Moderate Meat Production Growth; Trade to Slow

World meat production, is anticipated to grow modestly in 2013 to 308.2 million tonnes, an increase of 4.3 million tonnes or 1.4 per cent compared with 2012, according to the Food and Agriculture Organization (FAO) of the United Nations. In many countries, producers continue to struggle against elevated feed prices; however, although remaining high by historical standards, they began to fall during the second half of 2012 and have continued to diminish during 2013.

This has offered greater scope for profitable meat production, particularly in the pig and poultry sectors, which are the most dependent on concentrated feed. Meat production is anticipated to grow the most vigorously in the developing countries, which are the main centres of demand growth.

Figure 1. Gains in global meat trade in 2013

Meat prices have remained at historically high levels since the early part of 2011. The FAO Meat Price Index averaged 179 in May 2013, having moved within the narrow band of 177 to 179 since October 2012. Export reference prices for the different types of meat have followed varying directions so far this year, rising marginally for poultry and pork, remaining largely stable for beef, and falling for ovine meat.

Meat trade is expected to grow more slowly in 2013 than in recent years due to adequate national supplies in a number of importing countries and a reduction in production among some of the major exporters. Global meat exports are anticipated to rise to 30.2 million tonnes in 2013, an increase of 1.1 per cent over 2012.

Figure 2. Limited supplies and elevated feed costs sustain meat prices

Pig Meat

Growth in Asia to sustain world pig meat production

Production of pig meat is expected to grow by 1.5 per cent to a record level of 114.2 million tonnes in 2013. However, the rate of growth will be slower than in the previous year, as a result of higher slaughter rates in 2012 in response to the elevated price of feed and, in some cases, abundant stocks, which depressed prices.

Almost two-thirds of pig meat production originates in the developing countries, which is where most of the increase in output is forecast. Conversely, composite production by the developed countries is expected to show a small decline. Asia is the principal region, accounting for almost 60 per cent of world pig meat production. Strong consumer demand and government support policies are anticipated to result in China’s pork output reaching 53.8 million tonnes, or almost half of the world total. Recovery from FMD-depletion should boost production in the Republic of Korea. Elsewhere in Asia, listed by magnitude of production, output is forecast to be moderately higher in Viet Nam, the Philippines, Japan, Thailand and Indonesia – in some instances, growth in the sector is being limited by competition from other types of meat.

In the Americas, Brazil, the world’s fourth largest producing country, is expected to see pig meat output increase, stimulated by improved pig prices. In Mexico, production continues to expand, underpinned by improved genetics and productivity, which are translating into more piglets per litter and higher animal weights.

In the EU – at 22.4 million tonnes, the second most important pork producer after China – compliance with animal welfare requirements relating to the housing of sows is expected to depress output for a second year, with an anticipated fall of two per cent.

In the United States, the third largest producing country, lower feed costs and increased slaughter, associated with an expansion of the breeding herd could lead to limited growth. In Canada, producers’ struggles to remain profitable have resulted in a number ceasing operations – consequently a small decrease in output is anticipated.

In the Russian Federation, where a sustained four per cent growth is forecast, the industry is being assisted by reduced feed prices and is benefiting from government policies favouring large-scale farms

Pig meat trade stalls in the face of reduced demand in Asia and lower export availability

FAO reports that reduced output among some of the principal exporting countries and a decrease in demand by several major importing countries are expected to result in a decline in pig meat trade during 2013. Shipments are anticipated to fall by four per cent to 7.2 million tonnes.

Pig meat imports by Asian countries, which as a group represent approximately half of world demand, are expected to fall for a second year: after being down by four per cent in 2012, a six per cent decrease is anticipated for 2013. Procurement by the Republic of Korea is forecast to register a substantial drop for the second year in a row, decreasing by around 150,000 tonnes, or 30 per cent. This reflects a build-up of stocks and a fall in domestic prices stemming from a strong recovery of production following the 2011 FMD outbreak. Japan, the largest importer, is anticipated to cut purchases by 2.5 per cent, reflecting expanding production and strong competition from poultry and imported beef. Imports by China are expected to be stable, following notable growth in recent years, as a consequence of a rise in production.

Elsewhere, the Russian Federation, Mexico, the United States and Canada are anticipated to maintain purchases at a similar level to last year, while Ukraine’s purchases may fall due to restrictions on imports established in favour of national producers.

In terms of exports, reduced availability in the United States, the EU and Canada – which account for 75 per cent of world trade – is expected to constrain sales, especially in the EU, where shipments are anticipated to fall by 10 per cent. Brazil, the fourth largest exporter, is facing restrictions on pig meat trade in some markets, such as the Ukraine, and thus may also see a decline in sales.

Moderate growth in shipments by smaller scale exporting countries will go some way to counterbalance reduced exports by the main trading countries, according to FAO. Sales by non-traditional exporters, such as Chile and Mexico, are expected to rise, especially in Mexico due in part to its newly recognised status as free of Classical Swine Fever. Shipments from Belarus are also set to increase, facilitated by a newly negotiated customs union with the Russian Federation.

June 2013