While the short term outlook for beef is weighed down by weak demand conditions, the longer term picture is far more promising, according to a global meat industry analyst.
“It looks bloody good, simple as that,” Richard Brown from Swiss food and agriculture consultancy Gira said when asked by Beef Central about the longer term demand outlook for Australian beef exports.
“Worldwide demand for beef is going to grow, the price is going to be higher, and there is not that much of a production reaction elsewhere in the world.
“For those who are in cattle country and committed to cattle and don’t have opportunity to grow other things I think the future is quite positive, and much more positive than it has been for 20 or 30 years.”
Mr Brown, who lives in England, was in Sydney last Thursday to provide an update on the long-term outlook for global meat supply and demand as part of Meat & Livestock Australia’s mid-year projections program.
In an upbeat assessment, he said the fundamental long-term outlook for the overall meat industry for was far more positive than it had been for a long time, with worldwide meat consumption set to expand by 40 million tonnes by 2020.
Chicken and pigmeat are expected to account for most of that growth based on their lower costs of production and cheaper retail prices, with chicken set to overtake pork as the world’s most consumed meat by 2020.
However the longer term picture for beef and sheepmeat was positive as well, with consumption of both red meat proteins expected to register strong growth through to 2020.
The worldwide market is not only demanding more meat, but it is paying more for it as well.
Mr Brown said, from a global perspective, prices received by producers for all meats had increased by 50pc in real local currency terms since 2000.
“If you multiply grain consumption volumes by the fact that prices have increased in real terms, you quickly come to the conclusion that consumers are spending a huge amount more on meat than they were in the past,” Mr Brown said.
“I find that a very encouraging picture, and I believe the trend will continue upwards, there is no doubt in my mind whatsoever.”
Higher real prices were not only good for the farming community but good for the processing community, he said, as they stimulated increased production and in turn a greater supply of meat for processors.
With Australia’s cattle numbers back to a 40-year-high of 30 million head, Australia’s cattle industry was well positioned to supply expected global demand increases.
At the same time other major exporters were experiencing constraints on production.
Widespread drought has contributed to a dramatic reduction in US cattle numbers, with the national herd now down to a four-decade-low of 97.8 million head. Despite that rundown, Mr Brown said the
US beef industry was expected to continue to focus on export markets due to troubled domestic American demand and the price competitiveness afforded in export markets by a relatively weak US dollar.
Exports from Brazil have also been trending down since 2007-08, due to a range of factors including a stronger Brazilian Real and higher domestic demand which was soaking up far more Brazilian production locally.
“The Brazilian story has changed very significantly, and I think we are all now of the belief that we are not going to be swamped by Brazilian beef, and there is every sign that the Brazilian herd is not going to increase very quickly,” Mr Brown said.
Mr Brown said key challenges for the Australian beef industry in the shorter term included subdued demand conditions in the US and Europe due to flailing global economic conditions and the higher Australian dollar relative to the US greenback.
“The fundamentals are in favour of the Australian economy, so you will just have to live with a firmer Australian dollar than it was historically, that is the future.”