Strong demand and falling production are supporting current export prices for sheepmeat and the coming three to four years are also looking good, especially in Asia, according to a visiting global trade expert. Exporters will need to be wary of the correction after that point, however.
Richard Brown of independent Europe-based global market researcher Gira spoke to a group of trade and government officials in Wellington in early March, where he presented the latest Gira Meat Club data.
In his presentation he pointed to a rise in sheepmeat and goat prices: “The lamb producer price index is very clear,” he said. “Oceania (New Zealand and Australia) producer prices have risen very spectacularly since 2007 to 2019,” he said. The index rose by nearly 70 percent over the period.
The reasons behind that are strong demand and falling output which have supported strong export prices for sheepmeat, he said.
Gira monitoring also showed the average value for New Zealand sheepmeat had lifted from around US$4,300 to US$6,300 a tonne over the period (an increase of 46.5 percent), while Australian prices rose from around US$3,100 to around US$5,900 a tonne (+90 percent).
Brown pointed to consumption of sheep and goatmeat generally declining around the world, “but not in China,” he said. China’s flock is stable but production and consumption rates of all meats is rising.
It is of “incredible importance” for globally traded meat, with 300,000 tonnes (product weight) of sheepmeat and 2.7 million tonnes of beef imported during calendar year 2018, said Brown.
In the year to end December 2018, according to Meat Industry Association (MIA) analysis of the statistics, New Zealand exported just over 186,000 tonnes of sheepmeat and 116,000 tonnes of beef to China.
Over the next two to three years: “It’s China, again, which will have an enormous impact on world meat markets,” he said.
In addition, increasing demand for red meat in China is being influenced by an outbreak of the serious pig disease African Swine Fever (ASF) which is now “absolutely out of control” in China, said Brown. Getting that under control will take much of China’s pork production out of circulation and will see some demand shift onto other proteins, such as sheepmeat and beef, boosting import demand, from an otherwise well supplied global industry. Nevertheless, pork remains a staple in the Chinese diet.
All meats are expected to gain from pigmeat’s ASF problem, but only chicken is in the right price range for major gains, if supply is available, said Brown.
As a result, Gira is expecting the volume of meat – poultry, pork, sheepmeat and beef – traded globally to lift by 4.9 percent in 2019.
However, he believes the ASF outbreak will eventually boost China’s shift to modern meat production and wipe out the backyard farms that cannot afford the needed biosecurity measures.
“In the long-term, China’s overall imports will fall as the industry continues to modernise,” he says.
Lots of noise, but check the facts
Outlining trends for the global meat trade he said, despite the noise from some individuals in Europe and the US – for example, regarding alternative proteins and “backed by some very wealthy individuals” – the fact is that globally, meat consumption is continuing to rise.
He pointed to one “important, fact-filled chart showing demand for meat is still growing.”
This covered per capita meat consumption between 2003 and 2017. It showed the Chinese and North Asian markets are where meat consumption continues to rise, in contrast to Europe, Australia – and New Zealand – where consumption is falling a little. In the US consumption fell but it is now lifting again, probably due to supply recovering after the 2016 droughts.
Worldwide, the volume of meat – poultry, pork, sheepmeat and beef and veal – consumed has been growing at an average of around two percent a year over the 12 years from 2007 to 2018. Gira expects it to rise by one percent this year, but expects a stronger rise through to 2022-23 when it is predicted to lift by 1.7 percent.
Outweighing the “brakes” on demand – price, rising inequalities around the globe, social pressures, competition and the growing trend of vegetarianism and flexitarianism – are the strong demand drivers identified by Gira of population growth, income growth, urbanisation, functionality, availability and affordability and better meat marketing, said Brown.
Globally, there are a growing array of consumer and political concerns on meat, “which are not new, but growing,” he said. These are: nutrition, globalisation, animal welfare, the environment, frauds and public health.
Perceived environmental concerns, in particular, have been a key factor in the rise of alternative protein products, particularly in the US and Europe. This is now filling shelves of sophisticated British retailers, and traditional stockists of New Zealand lamb, like Waitrose + Partners, Sainsbury’s, Marks & Spencer, ASDA and Tesco. He believes the fact the retailers are putting their own brands on these products shows the importance of the category for their businesses.
“But, as we all know, the people developing the products need to do everything right in order to be a success,” he said.
“The environment absolutely will be a key part of agricultural policy development and producers will need to adapt in a sensitive way and respond to it,” suggested Brown.
“Industry needs to concede on some things but fight for others where they count.”
He said, overall, sheepmeat and beef are important parts of the consumer’s shopping basket.
“Sheepmeat is a niche meat and will become relatively more so and will need to be marketed in a good way because it will become more expensive to produce with environmental pressures.”