Prospects look positive for meat production, according to OECD-FAO report

Produced by the Organisation for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization (FAO) of the United Nations, the report looks at the prospects for the period from 2015-2024.

Price:​

The report noted that prices for livestock products showed diverse trends in 2014, with disease outbreaks, such as porcine epidemic diarrhoea virus (PEDv), and the need for herd rebuilding due to climatic influences supporting high meat prices.

In real terms, prices for agricultural products are expected to decrease over the next 10 years as production increases. However, they are predicted to be at a higher rate than in the years before the 2007-08 price spike.

In terms of meat, nominal meat prices are expected to remain high throughout the outlook period, although below 2014 levels. "By 2024, prices for beef and pigmeat are projected to increase to around US$4,900/t carcass weight equivalent (cwe) and US$1,900/t cwe respectively, while world sheep meat and poultry prices are expected to rise to around US$4,350/t cwe and US$1,550/t cwe respectively,"​ said the report.

OECD secretary-general Angel Gurría said: "The outlook for global agriculture is calmer than it has been in recent years, but there is no room for complacency, as we cannot rule out the risk of new price spikes in the coming years.​

"Governments should take advantage of the current conditions to concentrate on developing policies that raise productivity, boost innovation, better manage risk and ensure that robust agriculture systems benefit consumers and farmers alike."​

Production:​

According to the report, meat production is expected to respond to an improvement in margins, with lower feed grain prices set to boost the profitability of the sector, "that has been operating in an environment of particularly high and volatile feed costs for most of the past decade".​

Favourable meat to feed price ratios over the 2015-2024 period will support production growth, said the report, particularly those such as pork and poultry where large volumes of feed grains are required.

Poultry production is predicted to rise by 24% over the outlook period, with 26 million tonnes (mt) extra produced by 2024. Pigmeat is estimated to increase by 12% in terms of production (+13mt). On a global level sheep production is set to see an extra 3mt produced by 2024, and bovine meat an additional 8mt.

Consumption:​

According to the report, global meat consumption is predicted to grow by an annual average of 1.4%, equating to an additional 51mt of meat consumed by 2024. With poultry seeing growth of 2% annually, it will make up half of the additional meat consumed in 2024. Pigmeat expands by less than 1% annually, while bovine and sheepmeat will increase by 1.3% and 1.9% per annum, respectively, driven by growing demand in the Middle East and Asia.

Russia:​

Looking to Russia, and the effects of its trade ban, the report suggests that, overall, "no notable increase in domestic meat production has been observed".​ Before the ban, 71% of pork imports were supplied by the now-banned countries, which has hit consumer prices for pork in Russia, and also chicken, both jumping 27% in 2014. However, it is understood that the Russian Federation is looking to continue its own pork production in the long-term.

The main effects of the ban have been a major shift in import sources, as well as an overall decline in the volumes of agricultural imports. Brazil has now replaced the EU as the main exporter of pork, with its share increasing from 23% in 2013 to 72% in the last quarter of 2014. Brazil also upped its share of poultry imports from 9.8% to 25.4% over the same period.

Brazil:​

This year’s report contains a special feature on Brazil, prepared in collaboration with analysts associated with the Ministério da Agricultura, Pecuária e Abastecimento (MAPA) and Empresa Brasileira de Pesquisa Agropecuária (Embrapa).

Agricultural growth is expected to be driven by continued improvements in productivity, "with higher crop yields, some conversion of pasture to cropland and more intensive livestock production",​ said the report.

Meat production in Brazil is expected to continue at a fast pace over the next 10 years, due in part to the depreciation of the Brazilian real relative to the US dollar, lower projected feed costs, improved animal genetics, and increasing domestic and international demand.

More than half the expected increase in the country’s meat production is expected to come from poultry, with the remainder shared between beef and pigmeat. In addition to growing production prices are also expected to increase strongly: up 5.9% per annum for pork, +4.4% for beef and veal, and +3.9% for poultry.