The former giants of the meat trading world are under siege.
Chicken rules as the most popular meat and Brazil and China are gaining on the traditional world suppliers of pork, poultry and beef.
“Beef demand is limited by its relative high cost of production and the supply limitations to produce more beef in many parts of the world,” said Richard Brown, director of the British food consulting firm Gira.
He told the recent Canada Beef Export Federation annual meeting in Calgary that animal disease, drought and high production costs have made it difficult for beef producing countries like Australia and United States to compete.
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The European Union, once a major exporter into Russia and the Middle East, has become a meat importer. The U.S. is still in recovery mode after its 2003 BSE case including Australia faces continued drought.
“Where it has withdrawn, Brazil has taken over that market share especially in the Middle East and North Africa,” he said.
Brazil is becoming a powerhouse with its large land base and low cost of production. In 2000, it produced more than one million tonnes of beef and by 2015 is forecast to reach 10 million tonnes. Argentina has the capacity to produce three million tonnes of beef per year but government policy has hampered production and exports, said Brown.
Brazil faces constraints because of environmental issues, disease reporting and traceability. Burning trees to clear land for farming draws political and consumer opposition.
“If they don’t listen carefully to what their export customers are worried about, they will not achieve their fantastic potential,” Brown said.
The EU banned Brazilian beef as of Jan. 31, 2008 because the South American nation was not answering EU questions about how it controlled BSE and provided traceability.
Chicken is winning the meat popularity contest, especially in China, where incomes are growing and more people are moving to the cities. Pork has also made gains in China even when production declined 10 percent because of disease. China did not import much to make up for the shortfall because the government wants to encourage more domestic production. Rather than bringing in additional meat, China is more likely to import feed grains.
The cost of grain has a serious impact on livestock producers and it changes the comparative competitiveness between species everywhere. There is no greater advantage for grass-fed cattle because input costs for fertilizer and fuel cut into profits.
Animal diseases like BSE have also influenced the world meat market. Cases continue to crop up in unexpected places that were previously free of the disease.
“No one anywhere in the world should rest on their laurels that they are BSE free and will never have a case of BSE. They should anticipate it and be very careful in managing expectations,” said Brown.
Great Britain still has 200 BSE cases per year, so everywhere else pales by comparison.
The good news is that there are fewer cases throughout the world and a low incidence of variant Creutzfeld Jakob disease in people.
At the height of the crisis, 700,000 cattle were rendered and incinerated per year.
“The cost of BSE in Europe has been eye-wateringly severe and you absolutely have to understand the impact that that has made upon the politicians of the European Commission.”
Brown said the cost of handling BSE throughout the EU made it hypersensitive about food safety.
“You can extend that sensitivity to things like hormones, and they are not going to back off on that because of the experience the commission has had in dealing with some of the problems with meat production,” he said.
Following the BSE crisis and foot-and-mouth disease, the bluetongue virus is spreading throughout Europe. Designated Type 8, it migrated from Africa and quickly infected animals in northern Europe and the United Kingdom last year.
It is no threat to humans but it is deadly for livestock, especially sheep. It caused trade bans and cost producers heavily.
“Disease is a major part of thinking for everyone in the beef world,” Brown said.
