Goliath Tujendapi
The year 2022 has been nothing short of exciting for world markets at large.
We have witnessed the ongoing war between Russia and Ukraine, which took a great toll on our agricultural industry by affecting gas prices, feed and fertiliser costs, and an economic crisis in China, a country that makes up approximately a fifth of the global economy, and is one of the world’s leading importers.
We have also witnessed a Foot-and- Mouth Disease (FMD) outbreak in South Africa, which restricted the export of meat and meat products, as well as the ongoing import restriction of fresh meat, as well as the population reaching 8 billion on 15 November.
All these have us wondering what the agricultural sector might look like in the years to come, and how these changes will affect the meat industry. According to the OECD and FAO Agricultural outlook 2022-2031, the global demand for meat is projected to grow at a slower rate (below 1%), where China is expected to account for 34% of global meat demand due to expected dietary substitutions of basic cereals for animal products.
There is, however, a projected decline in China’s pork imports, which will put pressure on global pork markets as they recover from the African Swine Fever outbreak.
The outlook has further projected poultry meat consumption to increase globally to 154 mega tonnes per capita between 2022 and 2031, which will account for half of the meat consumed.
Meat Consumption
Global pork consumption is projected to increase to 129 mega tonnes per capita, and will account for a third of the meat globally consumed, whereas beef and mutton consumption will increase to 76 mega tonnes per capita and 18 mega tonnes per capita, respectively.
It is notable to mention that since 2007, the per capita consumption of meat has declined, and will drop a further 2% by 2031. The expected decline in red meat consumption is due to the shift in consumer preference for white meat and non-meat substitutes.
The only two regions where the consumption of beef is expected to increase are Asia and the Pacific. As of 2019, Namibia’s beef consumption per capita remained lower than most countries in the world, with only 6.61kg of beef consumed per capita.
In the Southern African Development Community countries, Namibia has a higher consumption per capita for countries than Madagascar, Mauritius, Lesotho, Angola, Malawi, Comoros and Mozambique.
Meat Production
Trends in global meat production are projected to reach 377 mega tonnes with the majority of meat production to take place in developing regions.
The increasing size and consolidation of production units towards more integrated systems will facilitate livestock expansion in emerging developing countries globally.
Poultry meat will continue to be the primary driver of meat production growth, and will increase by 16% in 2031 due to favourable meat-to-feed price ratios and short production cycles.
China, India, Brazil, the United States of America and the European Union will account for approximately 60% of the global animal output. Beef production is expected to increase by six mega tonnes, and will contribute 12% to global meat production, while pork will account for 38% of the growth in global meat production.
Trade
By 2031, global meat exports are projected to be 3% higher, reaching 40 mega tonnes. Compared to the last decade, this sluggish growth of trade is the result of an increase in pork trade during the African Swine Fever crisis in Asia in 2019.
Latin America and the Caribbean are expected to reinforce their position as prime exporters of poultry and beef, amongst other agricultural commodities.
Moreover, Europe and Central Asia’s net exports are expected to grow due to Russian and Ukrainian grain exports, whereas Australia and New Zealand’s net exports are expected to slowly grow over the next 10 years due to a decline in production growth.
Meat Prices
Meat prices are expected to rise as higher feed costs, transport costs and packaging costs have increased.
However, as the supply chain begins to stabilise, meat prices are expected to normalise as feed costs return to normal levels.
Beef prices are expected to reflect higher processing and feed costs, whereas sheep prices are projected to decline due to New Zealand’s rising pasture costs, and competition from the beef and dairy sectors.
Exporting countries including Argentina, Australia, Brazil and the United States should expect higher prices due to higher cattle inventories retaining supplies.
These important indicators give us insight into what to expect for the next 10 years in global meat trends. World consumption is expected to expand, especially in lower and middle-income countries.
Additionally, world meat production will also expand, leading to slower growth in prices.
It is important to understand the dynamics of international markets such as China to better establish our footprint, and to find opportunities within their economic crisis to establish longevity in Chinese-Namibian agricultural trade relations.
African markets will also become important over the next 10 years with increases in animal and meat production. Lastly, attention must be paid to major trends in consumer behaviour as it drives production.
High-income Western countries are seen to shift to white meat production and consumption due to environmental concerns and affordability.
Additionally, novel alternative proteins (meat from ostrich, kangaroo and crocodiles), which is a growing substitute for traditional animal-based foods, are also attractive to meet the demands of a growing population, where advocates assume these alternatives are healthier, more sustainable and eco-friendly.
Another example of alternatives of traditional protein sources is Wagyu beef. The Wagyu Industry experienced a big blow during the height of the Covid-19 pandemic, where demand across the globe was low compared to pre-pandemic levels.
The global market exhibited a decline of 4.82% in 2020, compared to 2019. This decline is mostly due to Wagyu beef being majority-sold through food service channels, which came to a halt during the pandemic, as well as the closure of harbours and borders due to lockdown restrictions.
The market is, however, expected to grow by 6.37% between 2022 and 2029, with expectations of more retail sales due to the shift in consumer demand to cook more home meals than to eat out.
The Wagyu market is driven by the demand for lean and additive-free meat, which is expected to increase over the next 10 years as consumers shift to a more health-conscious lifestyle.
These trends should closely be paid attention to as these may affect meat prices, to the extent that a consumer will be willing to pay a premium price for alternatives/substitutes as opposed to paying for traditional animal-based foods.
*Goliath Tujendapi is the Executive: Trade & Strategic Marketing at the Meat Board of Namibia.