The report revealed there had been a shift in value from prime cuts to processing cuts and fifth-quarter products since 2009, driven by increasing demand in Asian markets, consumer preference for convenient processed products, trading down as the result of the economic crisis, demand for animal by-products by the pharmaceutical and cosmetic industries and a decline in the US and EU sow herd.
It concluded that the shift was “permanent” and would “impact the business models of almost all players in the global meat industry”.
Rabobank analyst and report authort Albert Vernooij told Globalmeatnews.com the shift would have different consequences for different parts of the industry. For slaughterhouses, the focus would be on optimising the value of all parts of the carcase by improving quality and understanding the opportunities that existed in different markets, he said.
“The focus will move increasingly to getting the highest returns for by-products,” he explained. “The easiest first step is to improve collection and selection to reduce losses and improve quality of the product. This can be followed by increasing knowledge of the end-markets, including the possible options available for each product.”
For further processors, Vernooij said the shift in value could result in a need for long-term supplier contracts to ensure demand, or a switch to the cheaper prime cuts. “If sufficient by-products are not available, processors will increasingly source processing cuts like bellies, shoulders, etc,” he said.
He added that the increasing value of processing cuts and fifth-quarter products did not necessarily mean the price of prime cuts was coming down, and could lead to an overall increase in the price of meat. “In the last few years, we have seen that prime cuts more or less followed the average price development of meat, with rising prices for processing cuts and fifth-quarter products,” he said.