Animal diseases the main determinant of global meat trade in 2006

GLOBAL - A weakening of meat demand, uncertain price prospects and escalating trade restrictions in 2006 are expected to limit global meat output in 2006, according to the FAO's May assessment of meat market developments in 2006.
calendar icon 14 June 2006
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While relatively low feed prices are prompting higher pig meat and beef output, an unprecedented decline in poultry meat output would likely limit meat output gains, the report said. While output gains would be lower in developing countries, their contribution to global output is expected to rise in 2006 to nearly 60 percent of global production.

However, unlike previous years when South American products contributed half of developing country output gains, meat production in this region is forecast to grow only 1 percent due to policies and FMD-trade bans, according to the report.

Developing country gains are likely to be concentrated in Asia, as consumption patterns change, according to the FAO report. In developed countries, lower poultry production would contribute to a lacklustre meat industry despite an increase in pork and beef production, the FAO said.

Pork output to be driven by Asia

Driven mainly by Asia, global pork output is expected to reach 107 million tonnes, up over 3 percent, according to FAO estimates. Asia, which accounts for 60 percent of global pork consumption, would have larger pork output in the Philippines, Vietnam and China. In South America, Brazil would have slower growth due to FMD. In developed countries, FAO expects outputs to rise in the USA, Canada and the EU due to efficiency gains.


Supported by a recovery in North America and Asia, FAO expects global beef output to rise 2.5 percent in 2006 to nearly 66 million tonnes. Production in developed countries is projected to increase by over 2 percent, reversing negative growth over the past four years.

Poor grazing conditions in the US and more Canadian imports are supporting record numbers of cattle on feed in the US, according to the report. Meanwhile, EU beef supplies are expected to rise with the elimination of the BSE-related Over-Thirty-Month-Slaughter policy.

Beef output in Canada is expected to drop, due to stabilizing of cattle inventories and larger shipments of live animals to the US, according to the FAO. Growth in beef production in developing countries would be halved as FMD causes trade bans in South America, especially on Brazilian beef. Argentina's output would be similarly affected due to a self-imposed export ban. FAO expects most of the developing country output growth in Asia, where consumers are substituting beef and pork for poultry. The increase in beef output is reflective of rising beef prices and strong supplies in China.

The beef trade is expected to rise 3 percent rise to 6.7 million tonnes. FAO expects South American beef exports to decline 1 percent in 2006 on account of Argentina's export ban, after major gains the past five years, however, this would support exports from other beef exporters, the report added.

Meanwhile, although US beef shipments are expected to increase due to the opening of some Asian markets, shipments will likely be less than half of those in 2003, before mad cow disease shut off markets, the report said. Despite strong international beef prices, global beef demand would be supported by stronger Asian demand as mad cow concerns are overtaken by bird flu. Increased market access of other Asian countries would more than offset slower import growth by Japan. However, China's beef imports are set to remain low, according to the FAO report.

Lower prices stifle poultry output

The decline in poultry prices by between 10-40 percent in countries hit by bird flu has eroded industry profitability and reduced global poultry production by an unprecedented 1 percent to 81 million tonnes, according to the FAO. Per capita consumption in developed countries is estimated to decline by 3 percent to 27 kg in 2006, mainly in Europe where some countries experienced decreases of up to 70 percent.

Bird flu has also affected exporting countries, such as Brazil and the United States, thus limiting their production prospects. FAO predicts that Asian poultry production would fall by 1 percent, with declines expected in most developing countries. Global poultry meat consumption to have lowest growth in 25 years Bird flu concerns, trade bans, and demand and price shifts would influence meat market prospects in 2006, according to the FAO assessment.

A 4 million-tonne downward revision in the 2006 forecast for global poultry meat consumption is expected to limit overall growth in meat consumption to its lowest level in 25 years. Per capita meat consumption is expected to increase only marginally to 41.7 kg, according to FAO estimates. Declines in consumption of poultry meat was enough to cancel most of the gains in other meats, especially pork.

The gap between per capita meat consumption levels of developed and developing countries is set to narrow marginally as consumption declines in the former. Per capita consumption gains are expected in developing countries, but at half of their historical rates, the report said. The meat trade is forecast to increase less than 1 percent, the slowest rate in 25 years, excluding the disease induced drop in 2004.

Exports from developing countries are set to decline as South American meat shipments decline, according to the FAO. Despite a drop in EU meat exports due to bird flu, strong US exports and a cheaper exchange rate should help maintain the developed country share of global trade at 54 percent, the report said.

Countries in Central Asia, Russia and Africa, are expected to have lower poultry trade in 2006, due to lower import demand. Market uncertainty over trading licenses in Russia, the world's largest poultry importer, is expected to lead to lower imports. These developments are expected to lead to a 3 percent decline in poultry trade to 8.0 million tonnes.

Exports are just as gloomy in Brazil and the US, suppliers of approximately 70 percent of global poultry trade, where export prices fell between 20-50 percent in early 2006 as a result of lower import demand. EU exports are expected to be reduced by 25 percent due to bird flu concerns, according to the FAO.

Source: Food and Agriculture Organization of the United Nations (FAO) - 13th June 2006

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