Property

New investment and growing sustainability awareness driving beef industry innovation

Beef Central, 03/03/2021

AN injection of new investor interest in the livestock sector, coupled with increasing awareness of the need to improve sustainability, is driving innovation in the global beef industry, Rabobank says in a new report.

In its recently-released Beef Quarterly Q1 2021, Rabobank says increasing investment is starting to flow into animal protein supply chains – including from entrepreneurs, venture capital, and established agri companies.

“When the food and agribusiness sector started attracting the interest of venture capital about a decade ago, most investments were made in cropping,” Rabobank senior animal proteins analyst Angus Gidley-Baird said.

“However, there are now signs investor interest is shifting a little towards animal protein and the focus on and opportunities for innovation in larger livestock supply chains are increasing.”

The report says social and environmental factors are the other main catalyst driving increased innovation within beef supply chains.

“Heightened societal concerns surrounding the environment are motivating leading companies across the sector to invest heavily in research that will help produce better environmental outcomes,” Mr Gidley-Baird said.

“This focus on sustainability is not only driving new production improvements in the industry, it is also seeing wider community interest in the sustainable qualities of produce, which is in itself generating further investor interest.”

The report identifies several innovations that are anticipated to have the largest impact on the industry. These include maximising the potential of genetics, genomics and breeding; improved nutrition and feed additives; improved monitoring and data analysis and better landscape management.

For Australia, the Q1 Beef Quarterly says, restocking and herd-rebuilding activities continue to dominate the market. And producer demand is expected to remain strong through the first quarter of the year before easing into quarter two.

“Ongoing favourable seasonal conditions have been supporting strong domestic producer demand and sustained record cattle prices into 2021,” Mr Gidley-Baird said.

Producers’ reluctance to sell cattle, along with limited cattle supply, had seen slaughter levels plummet, the report said. For quarter four 2020, Australia’s cattle slaughter was down 27pc year-on-year at 1.56 million.

“Slaughter numbers are expected to remain low at least into the second half of 2021, if not into 2022,” Mr Gidley-Baird said.

Reflecting the lower production levels, Australia’s cattle exports dropped 15pc in 2020.

The report says trade agreements and recovery from COVID-19 shape as key watch factors for global beef industry participants over coming months.

“Food service operations remain restricted in most parts of the world, and this is unlikely to change in the first half of 2021. This means beef consumption depends on how successfully the industry can market beef for at-home consumption, with China and the US leading this trend.” Mr Gidley-Baird said.

“We expect food service to start recovering in the second half of 2021, and the re-opening of these channels could support increased consumption, depending on price.”

He said Brexit developments and the possible expansion of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) had the potential to impact global beef trade flows.

“The EU and the UK reached a trade agreement at the end of 2020, allowing free trade between the two parties from 2021. The UK will introduce custom checks and regulations in the second half of 2021 and uncertainty remains as to how the new UK regulations will impact the trade of beef products from the EU,” he said.

“The UK also recently requested that it be allowed to join the CPTPP and, given US President Biden’s long-standing support for trade liberalisation, opportunities exist for the US to enter the trade agreement as well.”

 

Source: Rabo

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