FAO/GIEWS - Food Outlook No.1 - February 2002 p. 9

Meat and Meat Products

 

Beef

Pigmeat

Demand for sheep and goat meat rises

Poultry Markets Continue to Expand Share of Global Meat Markets

Meat Outlook for 2002

The international meat economy was characterized in 2001 by the lowest output growth in two decades and a stagnant trade performance affected by market disruptions and trade diversion. The main underlying factors were a slow-down in worldwide economic expansion and the occurrence of animal diseases in major meat markets. The international meat prices, as represented by the FAO index, despite strong gains over the course of the year for meats other than beef, dropped 2 points to 83. The 6.5 percent and 11 percent respective annual growth in average poultry meat and ovine prices were offset by a steady erosion in international beef prices, which dropped by more than 4 points as a result of lower demand in foot and mouth disease (FMD)-afflicted regions and in Asia in the wake of Japan's first reported cases of Bovine Spongiform Encephalopathy (BSE).

Global meat production grew by 1 percent in 2001 to 237.1 million tonnes, with increased output of poultry compensating for constrained production of beef and pigmeat. The second successive year of negative meat output growth in developed countries allowed developing countries to expand their share of global output further to 56 percent. Despite this, meat production gains of 2.5 percent in developing countries, supported by expansions in South and Central America and, to a lesser extent, Asia, averaged only half the annual growth witnessed over the past 5 years.

While markets in Europe witnessed a recovery in beef demand in the latter half of 2001, escalating concerns about animal diseases and food safety outside of Europe, particularly in Asia, contributed to one of the first estimated declines in global per caput meat consumption in nearly 30 years. The estimated 2.6 percent drop in global per caput beef consumption, from 9.9 to 9.6 kilograms, pushed down global per caput meat intake to 38.7 kilograms. Even per caput gains in developing countries, which have averaged 4 percent over the past decade, are estimated to have increased only marginally in 2001.

Meat trade in 2001, disrupted by temporary market closures and food safety induced shifts in consumer preferences and affected by changes in relative meat prices, grew only fractionally to 17.3 million tonnes, the slowest gains in 13 years. While meat consumption and trade shocks in early 2001 were largely limited to Europe and some parts of Latin America, meat market disruptions in Japan, the recipient of nearly 16 percent of global meat shipments, are currently affecting Asian markets and hold the potential to influence trading patterns and meat prices well into 2002.

Beef

Sluggish herd rebuilding and disease-induced herd reduction, particularly in the EC, reduced global slaughter and output in 2001 by one percent to 59.3 million tonnes. Despite increases in Australia and New Zealand, bovine meat output in developed countries as a whole fell by 4 percent, dropping for the second successive year. While output growth in developing countries slowed from a 5-year average of 3.5 percent to 2 percent, overall output at 30.2 million tonnes surpassed for the first time that of developed countries. Producers in the largest developing countries of Brazil and China (Mainland) expanded output by over 3 percent; however, overall regional gains in South America were limited by FMD-induced output declines in the major beef exporting countries of Argentina and Uruguay. Similarly, in Asia, declines were recorded in Afghanistan and the Islamic Republic of Iran where drought, animal disease and low carcass weights contributed to 3 successive years of output declines.

Destabilized by escalating reports of BSE outside of Europe, weakening economies around the globe and declining consumption, global bovine meat trade slid 5 percent to 5.3 million tonnes in 2001. All regions, except North and Central America, witnessed declines in imports. BSE outbreaks in Japan, the world's largest beef importer, on average accounting for 20 percent of global imports, are estimated to have reduced its beef consumption and imports by 8 and 13 percent, respectively. Although beef intake in developing countries is estimated stable at 6.3 kg/caput, a higher share of consumption came from domestic production, reducing imports by 8 percent. Significant import declines were reported by Egypt and the Republic of Korea, while deliveries also declined to the Philippines, Malaysia and Singapore. Reduced competition from the major beef exporting countries afflicted by disease problems in 2001, which included the EC, Argentina, and Uruguay, strengthened exports from Australia, New Zealand, and Canada. Brazil, in particular, benefiting from a favourable currency rate, boosted shipments by one-third. Conversely, U.S. exports, constrained by high domestic prices and a strong US dollar, fell 12 percent to a three-year low.

Pigmeat

Despite a recovery in pigmeat returns in many countries since mid-2000, global pigmeat production in 2001 increased only 1.4 percent to 92.6 million tonnes. While production gains of over 5 percent were reported in Canada, Brazil, and the Republic of Korea, rising feed prices limited output gains in China, the producer of almost 50 percent of global pigmeat supplies, to only 2 percent. Higher carcass weights pushed up output marginally in the United States while in the EC outbreaks of FMD and Classical Swine Fever resulted in slightly lower output, despite BSE-induced higher pigmeat prices as consumer preferences shifted to meats other than beef. In Eastern Europe, lower prices and limited export opportunities have led to declining pork supplies in the major regional pigmeat producing countries - Poland, Hungary, Romania and the Czech Republic.

International Meat Prices

Source: FAO
1/ Chicken parts, United States export unit value. 2/ Frozen pork, United States export unit value. 3/ Manufacture cow beef, Australia, cif prices to the United States. 4/ Lamb frozen whole carcass, New Zealand, wholesale prices London. 5/ January-November.

Policy changes and lower exportable supplies in 2001 combined to move pigmeat prices up in 2001, restricting trade gains to 1 percent, or 3.3 million tonnes. The mid-year imposition of a WTO-sanctioned safeguard measure which raised pigmeat tariffs in Japan, the recipient of nearly one-quarter of global imports, was initially expected to limit overall trade movement later in the year. The discovery of BSE in Japanese cattle herds, however, pressured up domestic prices, strengthening demand for both imported pigmeat and poultry meat. Despite this late year increase in demand, the region's imports slid by 2 percent in 2001 as imports by the Republic of Korea declined by 30 percent. Globally, however, the regional decline in Asia was offset by strong demand from Mexico and Canada. With EC exports disrupted by the FMD outbreak in 2001, non-traditional suppliers such as Brazil, Viet Nam and China (Mainland) moved to expand their shipments, particularly to the Russian Federation, a major market for EC pigmeat. Both Canada and the United States also expanded their market share, registering double-digit export gains.

Demand for sheep and goat meat rises

Global production and consumption of ovine meat rose only marginally in 2001 to 11.5 million tonnes. Slower output gains in northern China, where severe weather in early 2001 led to significant mortality losses, are limiting overall gains for developing countries to nearly half of the 3.1 percent reported in 2000. Similarly, in other areas of Asia which account for nearly half of global output, weather and disease losses were reported in Mongolia, Afghanistan and the Islamic Republic of Iran. Progressive output declines in many developed countries continued in 2001 with an aggregate decline of over 3 percent, largely due to disease-related animal culls in the EC. Low flock numbers in Australia constrained output while New Zealand producers, despite drought conditions, increased output as lambing percentages hit record levels.

As production declined faster than consumption in importing countries, global trade increased by 3 percent to 860 000 tonnes. FMD-induced intensive culling of over 5 million UK sheep in 2001, or nearly 2 percent of EC total inventories, led to an estimated 11 percent decline in EC sheepmeat output, forcing up average EC sheepmeat prices by nearly 15 percent. Although quotas prevent a large increases in EC imports, deliveries to the EC are estimated up 6 percent, with a shift of product moving to continental Europe accompanied by an 18 percent increase in deliveries of fresh/chilled product. Import demand also rose in other markets, with lamb imports by the United States estimated up 13 percent despite the TRQ on Australia and New Zealand lamb which remained in place until 15 November. As of that date, the United States lifted the TRQ, complying with the earlier WTO ruling that such trade restricting measures were not in compliance with its WTO obligations. Shipments from Australia and New Zealand accounted for nearly 90 percent of global exports in 2001, with product movement from Uruguay restricted by animal diseases concerns.

World Meat Production

Source: FAO Note: Total computed from unrounded data.

Poultry Markets Continue to Expand Share of Global Meat Markets

Strong demand for poultry meat and rising product prices, combined with stable input costs for poultry producers in many countries, pushed up poultry output 3 percent in 2001 to 69.4 million tonnes. The low relative price of poultry meat and shifting consumer preferences have expanded poultrymeat share of global meat output to 29 percent in 2001, up from 27 percent in 1995. In 2001, broad-based output gains were realized in most regions with that of developing countries growing by 3 percent. Global per capita consumption inched up slightly, from 11.2 to 11.3 kilograms/caput. While consumers in developing countries increased their intake slightly to 7.7 kg in 2001, shifting meat consumption preferences in the EC, a region which account for only 13 percent of global consumption but accounted for almost 30 percent of the consumption gains in 2001, pushed up the average intake in developed countries from 24.1 to 24.8 kilograms/caput.

Consumer preferences for poultry prompted global poultry trade to increase 4 percent in 2001 to 7.6 million tonnes, pushing up poultry's share of global meat trade to 44 percent. Strong import demand stemmed from most regions, with the exception of Asia where reduced deliveries to China (Mainland), one of the largest poultry markets, resulted from lower domestic prices, as excess supplies built up due to Avian Flu problems which limited exports. A strong recovery in the Russian Federation market and high demand from the EC, however, more than compensated for lower Asian imports. To meet growing demand in these markets, shipments from Brazil surged almost 25 percent, pushing up exports as a share of production from 15 percent in 2000 to an estimated 19 percent in 2001 while significant export gains were reported by the United States and Thailand.

Meat Outlook for 2002

A recovery in meat production and consumption is expected in 2002, with output forecast up 2 percent to 243 million tonnes. Much of the recovery is likely to be concentrated in the poultry and pigmeat sectors with output forecast to be up 3 percent and 2 percent, respectively, in response to stable feed prices and producer returns. As food safety fears abate in Europe, increased slaughter and output in the EC is expected to push up beef production slightly; however, supply availabilities in the major exporting countries in North America and Oceania are expected to be limited due to a progressive move towards cattle herd rebuilding.

World Meat Exports ^1/

Source: FAO
Note: Total computed from unrounded data.
1/ Includes meat (fresh, chilled, frozen prepared and canned) in carcass weight equivalent; excludes live animals, offals and EC intra-trade.

Meat trade prospects are forecast up nearly 4 percent in 2002 to 17.9 million tonnes as exportable supplies of beef and pigmeat expand in the EC and the Republic of Korea. These countries, barred from exporting in 2001, have regained their previously recognized FMD-free status without vaccination. More supplies will also be available from South America, as the EC, having already opened the doors to Uruguayan beef, moves towards a partial lifting of restrictive measures on beef from Argentina. Poultry trade is forecast up 3 percent, considerably slower than the 8-percent averages seen over the 1995-2000 average, as abundant supplies of other meats and a more stable consumption outlook for beef constrain gains. Meanwhile, expectations of lamb retention for flock rebuilding in Australia and New Zealand will likely reduce mutton and lamb exports, with some pressure to the Australian industry stemming from Saudi Arabia's lifting of its ban on meat imports from the Sudan. The WTO accession for China (Mainland) and the Chinese Province of Taiwan, as of January 1, 2002, is expected to result only slight trade gains in 2002 despite increased market access through tariff-rate quotas and tariffs declines.

The price strength for both poultry and pork products witnessed in 2001, as consumers shifted consumption of beef to other meats, is expected to moderate in 2002 in the context of expanding meat supplies, particularly beef, from those countries in Europe and South America previously restricted from exporting. In addition, lingering food safety concerns in Asia and significant downward revisions of global economic growth prospects by the IMF to 0.8 percent for developed countries may moderate upward price pressure for most meats. Sheepmeat could be the exception as prices are expected to be supported by reduced availabilities of ovine meat and continued strong demand from Europe and the United States.