Meat industry sees chickens rule the roost

VICTORIA – Chicken is expected to lead the way as meat demand nearly doubles by 2050.Bill Cordingley, head of Rabobank International’s agribusiness and research advisory division for America, says poultry will be the easiest and cheapest to produce as incomes improve and consumers want more protein.Cordingley told the Canadian Meat Council’s annual meeting in Victoria May 5-7 that beef’s 30 percent share of the world meat trade is likely to fall to 20 percent by 2030. About 70 percent of the meat demand growth will be in Asia, he added.“The meat industry has much to gain in the next 20 to 40 years. The fundamental story of increased population and income around the world are still in place.”Cordingley said China will need more protein in the next 30 years. Although it can grow much of its own, production and transportation constraints may ultimately restrict how much it can produce.Strong demand increases are also expected in Russia, the European Union, Brazil and Mexico. India has a strong economy but chicken is likely to be the first choice among those who eat meat.He said farmers will either need to find more land or become more efficient.Countries within the former Soviet Union, the United States, China and Brazil have land that could be put into production, but farmers are more likely to increase their productivity rather than open more acres.Canada can expect moderate growth, he said, while Australia’s growth is expected to remain flat.Global meat consumption was flat last year after growing about two percent annually for the last decade.“The meat industry has been through somewhat of a perfect storm.”Cordingley said livestock producers in Canada, the U.S. and Australia have been under stress in the last five years. Living through the worst economic contraction since the Second World War exacerbated the struggles of volatile currencies, slow demand, high input costs and poor market prices.Producers faced sinking retail beef and pork demand, tight credit, no available capital for investment, negligible profits, drought in the cow-calf regions and subsequent herd dispersals.“Herd liquidation has occurred at such a pace it has clearly created problems for the processing and trade side of the business because you rely on throughput,” he said.After years of a low dollar relative to the U.S. greenback, Canada’s strengthening currency has created an agricultural trade imbalance for the first time in 10 years.Live cattle and hog exports fell 33 percent in 2009, meat demand weakened and trade was disrupted by country-of-origin labelling requirements and BSE and H1N1 restrictions.U.S. hog producers have lost money for 27 out of the last 29 months, but Cordingley said positive returns are coming and should follow in Canada.Livestock and meat retail prices have spiked because of tight supplies, but some of this is a seasonal effect that may not last.“In terms of access, Canada has had a particularly difficult time,” he said.Consolidation in the processing sector is also under scrutiny.Among developed nations, the United States’ pork, beef and poultry industries are the most integrated and consolidated, but U.S. president Barrack Obama’s administration is looking at antitrust legislation.As well, hearings have started to discuss packer involvement in primary production and consolidation.Other countries are likely to follow the U.S. consolidation model because it is efficient and less costly.On the positive side, Cordingley said Canadian livestock producers are efficient and have a good reputation for quality and high food safety standards.Their industry is part of the North American Free Trade Agreement with wide access to the U.S. and good links to Asia.“Canada has good trade access to most parts of Asia, notwithstanding Korea, which is an ongoing problem,” he said.South Korea is a major Asian market but refuses to buy Canadian beef because of BSE concerns.Social issues such as improved animal welfare practices, environmental protection and obesity are also taking a toll on livestock industries in the developed world.Cordingley said consumers want less fat and less salt in their food. One in 80 Americans weighs more than 300 pounds, and the meat industry is often blamed for offering processed products with too much fat and salt.“This is an issue that will not go away and it is going to lead to more compliance, more red tape and more costs and lost opportunities in the market,” he said.