Global meat production to decline in 2022
Higher input costs for animal protein supply chains will be top-of-mind change drivers, accompanied by ongoing change, driven by the transition to more sustainable animal protein, biosecurity challenges and Covid-19, says Rabobank.
According to Rabobank's outlook, a similar level of uncertainty is expected in the global animal protein market in 2022. Although the markets are expected to calm down somewhat in 2022, many factors of recent changes remain. Among them, the higher costs of animal protein production in supply chains, including animal feed, labor, energy, and trucking, will be the main factors contributing to a change in thinking. They will be accompanied by constant changes due to the transition to a more stable animal protein, biosafety challenges, and Covid-19.
The overall trend for 2022 is for continued but slowing production growth, driven by pork, poultry and aquaculture. Beef and wild catch are both expected to contract slightly. The ongoing recovery of China’s pig herd will be the largest single driver of growth in global markets in 2022, analysts said. Against this backdrop, animal protein prices should remain firm in 2022 (with some exceptions), supported by ongoing supply constraints and general strength in demand. «We expect leaders of progressive animal protein companies to focus on the opportunities created by the ongoing market disruptions, rather than only seeing the multiple changes as business risks,» says Justin Sherrard, Global Strategist – Animal Protein.
According to the report, domestic pork consumption in Europe needs to rise to balance markets. At the same time, poultry should improve on opening of all channels, despite higher costs. Also, SE Asian poultry sector is expected to see growth in production after two years of challenging Covid-19 impacts. Pork will also recover from impacts of ASF and Covid-19, but more slowly. Meantime, in China, pork production recovery is expected to continue, but the path is uncertain while consumption is soft, and prices remain low. Beef demand will stay firm, while poultry is pressured by pork recovery.
In North American markets, the ongoing strength of demand will support production and prices. Production constraints could yet spoil what is shaping up as a positive year. Brazil will continue its ascension as one of the top meat exporters, although demand is rising in the domestic market as well, while in Australia, beef and lamb supply is set to slowly improve. Ongoing demand for New Zealand exports, and tight supply, are positive for returns, says the report.