Tag Archives: production

Global meat production and consumption curbed

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A new United States report looks at how disease and drought have curbed global meat production and consumption, notes shifts in geographical areas of production, calls for lowering individual meat consumption and for meat production to be “reconnected to the land and its natural carrying capacity”.

Global meat production rose to 270 million tonnes (297 million short US tons) in 2011, an increase of 0.8 percent over 2010 levels, and is projected to reach 270 million tonnes (302 million tons) by the end of 2012, according to new research conducted by the Washington DC-based Worldwatch Institute’s Nourishing the Planet project (www.worldwatch.org) for the Institute’s Vital Signs Online service.

In comparison, the report shows that meat production rose 2.6 percent in 2010 and has risen 20 percent since 2001. Record drought in the U.S. Midwest, animal disease outbreaks, and rising prices of livestock feed all contributed to 2011 and 2012′s lower rise in production, write report authors Danielle Nierenberg and Laura Reynolds.

Also bucking a decades-long trend, meat consumption decreased slightly worldwide in 2011, from 42.5 kilograms (kg) per person in 2010 to 42.3 kg, the authors note. Since 1995, however, per capita meat consumption has increased 15 percent overall; in developing countries, it increased 25 percent during this time, whereas in industrialised countries it increased just two percent. Although the disparity between meat consumption in developing and industrialised countries is shrinking, it remains high: the average person in a developing country ate 32.3 kg of meat in 2011, whereas in industrialised countries people ate 78.9 kg on average.

Pork was the most popular meat in 2011, accounting for 37 percent of both meat production and consumption, at 99 million tonnes (109 million tons), the report notes. This was followed closely by poultry meat, with 92 million tonnes (101 million tons) produced. Yet pork production decreased 0.8 percent from 2010, whereas poultry meat production rose three percent, making it likely that poultry will become the most-produced meat in the next few years.

The report also says that production of both beef and sheepmeat stagnated between 2010 and 2011, at 61 million and 12 million tonnes (67 million and 13 million tons), respectively

.A breakdown of meat production by geographic region reveals the dramatic shift in centres of production from industrialised to developing countries over the last decade. “In 2000, for example, North America led the world in beef production, at 12 million tonnes (13 million tons), while South America produced 11 million tonnes (12 million tons) and Asia 9.1 million tonnes (10 million tons). By 2011, North America had lowered its beef output by 180,000 tonnes (200,000 tons) and was overtaken by both South America and Asia, which produced 14 million  and 15 million tonnes (15 million and 17 million tons), respectively.”

The United Nations Food & Agriculture Organisation (FAO) puts the slowdown in growth in industrial countries to rising production costs, stagnating domestic meat consumption and competition from developing countries.

Widespread and intense drought in China, Russia, the US and the Horn of Africa contributed to lower meat production—-and higher prices—-in 2010 and 2011. The combination of high prices for meat products and outbreaks of new and recurring zoonotic diseases – those transmitted between animals and humans – in 2011 curtailed global meat consumption.  In 2011 alone, foot-and-mouth disease was detected in Paraguay, African swine fever in Russia, classical swine fever in Mexico, and avian influenza (H5N1) throughout Asia. According to a 2012 report by the International Livestock Research Institute, zoonoses cause around 2.7 million human deaths each year, and approximately 75 percent of all emerging infectious diseases now originate in animals or animal products.

Many zoonotic disease outbreaks can be traced to concentrated animal feeding operations (CAFOs), also known as factory farms. These systems now account for 72 percent of poultry production, 43 percent of egg production, and 55 percent of pork production worldwide.

“Factory farming systems contribute to disease outbreaks in several ways,” says Danielle Nierenberg, report co-author and Worldwatch’s Nourishing the Planet project director. “They keep animals in cramped and often unsanitary quarters, providing a breeding ground for diseases; they feed animals grain-heavy diets that lack the nutrients needed to fight off disease and illness; and many CAFOs feed animals antibiotics as a preventative rather than a therapeutic measure, causing the animals—-and the humans who consume them—-to develop resistance to antibiotics.”

But not all livestock are reared in industrial or mechanised environments. Nearly one billion people living on less than US$2 a day depend to some extent on livestock and many of these people are raising animals in the same ways that their ancestors did.

“Lowering individual meat consumption would alleviate the pressure to produce more and more meat for lower and lower prices, using rapidly dwindling natural resources,” say Nierenberg and Reynolds. “Reconnecting meat production to the land and its natural carrying capacity, as well as reducing meat consumption, can thus greatly improve both public and environmental health.”

Further highlights from the report:

  • Over the last decade, meat production grew nearly 26 percent in Asia, 28 percent in Africa and 32 percent in South America.
  • In 2012, drought and corn crop failures continue throughout the United States, causing the U.S. Department of Agriculture to estimate that by 2013, beef will cost 4-5 percent more than in 2010, pork 2.5-3.5 percent more, and poultry 3-4 percent more.

A full copy of the report can be purchased here.

 

Meat export revenue down in June quarter, says MPI

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Lamb leads a drop in export meat revenue for the June 2012 quarter, according to the latest figures from the Ministry for Primary Industries (MPI).

The Ministry’s Primary Industries: Production and Trade report for the June 2012 quarter, says that this is mostly because of lower export prices from weaker international demand and a build up in meat stocks in New Zealand, particularly for lamb, which fell by 25.6 percent against the same period a year earlier. Venison also  recorded a fall of 15.1 percent for the quarter and beef and veal -2.9 percent. In total,  meat export revenue for the quarter, was down 14.4 percent to $1.6 billion. Lamb production, however, was up 5.9 percent in the year ended June 2012, with slaughter numbers up 2.4 percent and carcase weights up 2.5 percent on the previous year, says MPI.

“This reflects increased numbers of lambs born in late winter and early spring 2011 and a record average carcase weight of 18.48kg.”

Beef production fell by 1.8 percent in the quarter due to lower slaughter numbers, particularly for cows and heifers, reflecting lower beef cattle inventories at the end of the 2011 season and retentions for an expanding national dairy milking herd.

Offals seem to have had a healthy year with quarterly revenue increasing for ‘other meat’ of 8.5 percent and a year-on-year increase of 10.7 percent, to end June 2012.

Another significant highlight is that China became the number one market for frozen bone-in lamb cuts in the six months to end June, with the European Union now taking second spot, according to MPI. “However, average export prices of lamb sold to China re about half that received in the EU,” the report concedes.

All but one industry grouping experienced a decline in export revenues, the report says. Overall, primary sector revenue for the June quarter was down 5.8 percent, compared with the final quarter in 2011, to $8.8 million. However,  during the year ending June 2012 there was a production-driven revenue increase of 1.3 percent to just over $32 billion, due to favourable climatic conditions, MPI says.

Climate conditions for pasture growth for the year ended June 2012 were the best since 2002, MPI notes, with 51.4 days of soil moisture deficit compared to the 20-year average of 61.6  – resulting in record carcase weights for lambs, heifers and cows and record milk solids per cow.

The full report Primary Industries: Production and Trade is available for download at the MPI website (search under Publications).

 

 

 

 

Boot camp stimulates insights

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The outcome of the Boot Camp, which was held two weeks ago at Stanford University, has not – for obvious reasons – been widely trumpeted, writes industry commentator Allan Barber.

 

After all, the objective was never to produce yet another sector strategy, long on analysis of the problem and short on achievable actions to produce a state of nirvana.

Bill Falconer, chairman of the Meat Industry Association, was chosen as the spokesperson for the Boot Camp because he did not represent a single company, but an industry body. The senior executives who attended did not see the merit of or justification for purporting to speak on behalf of their peers from a wide range of rural sector businesses. Therefore, Falconer was the obvious person to speak on their behalf.

The Boot Camp’s objectives, simply stated, were seen as:

  1. To allow the attendees to learn from the professors and to visit US companies in different industries, which would enable them to see how to become consumer driven.
  2. To take six days out of day -to-day business and examine their business from a different perspective.
  3. To see how or whether individual companies could collaborate to their mutual advantage.

Falconer told me that is was one of the most stimulating and encouraging gatherings he had attended, with 20 CEOs and top managers from across the agricultural sector learning from six outstanding marketing professors how to lift their game for the benefit of their companies, industry sectors and agribusiness as a whole.

The conclusions from the Boot Camp can be looked at against the backdrop of the Government’s growth agenda to double exports or otherwise expressed as lifting exports from 30 percent to 40 percent of GDP by 2025.

The visits to companies near Stanford were immensely helpful in gaining an understanding of how the export target might be achieved. The first important conclusion is that there is no point in increasing production on-farm, or in any other environment for that matter, unless you can sell it.

In order to start working out how to sell the extra production, an understanding of consumer demand is necessary, becoming market- not production-driven and planning how to lift performance accordingly. A major insight was the scale of social media used by all the companies visited, a country mile ahead of any New Zealand company, including Icebreaker, which is seen as a leader in the New Zealand context.

I suspect, although Bill Falconer didn’t say so, that tangible results from the Boot Camp will of necessity be slow to eventuate. Nor is it likely that companies will feel the need to make a lot of noise about any specific programmes they develop, either in collaboration or on their own, until there is something concrete to report.

However, if the Boot Camp has achieved a change in attitude about the nature of the task and provided a blueprint of how to go about lifting sales and marketing performance, this will prove to be the best outcome. There has been too much navel-gazing analysis of the size of the problem and the same old strategies to solve it, without any real change in behaviour.

Ideally, agribusiness needs a Messiah to preach the new marketing gospel until the sector as a whole becomes customer- or consumer-driven.

Food’s changing world and demands

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Hyperglobalisation, China, mega cities, urbanisation and water are some of the big issues that will play their part in the future of the New Zealand and global export meat industry, according to several Red Meat Sector Conference speakers.

In his presentation about the political and economic environment facing the industry, Colin James of the Hugo Group said it is becoming more and more difficult for a nation to act independently these days. ‘Hyperglobalisation’ refers to the increasing global interdependence and interconnectedness, which make protection from global economic forces more difficult, he said.

We can expect more of the same over the next 20 to 25 years, he explained. “It’s going to need a fair amount of resilience.”

Water, along with fossil fuels, will be the big issues, he predicts. Multinationals are rebranding and adopting a “fresh, clean, natural” stance rather than ‘clean, green’ approach to capitalise on the emergence of an affluent middle class in emerging markets. This growing middle class around the globe is calculated to encompass more than 210 million new households with income of US$20,000 or more by 2025, which he believes New Zealand is well placed to serve.

Four percent global GDP growth predicted

New Zealand’s top ten trading partners are projected to grow roughly four percent a year in 2012 as weighted by the goods trade. “Modest, but not boom time,” James commented.

Four percent in global GDP growth also stood out for Richard Brown of market research company GIRA, who admitted to being surprised that the forecasts were so positive. The leader is China, whose GDP is anticipated to grow in 2011/2012 by 8.5 percent, “not as good as expected but still OK”, followed by Indonesia (6.5 percent). He anticipates similar growth in 2012.

In his detailed look at the outlook for various meats, including beef and sheepmeat, he said that global prices for meat are generally, “fundamentally more exciting than they have been.” He was reassured with the direction of the trends, which he said were, “very good news for the producing sector.”

In 2011, prices had gone up boosting producer morale, because total global meat production was down – largely as a result of the outbreak of the pig disease PRRS in China, Brown explained. “What that illustrates is the Chinese effect on global trade is profound.”

This point was echoed in a later presentation from McDonald’s senior director and head of strategy for China and Hong Kong Arron Hoyle, who said that China is having a dramatic effect on global commodities.

“We don’t sell beef at McDonald’s, we sell a burger, so other commodities have to be taken into account.”

Rise of the dragon

Both James and Brown pointed to the current difficulties in the US and in Europe, which is facing big problems with the Euro. Europe had a “spectacularly fragmented meat industry,” Brown said and pointed to problems with the region’s biggest meat company, Vion, which is now in trouble after a period of rapid acquisition. This reflects a lower rate for now for global corporate processor consolidation “with a long way to go and an unproven success record.”

Arron Hoyle also pointed in his presentation to the ‘rise of the dragon’, the lean away from the west to the East, with McDonald’s choosing to target consumers in what it calls the APMEA (the Asia Pacific, Middle East and East Asian) region.

Unprecedented urbanisation

Hoyle talked about urbanisation in those emerging markets, such as China and India, “like we’ve never seen it before.” In the APMEA countries populations are moving from rural to urban settings in a similar manner to Britain’s Industrial Revolution, “but it’s happening 20 times faster and involves about 800 times more people,” he explained.

“We’re living in an era where we’re seeing different dynamics to the previous 50 years,” he said, adding that volatility will be more extreme than ever before.

‘Mega Cities’, those with populations of more than 10 million, are on the rise and currently count Shanghai, Mexico City, Sau Paolo, Beijing, Mumbai and Delhi as the top six.

“In addition, emerging market cities will be a key driver of global food demand with key 440 cities identified across Asia. With this explosion in urbanisation we see many ‘tier two cities’ with populations over one million evolve: By 2020 it is projected China will have 221, India 50, Indonesia 15 and Korea nine.”

With this trend comes a “massive” transport and infrastructure need, but also a forecast quadrupling of per capita of GDP by 2020, said Hoyle.

“It’s a world of opportunity for years to come,” he said cautioning that it also comes with higher rents and increased pressure on costs for McDonald’s stores or other businesses that target Asia as a key future growth driver.

This article appeared in Food NZ magazine (August/September 2012).