Meating the Market: Outlook and Issues
Nancy MorganCommodities and Trade
Division, FAO
Issues of Concern to Meat Market Participants
Disease Outbreaks
Food Safety
Protectionism
Liberalization
Exchange Rate Movements
Policy Developments Input Costs
Market Access
Long Term Market Prospects
Structural Change and Competitiveness
Technical and Sanitary Standards
An Overview of the Presentation
Trends in the global livestock sector
Factors influencing the global meat market in 2006
Impact of animal disease
Medium term outlook, issues/analysis
Challenges for the industry
World Meat Production and Trade, a historical perspective, 1990-2006
0
50
100
150
200
250
1990 1995 2000 2001 2002 2003 2004 2005 2006
Beef Pigmeat Poultry Ovine
Driven by Gains in Poultry/Pork Sectors
0
5
10
15
20
90 92 94 96 98 99 2000 2001 2002 2003 2004 2005 2006
Mill
ion
tonn
es
Beef Pork Poultry Meat Ovine
Trade Grows Faster than Production: Composition of Trade Changes
Accompanied byAnimals Disease Outbreaks
The 2006 Meat OutlookLimited meat consumption gains, with poultry down 1 percent
Disease induced price diverenges between the various meats
Import bans on poultry/South American beef/pigmeat leads to trade diversion
Meat trade is taking a hit, growing less than one percent
The context:The context:
Strong economic growthStrong economic growth
Rising feed pricesRising feed prices
Less exchange rate Less exchange rate volatilityvolatility
Animal disease concerns cloud market and price outlook in 2006
•Poultry consumption down 1 million tonnes from 2005•Prices drop by half in some markets-even in some exporting countries•Market bans, changing market structures….
potentally long term implications for investment in sector
AI moves westwardinto Europe-ME-Africa
Policies shaping the 2006 outlook
Import bans on poultry/South American beef/pigmeat—what are the Russians doing?
EU moves to set up TRQs on certain types of poultry cuts
Food safety issues: China’s zero tolerance for pathogens; impact on trade?
Increased imports by disease-affected developing countries
The key issue in 2006?
Impact of animal disease on consumption patterns and relative meat price movements
Animal disease/exchange rates movement influence trading patterns.....
BRAZIL’S MARKET SHARE: 24%US: 20 %EU: 12%
South America Meat Exports
010002000300040005000600070008000
2000 2001 2002 2003 2004 2005 2006
1000
tonn
es
Beef Pork Poultry
Share of World Trade:
Poultry: 14==>40%Pigmeat: 5==>18%Beef: 17==>44%
Total Meat: 13==>35%
Brazil’s meat exports to drop4 percent in 2006
75
80
85
90
95
100
105
110
115
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Months/years
Bas
e Pe
riod
1990
/92
Asian/Russiafinancial crisis
Animal disease
Animal disease increases price volatility
FMD/BSE crisis
Animal disease outbreaks result in unusual price movements…
0.70
0.80
0.90
1.00
1.10
1.20
1.30
1.40
1.50
2000
2001
2002
2003
2004
2005
2006
Inde
x:19
98-2
000
=1
Poultry Pigmeat Bovine
Cost of recent animal disease outbreaks
0
2
4
6
8
10
U.K. Netherlands Taiwan Uruguay U.K. Korea 1/ Japan 1/
US$
billi
on
IndirectDirect
$3.8
$2.3
$6.6
$.08
$9.2
$.433 $.015
1/ Indirect costs not available.
BSEBSE CFSCFSFMDFMD
COSIMO: COSIMO: FAOFAO’’ssCOMMODITY COMMODITY SIMULATION SIMULATION
MODELMODEL
plusplus
OECD AGLINK OECD AGLINK MODELMODEL
2.4
3.5
1.4
2.12.4
1.3
2.0 1.9 1.72.3
-1
1
3
5
Total Meat Bovine Pork Poultry Ovine
% c
hang
e pe
r ann
um 1996-2005 2006-2015
Meat Consumption Growth Slows
Per capita meat consumption gaps between OECD and Non OECD countries
0
10
20
30
40
50
60
70
80
1995 2005 2015 1995 2005 2015
Kg
per p
erso
n r.t
.w.
BEEF PORK POULTRY SHEEP
OECD Non OECD
3.5
8.6
5.1
3.73.7 3.73.6 3.42.6
1.70.4
3.2
0
2
4
6
8
10
World Developed NorthAmerica
Europe Developing Asia
% c
hang
e pe
r an
num 1996-2005 2006-2015
World Trade increases from 21 mmt to28 mmt
Developing country imports increases 10 mmt to 14mmt
Meat Trade: Where will the growth be?
Import Gains for Meats:Where will they originate?
-2000
0
2000
4000
6000
8000
1990-1995
1995-2000
2000-2005
2005-2015
1000
mm
t
LDC Other DevelopingTransitional Developed
4.2 mmt (66% imports):
Mexico: 500,000China: 650,000Korea: 360,000
Africa-700,000
6.3mmt
This Outlook Assumes NO Changes in:
Domestic policies
International Rules and Standards
No Doha Agreement.
What about protectionism and market liberalisation?
Animal disease outbreaks?
Issues of Concern to Meat Market Participants
Total Value of Production (at farm gate)=822 billionTotal Support Estimates: 378 billion (PSE 279)
Estimated Support to Livestock Sector: 102 billion
Beef/Veal: 34 billion Sheepmeat: 4.9 billion Pigmeat: 13 billion Poultry: 9.4 billion
Milk: 39 billion
Protectionism
Liberalization
Trade Liberalization: Meat MarketsIndicators Change
in World Price
Change in Exports
Major Beneficiaries
Beef 12%
Poultry 11%
Pigmeat 8%
Sheepmeat 16%
Trade Liberalization: Meat MarketsIndicators Change
in World Price
Change in Exports
Major Beneficiaries
Beef 12% 23%
Poultry 11% 40%
Pigmeat 8% 17%
Sheepmeat
16% 38%
Trade Liberalization: Meat MarketsIndicators Change
in World Price
Change in Exports
Major Beneficiaries
Beef 12% 23% Dvped: 2%Dvping: 74%
Poultry 11% 40% Dvped: 35%Dvping: 52%
Pigmeat 8% 17% Dvped: 2%Dvping: 53%
Sheepmeat
16% 38% Dvped: 2%Dvping: 74%
Impact of Further Outbreaks of AITable 1: Scenario 1 - Worldwide 10% Preference Shift Away From Poultry Consumption
World Developed Least
Developed Other
developing Production -5.8 -4.7 -5.5 -6.7 Consumption -5.8 -5.5 -6.2 -6.0 Imports -16.2 -8.0 -12.3 Exports -13.3 -7.7 na -18.9 International Prices: Poultry -6.7
Atlantic Pigmeat 14.9 Pacific Pigmeat 18.8
Atlantic Beef 15.8 Pacific Beef 10.7
Maize -3.2 Oilmeal -3.3
Notes: In this scenario the consumption preference shift away from poultry is re-allocated to other meats on a proportion basis using world consumption shares of 2004-05. An na value for LDCs results from the fact that exports from these countries are miminal.
Impact of Further Outbreaks of AIScenario 2b: AI outbreaks in the EU: 10% preference shift away from poultry
World EU Brazil US Developed Least
Developed Other
developing % change Production -1.0 -11.9 1.5 0.6 -3.4 0.9 1.0 Consumption -1.0 -6.6 -0.3 0.2 -1.7 -0.9 -0.4 Imports -0.4 0.0 0.0 3.0 -4.5 -8.5 Exports -3.2 -50 5.8 3.0 -12.3 na 5.8 Price: Poultry 1.2 -6.2 1.5 0.5 Pigmeat 1.5 11.8 -0.1 1.5 Beef 3.6 4.7 3.6 0.6 Notes: Applied to 2006 base projection. Assumes trade bans last 6 months. Results for annual data. Consumption preference shift is allocated to other meat products in proportion to 2006 consumption share. For the EU, the world reference prices used are the Pacific pigmeat prices and Atlantic beef prices.
Challenges for Global Meat Industry
Animal diseases and food safety concerns
SPS issues and barriers
Health issue awareness (hormones, GMO’s, Halal)
Product quality and safety are passwords to success
Growing number of exporters
Competition globally between meats
Traceability and labelling
Social concerns: Environmental and animal welfare
Symposia Announcement:
Market and Trade Dimensions of Avian Influenza Prevention and Control
(Tuesday, 14 November 2006)
Dairy Value Chains and Comparative Marketing Systems (Wednesday, 15 November 2006)
FAO Headquarters, Rome 14-15 November, 2006
Thank You
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Contact:Nancy MorganFAO, Meat Trade [email protected]: 39-06-570-54528Fax: 39-06-570-54495FAO web site: www.fao.org