weaken the country’s competitiveness in the global market for this product. As for the trade negotiations underway between the United Kingdom and the European Union, they will have repercussions on the various meat markets.
When it comes to the COVID-19 epidemic, it is difficult to predict its duration and the magnitude of its short-term effects. The resulting labour supply and transport problems could spill over into the marketing chain and negatively affect beef prices (whether slaughtered or processed). The disease will also have a short-term impact on consumption patterns, on consumption outside the home, and, consequently, on the demand for higher quality cuts, which are generally consumed in restaurants. Furthermore, the risk of not being able to sell or process the animals ready for the market due to the current lack of manpower could cause serious economic hardship in rural communities and big problems in terms of animal welfare. Finally, the duration of the economic crisis and its impact on income growth will influence the demand for meat during part of the projection period since this demand is highly elastic relative to changes in income.
Globally, meat consumption continues to increase under the influence of population growth and rising incomes. On the other hand, its evolution is not the same for the types of meat. For instance, relative beef price variations, combined with growing health and environmental concerns, are leading consumers to gradually shift their meat consumption from red meat to that of poultry. Data shows that the rate of growth in meat consumption is slowing in response to slower income growth. In many high-income countries, per capita consumption is reaching saturation level. The evolution of consumer preferences will also play, such as the development of vegetarianism and Veganism, social concerns raised in particular by the damage caused by meat production to the environment, and various other socio-cultural aspects linked, for example, to religion or cultural norms.
Climate change, obese and overweight population (https://www.who.int/news-room/fact-sheets/detail/obesity-and-overweight), technological advances, and changes in consumer lifestyles are also important factors, not least because they influence government initiatives and the adoption of more environmentally friendly consumption patterns. The growing consumer attention to animal handling and beef production methods (the increasing preference for organic beef and beef products) is a relatively new trend. It is difficult to assess how this will impact the beef prices at this point. If it were to rally more of the population, it could affect global markets, but it is difficult to determine the extent to which consumers are willing and able to pay more for these products.