This chapter describes market developments and medium-term projections for world meat markets for the period 2022-31. Projections cover consumption, production, trade and prices for beef and veal, pigmeat, poultry, and sheepmeat. The chapter concludes with a discussion of key risks and uncertainties which have implications for world meat markets over the next decade.
OECD-FAO Agricultural Outlook 2022-2031
OECD-FAO Agricultural Outlook
6. Meat
Abstract
6.1. Projection highlights
Slowing down globally but better prospects in low and middle income countries
The shift in meat consumption from foodservice to home cooking that occurred during the COVID pandemic is expected to be short term and will revert to prior expenditure patterns as restrictions are lifted. In high income countries, however, where per capita consumption is already high, demand is anticipated to level off or trend lower given ageing populations and greater dietary concerns that seek more diversity in protein sources. In lower income countries, both population and income growth will spur higher overall consumption, albeit from a much lower per capita base level. Recovery in meat consumption in the People’s Republic of China (hereafter “China”), which fell in per capita terms by over 11% in 2020 from its historical peak in 2018, is projected to return to its longer-term trend by 2023, as the impact on domestic pig meat prices of African Swine Fever (ASF) abates. Per capita global meat consumption, once China pork consumption recovers, is expected to stabilise around 35.6 kg/year in r.w.e. by 2031.
The long-term shift in meat consumption toward poultry continues to strengthen. In high-income countries this trend is due to a rising preference for white meats that are more convenient to prepare, and which are perceived as a better food choice. In low- and middle-income countries, the upward trend is additionally due to the lower price of poultry compared to other meats. Globally, protein availability from poultry, pork, beef, and sheep meat is projected to grow 16%, 17%, 8%, and 16%, respectively, by 2031 (Figure 6.1). Poultry meat is projected to constitute 47% of the protein consumed from meat sources, followed by pig, sheep and bovine.
Figure 6.1. Growth in meat production and per capita consumption on a protein basis, 2019-2021 to 2031
Note: The 38 individual countries and 11 regional aggregates in the baseline are classified into the four income groups according to their respective per-capita income in 2018. The applied thresholds are: low: < USD 1 550, lower-middle: < USD 3 895, upper-middle: < USD 13 000, high > USD 13 000.
Source: OECD/FAO (2022), “OECD-FAO Agricultural Outlook”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-outl-data-en
Global meat supply will expand to meet rising demand over the projection period reaching 377Mt by 2031 but growing slower than the last decade. Global herd and flock expansion, especially in China, combined with continuous improvement in animal breeding, management, and technology will increase productivity, particularly in low- and middle-income countries, which will drive the growth in production. Higher prices for meat early in the projection period will induce a supply response, albeit restrained by higher costs for inputs, particularly for feed, energy, and transport. Bottlenecks in processing capacity witnessed during the height of the pandemic are expected to ease. China is projected to account for most of the total increase in meat production, followed by the United States, Brazil and India. By contrast, in the European Union meat production will decrease over the outlook period due to increasing domestic and environmental costs, and reduced export opportunities due to greater competition on global markets.
The increase in global meat production is influenced mainly by growth in poultry meat. Global growth in pig meat production will remain limited in the first years of the Outlook due to the ongoing recovery from the outbreaks of ASF in China, the Philippines and Viet Nam. The recovery process is assumed to be completed in China and Viet Nam by 2023 and in the Philippines by 2024. Government strategies in the latter two are based on the development of a commercially available vaccine to control the spread of ASF, which will be critical in reducing the risks of future ASF outbreaks.
The current projection foresees a global increase in livestock inventories with cattle, pigs, poultry and sheep rising to 1.8, 1.0, 31.0 and 2.9 billion head, respectively. As a result, greenhouse gas (GHG) emissions by the meat sector are projected to increase by 9% by 2031. This increase is considerably less than the 15% increase in meat production given the rising share of poultry, and productivity increases that yield higher production of meat per animal, and thus a lower ratio of GHG emissions per unit of meat output (Figure 6.5). An important exception is in Africa where emissions will rise by 24% largely in parallel with its rise in production.
International meat trade will expand in response to growing demand from high per-capita income growth in Asian countries and by high population growth in Sub-Saharan Africa. Import demand in middle and high-income Asian countries has been steadily increasing in recent years due to a shift toward diets that include higher shares of animal products. The expected decline in China’s pork imports will put pressure on global pork markets as they re-adjust to a post-ASF situation. Trade in other meats will continue to grow, albeit at a slower pace than in the last decade.
This Outlook projects that nominal meat prices are anticipated to remain high in 2022, as demand in some middle- and high-income countries continue to recover from the COVID-19 pandemic and underpin market demand, while supplies remain tight. Real prices of all meats are foreseen to return to their long-term downward trend levels over the Outlook period as supplies respond to price incentives, and productivity gains are realised.
The projections assume that aside from demographic, income, and price factors, evolving consumer preferences will shape diets. Meat consumption patterns of consumers in some high-income countries have reached a turning point at which overall demand has started to stagnate and shifts will occur based on the type and the quality of the meat consumed. Dietary recommendations advising limited red meat consumption as well the changing consumer’s preferences towards alternatives to conventional meat proteins over the past years are having a greater impact on consumer purchases.
6.2. Current market trends
6.2.1. Market prices rise despite higher supplies
World meat production rose 5% in 2021 to an estimated 339 Mt, led by a large 34% increase in pig meat production in China following two years of precipitous decline induced by an outbreak of ASF. Supplies of poultry, bovine and sheep meat rose only marginally as high feed prices reduced profitability. Bovine meat output in some countries was restrained by a variety of factors such as COVID–19 related disruptions, labour shortages, the on-going shrinkage of the dairy herd in the European Union, and the implementation of an export tax in Argentina. On the other hand, beef output increased 12% in India as slaughter numbers increased following the gradual reopening from the COVID-19 pandemic lockdown and in response to improving demand from overseas markets in the Middle East and Southeast Asia.
World meat imports in 2021 are estimated to have reached 40 MT, led by poultry imports. Leading meat exporters ‒ including Brazil, the European Union and the United States ‒ supplied much of this higher import demand.
International meat prices quoted in the Outlook trended upward in 2021, reflecting higher demand from economic recovery and higher marketing and transport costs. However, meat to feed price ratios fell significantly, putting pressure on sectoral profitability in intensive feed-grain livestock operations. This will cause markets to tighten further inducing higher prices early in the Outlook period.
6.3. Market projections
6.3.1. Consumption
Meat demand is weakening in high income countries, with a shift to white meat
Population growth is a major driver of increased demand, and its projected global increase of 11% will underpin an estimated growth of 15% in global meat consumption by 2031, compared to the base period of this Outlook. As well as population growth, determinants of meat consumption are complex including income, prices, demographics, urbanisation, traditions and religious beliefs, as well as environmental, ethical/animal welfare and health concerns. The past several decades have witnessed considerable changes in the impact of each of these factors across a broad array of countries and regions.
Economic growth is an important driver of meat consumption as it enables the purchase of meat, which is typically a more expensive source of calories and proteins. It is also accompanied by other structural changes such as greater urbanisation, higher labour participation, and away-from-home food service expenditures that additionally encourage higher meat purchases. However, the response of consumption to income growth is demonstrably higher at lower incomes, and less so at higher incomes where consumption is largely saturated, and consumers may be more sensitive to environmental, and ethical/animal welfare and health concerns. Recent analysis suggests that at a GDP per capita exceeding about USD 40 000, growth of GDP is no longer a driver of growth in meat consumption (Whitton et al., 2021[1]). Countries appear to be grouped into two clusters: one in which increases in GDP per capita matches increases in meat consumption (cluster 1); and a second one of nine countries (cluster 2) in which there is no association between per capita change in GDP and meat consumption (Figure 6.2).
The empirical evidence on consumer behaviour suggests that increases in income in low-income countries, where the share of food expenditure represent a high share of all expenditure, stimulate a higher consumption of lower valued foods, particularly carbohydrates. Beyond a certain threshold, higher valued foods such as animal proteins are preferred. For meat proteins the evidence suggests that the shift towards higher shares of meat protein in the diet have increased the most for upper middle-income countries, particularly China. However, after 2015 it appears that the dietary shift towards increasing amount of meat proteins as a share of total protein intake has slowed. These trends are not anticipated to change much over the next decade. Higher incomes may induce higher per capita protein consumption (including eating away from home), but not necessarily a higher share of meat protein in diets.
Figure 6.2. Change in Gross Domestic Product (GDP) and change in meat consumption.
Note: Scatter plot of change in nominal GDP per capita per year and change in meat consumption per capita per year. Circles indicate country clusters.
Source: Whitton, C.; Bogueva, D.;Marinova, D.; Phillips, C.J.C. Are We Approaching Peak Meat Consumption? Analysis of Meat Consumption from 2000 to 2019 in 35 Countries and Its Relationship to Gross Domestic Product. Animals 2021, 11, 3466. https://doi.org/10.3390/ani11123466
Research has found that the main motivations prompting consumers in higher income countries to shift towards a diet that excludes or reduces meat products and re-allocates among meat products (e.g. red vs white meat) are those relating to animal welfare and health. Consumer research has also examined attitudes and behaviour towards meat consumption in relation to environmental concerns. The results show that the number of consumers willing to stop or significantly reduce meat consumption for environmental reasons or who have already changed their meat intake for ecological concerns still represent a small minority of global consumers, which is however of growing significance among young Europeans who are adopting environmentally motivated meat curtailment strategies (Sanchez-Sabate and Sabaté, 2019[2]).
Figure 6.3. Meat consumption per capita: Continued rise of poultry, pig meat and fall of beef
Note: Per capita consumption is expressed in retail weight.
Source: OECD/FAO (2022), “OECD-FAO Agricultural Outlook”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-outl-data-en
Poultry meat consumption has risen in virtually all countries and regions (Figure 6.3). Consumers are attracted to poultry due to lower prices, product consistency and adaptability, and higher protein/lower fat content. Consumption of poultry meat is projected to increase globally to 154 Mt over the projection period, accounting for nearly half of the additional meat consumed. On a per capita basis, these robust growth rates in poultry consumption reflect the significant role it plays in the national diets of several populous developing countries, including China, India, Indonesia, Malaysia, Pakistan, Peru (which will surpass the United States to become the second largest per capita consumer), the Philippines and Viet Nam.
Global pig meat consumption is projected to increase to 129 Mt over the next ten years and to account for a third of the total increase in meat consumption. However, on a per capita basis, global consumption is expected to stagnate over the outlook period. Pork will remain the meat most eaten in the European Union over the coming decade, even though it will remain stable in per capita terms as changes in diets will favour poultry as a cheaper and perceived better food choice. In most of Latin America favourable relative prices have positioned pork and poultry as the favoured meats to meet rising demand from the middle class. Several Asian countries which traditionally consume pork such as Korea and Viet Nam, are also projected to increase consumption on a per capita basis.
Global beef consumption is projected to increase to 76 Mt over the next ten years. However, per capita consumption has declined since 2007 and is projected to fall by a further 2% by 2031. Asia and the Pacific is the only region where per capita beef consumption is projected to increase over the outlook period, albeit from a low base. In China, the world’s second largest consumer of beef in absolute terms, per capita consumption is projected to rise a further 10% by 2031, after having risen 50% in the last decade. But most countries that have high beef per capita consumption will see the level decline in favour of poultry meat. For example, in the Americas and Oceania, which is where preference for beef are among the highest in the world, per capita consumption will fall in Argentina(-5%) and Canada (-2%), Brazil (-2%), the United States (-4%), and, significantly (-15%), in Oceania.
Global sheep meat consumption, a niche market in some countries and considered a premium component of diets in many others, is projected to increase to 18 Mt over the outlook period and to account for 5% of the additional meat consumed. Sheep meat consumption worldwide, on a per capita basis, is comparable in both developing and developed countries. In some Near Eastern and North African (NENA) countries, where sheep meat is traditionally consumed, per capita consumption is projected to continue its long-term decline despite increasing disposable income.
6.3.2. Production
Poultry meat remains the primary driver of growth in meat production
Global meat production is projected to reach 377 Mt based on increasing profitability in the early years of the outlook period as meat prices rebound post-COVID-19 and feed costs decline. Overall, most meat production growth will occur in developing regions. The market share of the Asia and Pacific regions will return to its historical level, after dipping during the ASF crisis, mainly due to developments in China which is the world’s largest meat producer. The production share of the world’s top five meat producers ‒ China, the United States, the European Union, Brazil, and the Russian Federation (hereafter “Russia”) ‒ will gradually trend downwards from its current level. This downward trend reflects a decline in production from the European Union and an emerging broader base of global production. Globally, livestock expansion will be facilitated by the increasing size and consolidation of production units towards a more integrated systems, especially in emerging developing countries (Figure 6.4).
Figure 6.4. Growth of meat production by region and meat type
2031 vs 2019-21
Note: c.w.e. is carcass weight equivalent, r.t.c. is ready to cook equivalent.
Source: OECD/FAO (2022), “OECD-FAO Agricultural Outlook”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-outl-data-en
Poultry meat will continue to be the primary driver of meat production growth increasing 16% by 2031. With favourable meat-to-feed price ratios compared to other ruminants, together with a short production cycle, poultry producers can respond quickly to market signals while taking on board rapid improvements in genetics, animal health, and feeding practices. Production will expand from sustained productivity gains in Brazil, China, India, Indonesia, and the United States. Expansion is also foreseen in Asia as the shift away from pig meat triggered by several ASF outbreaks will benefit poultry in the medium term.
Pig meat output is projected to rise by 17% by 2031, up from an ASF-reduced base level 2019-2021 and benefiting from increasing specialisation of the sector and biosecurity measures. The ASF outbreak across Asia, starting in late 2018, will continue to affect many countries in the early years of the outlook period, with China, the Philippines and Viet Nam experiencing the greatest impact. It is projected that ASF outbreaks will continue to keep global pig meat output below previous peak levels until 2022, after which it is expected to steadily increase to 2031.
Pig meat production in China is expected to continue to increase and attain pre-ASF (2017) levels by 2023. Most of the pig meat production increase in ASF-affected regions will be due to conversion from largely small-scale backyard holdings to large-scale commercial enterprises. Viet Nam, which has suffered from ASF-reduced output since 2019, is projected to become the sixth largest pig meat producer just below Brazil and Russia. Its domestic policy rests on vaccination to control the spread of ASF, and trials have proved to be safe and efficient. As a result, Vietnamese production is projected to recover to 2019 levels by 2023 and to grow further over the projection period.
Pig meat production in the European Union is projected to decline as environmental and animal welfare concerns are expected to limit domestic demand while the decline in imports by China also weigh negatively on trade prospects. Brazil and US production are also expected to fall at the start of the Outlook in the face of the expected decline of Chinese import demand and high feed costs. On the other hand, their production will remain high given their strong competitive position in global markets.
Beef production will grow to 76 Mt by 2031, with slow growth attributable to weak beef demand as consumers continue to shift preferences to poultry meat. In North America, the largest producing region, a modest herd expansion, is projected to increase beef production by 4% by 2031. Production in the European Union is projected to fall as inventories of dairy cows, responsible for approximately two-thirds of the beef supply, decrease following productivity gains in the milk sector. Other factors limiting the growth potential of this sector in the European Union are a reduction in suckler cowherds due to their low profitability, steep competition in export markets, and declining domestic demand. The beef sector is the main beneficiary of the European Union’s voluntary coupled support programme, and a relatively good price outlook will dampen the downward trend of production in the European Union.
Beef and carabeef1 production in India rebounded in 2021 after recording a large decline in 2020 in part due to COVID-19 lockdown and regulations on animal welfare in several Indian states. The largest historical increase in beef supply was recorded in 2021 as the Indian government implemented measures to facilitate processing and slaughtering of bovine and water buffaloes in particular. India’s cattle production is expected continue to grow over the projection period with improvement in breeding, nutrition, and animal health. Pakistan is projected to have the strongest growth rate of any country at 26%, as calf and milk-producing cows are being slaughtered to meet the high demand of meat protein from the Middle East.
In Australia, which has faced a COVID-related shortage of labour, production is projected to increase due to greater cattle availability and the return of labour to processing plants. Overall, beef producers have greater ability to increase slaughter in the short term but have less flexibility to increase carcass weights with high feed prices. Therefore, in the early years of the Outlook beef production will be higher due to more slaughtering of lower weight animals.
Growth in sheep meat production will mostly originate in Asia, led by China, India, and Pakistan but significant increases are also projected in Africa, particularly in the least developed countries of Sub-Saharan Africa. Despite limitations linked to urbanisation, desertification, and the availability of feed in some countries, sheep and goats are well adapted to the region with their extensive production systems.
In Oceania, New Zealand sheep meat production is expected to remain stable due to competition for pastureland from the beef and dairy sectors and forestry. The larger availability of sheep meat in Australia will enable it to respond to growing global demand despite being constrained by its currently small sheep flock.
Sheep meat production in the European Union is expected to increase slightly, underpinned by voluntary coupled producer support offered in the main sheep-producing Member States.
Box 6.1. Productivity change in the meat sector
Meat production has grown about 110% in the past 30 years and, as noted in this Outlook, is anticipated to grow an additional 8% over the next ten years, due largely to growing demand of populations and incomes in developing economies. At the same time, the “off-take”, or the quantity of meat produced per animal, has also increased substantially over time. This means that fewer animals are required to produce a given level of meat. This partial productivity measure captures several changing characteristics in the meat sector including the number of offspring per breeding animal, length of feeding period, the quantity of feed needed per kg of meat produced and thus the yield of meat for each animal slaughtered. Ultimately, higher off-take ratios imply a lower inventory of animals or capital which is required to produce meat, while a decreasing feed conversion ratio implies, in the case of industrial operations, a lower need for feed grain.
Both indicators have considerable resource implications. Table 6.1 and Table 6.2 provide selected country examples of off-take and feed conversion ratios for different meats, recent trends, and projected future growth rates over the next decade. Off-take ratios and feed conversion ratios by country and by animal type may vary for several reasons. Meat production characteristics vary by animal and by country depending on genetics, livestock management, climate, pasture and arable land availability, social norms and the state of economic development. Large differences in off-take ratios can be observed between intensive operations with normally higher off-take ratios, and less intensive ones. Grain fed operations typically show higher off-take ratios, as animals may be slaughtered at a younger age and at higher weights.
Table 6.1. Trends in meat off-take ratios in selected countries
Note: Off-take ratios are computed as gross indigenous meat production divided by all animal inventories at a fix time of the year. Trend growth rates are computed from trend regression over the period indicated. Countries selected to represent all inhabited continents.
Source : OECD/FAO (2022), “OECD-FAO Agricultural Outlook”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-outl-data-en.
Table 6.2. Trends in non-ruminant Feed Conversion Ratios in selected countries
Note: Trend growth rates are computed from trend regression over the period indicated.
Source: OECD/FAO (2022), “OECD-FAO Agricultural Outlook”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-outl-data-en.
In general, off-take ratios appear much lower in developing countries, particularly for bovine meat. Ratios appear very low for African countries, where growth rates are also much lower due to poor disease resistance, limited veterinary care and inefficient feeding practices. In addition, smallholders are often isolated from markets and abattoirs by limited infrastructure and, as a result, many animals fail to yield their potential economic value. Often, animals are kept for other reasons than simply meat production, such as for providing a source of wealth or, in the case of sheep, wool. Historical growth in off-take ratios has been high for several emerging countries, such as Chile, China, South Africa, Thailand, as well as in Australia. As emerging countries increase their share of meat production from specialised units, higher off-take ratios will be important in regulating the size of their animal inventories while lower feed conversion ratios lower the pressure on natural resources and environmental damage.
Trend projections in Tables 6.1 and 6.2 generally indicate that the rate of partial productivity growth is slowing in most countries. It should be noted that this lower growth is often from a high base. In general, except for many African countries, the gaps in off-take ratios have been converging to some degree, although not rapidly. There would appear to be substantial scope for increasing productivity in many countries, offering the potential to limit the growth of animal numbers over the long term and minimise resource and environmental costs otherwise associated with a larger number of animals and more feed.
Greenhouse gas emissions will rise at a slower rate than production
Greenhouse gas (GHG) emissions from the meat sector are projected to rise by 9% by 2031. This growth is considerably less than the rise in meat production due primarily to shifts towards poultry production, national low carbon emission initiatives, and increased productivity which yields higher meat output from a given stock of animals (Box 6.1). The strongest growth in meat-related greenhouse gas emissions will be in Africa, and in particular Sub-Saharan Africa, which will be 24% higher in 2031. A renewed effort to reduce GHG emissions could include policies such as carbon taxes and specific regulations combined with incentives to adopt technologies and production systems, such as the integration-crop-livestock-forest promoted by the Low Carbon Emission in Agriculture Plan in Brazil,2 that reduce the sector’s GHG footprint (Figure 6.5). In some cases, additional policies to ensure food security should be introduced because a carbon tax might have a higher negative influence on food security than climate change itself (Hasegawa et al., 2018[3]).
The CO2 produced by the livestock sector is only part of the warming process and methane (CH4) emitted by the livestock sector, while declining, also contributes considerably to global warming in the short term (Figure 6.6) as methane has a much shorter atmospheric lifetime than CO2, at around 12 years, while those from the CO2 may remain for centuries. Nevertheless, methane is much more potent than carbon dioxide. The Intergovernmental Panel on Climate Change (IPCC) estimated that one tonne of methane is considered to be equivalent to 28 to 36 tonnes of CO2 if assessing its impact over 100 years. A reduction in methane emissions would therefore have a big impact in reducing GHG emissions in the short term. The largest source of anthropogenic methane emissions is agriculture, responsible for around a quarter of the total including from livestock, manure, food waste and paddy rice. In November 2021 over 100 countries representing 70% of the global economy joined the Global Methane Pledge (Gidden et al., 2019[4]) and are committed to a global goal of reducing global methane emissions by at least 30 percent from 2020 levels by 2030. The potential of reduction of methane emissions from the livestock sector could increase the sector’s adoption of targeted measures. Livestock producers in many countries have already initiated methane reduction actions, aside from policy measures, for example, following guidelines from FAO’s LEAP project.3 These actions would include improving animal health husbandry and manure management, the adoption of new technology such as processing feed grain to enhanced digestibility and the use of feed supplements and seaweed. It is estimated that such measures could potentially reduce methane emissions by the 30% target (Ocko et al., 2021[5]).
Figure 6.5. Meat GHG emissions intensity per regions
Note: Estimates are based on historical time series from the FAOSTAT Emissions Agriculture databases which are extended with the Agricultural Outlook projections. CO2 equivalents are calculated using the global warming potential of each gas as reported in the IPCC Sixth Assessment Report (AR6).
Source: OECD calculations based on FAOSTAT-Emissions Totals, Statistical Division of the UN Food and Agriculture Organization (accessed January 2021).
Figure 6.6. Major sources of methane average 2008-17 vs average 2000-09
Source: Chevallier, F., Le Quéré, C., Saunois, M., GCP, 2020. Data supplement of Global Methane Budget 2000-2017, https://hdl.handle.net/11676/4mKODq6pdGLSebFBueFFvkxW.
6.3.3. Trade
Global meat supplies will continue to be concentrated in very few countries
Global meat exports are projected to be 3% higher by 2031 than in the base period, reaching 40 Mt. This measured slow-down in the growth of trade compared to the previous decade is largely the result of high pig meat trade during the ASF crisis in Asia during the base period, particularly by China. By 2031, as ASF-induced trade declines, the proportion of meat output traded should remain stable at around 11%.
Rising imports over the next decade will mainly comprise of poultry and projected to account for two third of the additional meat imports into Africa where consumption growth will outpace the expansion of domestic production.
Meat exports are highly concentrated with the share of the two largest meat exporting countries, Brazil and the United States, expected to increase to around 40%, contributing two thirds of the expected increase in global meat exports over the projection period. The European Union has improved its access to Asian markets in recent years, but the projected decline in meat imports by China as well as competition from North and South America will limit export opportunities, with exports declining over the period to 2031. Other traditional exporting countries; such as Argentina, Australia, Paraguay, Thailand and Türkiye are expected to contribute considerably to the increase in the global meat trade.
Brazil is expected to record by far the largest increase in world meat exports, benefiting from a favourable exchange rate and ample feed grain availability. Its dominance as the largest exporter of poultry meat and beef will continue to increase over the outlook period. Indian buffalo meat exports, despite the government reforms concerning animal welfare, are expected to increase as import demand from the Middle East and Indonesia rises over the next decade. The meat trade in value is dominated by beef and veal, but increasingly dominated by poultry in quantity terms (Figure 6.7)
Figure 6.7. Meat trade in value is dominated by beef and veal, but increasingly by poultry in quantity
Note: c.w.e. is carcass weight equivalent. Exports measured in constant 2014-16 USD.
Source: OECD/FAO (2022), “OECD-FAO Agricultural Outlook”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-outl-data-en.
Import demand is expected to increase most quickly in terms of quantities in Africa, with a 2 Mt increase from the base period. The Asian region will account for 51% of global trade by 2031. The largest increases in imports will occur in Korea, Indonesia and the Philippines, and the latter for poultry meat. While Chinese meat imports remain high in the early part of the projection period, a gradual decline is projected in the second half of the projection period as pig meat production recovers from the ASF outbreak. While Chinese beef imports will continue to increase over the projection period.
Sheep meat imports by the Near East region are projected to increase in alignment with rising demand and as a result Australia is expected to continue to increase its lamb production at the expense of mutton. In New Zealand, export growth for sheep meat is projected to be marginal with land use shifting from sheep farming to dairy.
6.3.4. Prices
Prices in real terms are expected to fluctuate around its long-term declining trend
Meat prices have rebounded from COVID-19 induced lows in 2020 and are expected to rise as higher feed costs are passed through the livestock value chain. However, they should remain well below their peaks of a decade ago (Figure 6.8). The projected rise in nominal prices for all meats will be uneven as each livestock species displays different dynamics due to the respective biological supply responses to recent shocks. In addition to higher feed costs, other inputs along the meat supply chain, such as packaging and transport, have become more expensive. The projections assume prices for meat to settle down as the supply chain begins to stabilise and feed costs return to trend levels. As a result, the ratio of nominal meat prices to feed prices will increase compared to recent years (Figure 6.9), returning to profitable levels before resuming the longer term downward trend as feed productivity gains are realised, such that less feed is required to produce a unit of meat.
Figure 6.8. World reference prices for meat -rising in nominal, but falling in real terms
Note: Real prices are nominal world prices deflated by the US GDP deflator (2020=1). US Barrows and gilts, National base 51-52% lean c.w.e. Brazil: Export unit value for chicken (f.o.b.) product weight. US Choice steers, 5-area Direct c.w.e., Total all grades. New Zealand lamb price c.w.e., all grade average.
Source: OECD/FAO (2022), “OECD-FAO Agricultural Outlook”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-outl-data-en.
All meat prices are projected to initially remain high as demand in high income countries recover from the COVID-19 pandemic before returning to longer term trends that are declining in real terms. The exception is sheep meat, the prices of which have displayed an upward trend as exports from New Zealand have been increasingly constrained by rising costs of pasture due to the profitability of forestry and competition from the beef and dairy sectors. The reference price for pig meat in heavily traded Pacific markets (US national base price) will remain high early in the projection period to meet strong demand, particularly from Southeast Asia, but supply responses and higher export supplies will exert downward pressure on prices. Poultry prices (Brazil fresh, chilled or frozen export prices) are expected to follow grain prices closely given the high share of feed costs in their production and the swift response of production to global rising demand. Beef prices (US choice steer prices) are projected to reflect higher processing (labour) and feed costs. Uncertainty on price developments have led farmers to scale back production initially, but prices are expected to remain higher as higher cattle inventories are retaining supplies in key exporting countries, including Argentina, Australia, Brazil and the United States.
Figure 6.9. FAO Food Price Index for meat and its ratio to feed prices
Note: Index average 2014-2016=100. Meat price Index: computed from average prices of four types of meat.
Source: OECD/FAO (2022), “OECD-FAO Agricultural Outlook”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-outl-data-en.
6.4. Risks and uncertainties
Animal disease outbreaks remain the most significant risks in the meat sector
In the short term, the Outlook assumes that the impacts of COVID-19 on economic growth and on restrictions in the movement of people and goods will end and that recovery will start in 2022. But, together with the impacts of Russia’s war against Ukraine, a delay to the end of the pandemic, a possible economic downturn and government policy responses, prospects for the meat sector may well deteriorate.
The livestock and meat sector regularly experience serious economic repercussions from disease outbreaks despite advances in public health and veterinary measures. Outbreaks which shock markets can occur quickly and can take years to fully resolve. The socio-economic costs of these disruptions vary by countries and situations depending on the importance of the loss of export markets, imports from an affected country, or when consumers reduce purchases because of health concerns. Costs on the global market may be significant but can be mitigated somewhat by supplies from alternative disease-free markets, or by following OIE protocols that localise disease impacts on trade. Animal diseases, even though they may not directly infect humans, can cause significant disruptions in livelihoods of rural communities and smallholders, impacting livestock productivity, food security and nutrition of the most vulnerable populations. On the other hand, some infectious animal diseases are also contagious to humans (zoonosis) or compromise food safety, posing direct public health concerns4. Additionally, the environment can also be impacted by disease outbreaks since animal morbidity and mortality generated by infections may raise livestock’s emission of greenhouse gases, thus contributing to climate change. Maintaining the herd during and after the outbreaks would need more energy, thus resulting in rising emission rates from digestive processes (FAO, 2021[6]).5 ASF, highly pathogenic avian influenza (HPAI), and foot and mouth disease (FMD) pose significant ongoing risks for meat markets. The Outlook assumes that recovery from ASF in East and Southeast Asia will be completed by 2031, but there is risk that this is not the case or that ASF emerges elsewhere. Investments to restructure and modernise production and processing facilities in the pig meat sector, and the successful development of a vaccine would have significant implications for future production and trade. Bovine Spongiform Encephalopathy (BSE), which had previously impacted livestock markets for decades re-emerged at the end of 2021 in Brazil, temporarily halting exports to China, its main export market. It is assumed that this BSE outbreak will be contained and not affect Brazil’s markets beyond 2022. If it is not contained the impact on Brazil’s meat sector and on world markets would be significant.
Assumptions regarding productivity improvements and climate change policies will affect the meat sector’s contribution to climate change. Since meat is a significant user of resources ‒ of land, feed and water ‒ lower demand along with productivity improvements would imply lower need for these inputs. Specifically, this means lower animal inventories and fewer feed inputs (meat production in 2019-21 used around 38% of the calories produced by the crops covered in this Outlook). Lower production would also imply lower GHG emissions from meat production compared to past decades. The role of the meat sector is critical in discussions on climate change, and future policies addressing environmental change may have important consequences for production and trade.
The Outlook assumes that consumer preferences will evolve slowly. Consequently, dietary preferences for lower (particularly red and processed) meat consumption are assumed to be adopted by a small but growing part of the population concentrated mainly in high income countries, and therefore will not significantly affect global meat consumption over the next decade. But preferences may change more than assumed, and more quickly, partly depending on relative prices. The development of novel alternative proteins as substitutes for traditional animal‑based foods (meat and milk) may be attractive to meet the nutritional needs and food demands of an increasing population, which some consumers may consider to be more healthy and sustainable. Advocates for novel alternative proteins foresee benefits that include better nutrition and health, and a reduction in greenhouse‑gas emissions. However, scientific evidence on such benefits is not conclusive. In any case, these products are unlikely to fit significantly into the Outlook’s ten-year horizon. Central questions yet to be fully addressed concern the role of government regulations required to ensure safety while encouraging the emergence and development of innovations. Several aspects need to be explored such as growth opportunities, potential barriers to competition and trade, impact on the conventional livestock and meat processing sector, implications for the supply chain, environmental impacts, and consumer acceptance. A key element on the prospects of alternative proteins will be their price relative to conventional protein sources from livestock.
Finally, consumers are expressing concerns about meat production systems, in particular animal welfare including traceability and the growing preference for antimicrobial-free meat due to the global risks associated with antimicrobial resistance. Antimicrobial-free and, more broadly organic, meat production systems are being adopted by an increasing number of producers and will affect global meat markets to the extent to which consumers are willing to pay a premium for such meat.
Notes
← 1. Asian domestic water buffalo use in dairy production
← 2. Crop-Livestock-Forest Integration (ILPF) is a sustainable production strategy that integrates agricultural, livestock and forestry activities in the same area, whether in consortium, succession or rotation. https://www.gov.br/agricultura/pt-br/assuntos/sustentabilidade/plano-abc/arquivo-publicacoes-plano-abc/abc-english.pdf
← 3. See, for example, https://www.fao.org/partnerships/leap/en.
← 4. Over 70% of human diseases originate in animals, and our expanding human population is inhabiting more wilderness while becoming ever more reliant on animals for food. FAO. 2013. World Livestock 2013 – Changing disease landscapes. Rome.
← 5. FAO (2021), The Impact of Disasters and Crises on Agriculture and Food Security: 2021, Rome. https://doi.org/10.4060/cb3673en.