Bright longterm outlook for meat prices
FARGO, N.D. — Successfully predicting the future is notoriously difficult. But there are valid reasons to be optimistic about long-term U.S. livestock prices, says Tim Petry, a North Dakota State University livestock marketing economist.
"When you consider the supply and demand determinants, the outlook is encouraging," says Petry.
Supply and demand can be likened to the two blades of a scissors working in union. Both blades need to function properly for the scissors to cut. Likewise, both supply and demand need to work in livestock producers' favor to create and maintain attractive prices — and that appears to be the case, Petry says.
On the supply side: Global ability to increase supply is limited. Brazil and Argentina have potential to produce substantially more meat, but they're the exception, Petry says.
On the demand side: The world's population is growing rapidly, and so is the need for — and ability to buy — food, including high-protein meat. The world will have an estimated 9.3 billion people in 2050, up from 6.9 billion in 2010, with the global per capita income doubling in the same period, according to a United Nations report.
"As incomes in developing countries increase, food consumption shifts to diets richer in animal protein," the U.S. Department of Agriculture says.
China already is an important growth market for U.S. beef. Though China's domestic beef production is rising, beef consumption is rising even faster, boosting the need for imports from the United States and other exporters, USDA says.
But USDA also says that several countries, particularly Argentina and Uruguay, offer "fierce competition" for beef sales to China.
'People still like meat'
Some in production agriculture once wondered if interest in vegetarianism eventually might cut into meat consumption. But that hasn't happened, at least not to a meaningful extent, Petry says.
"People still like meat," he says, noting that young American adults do, too.
U.S. per capita consumption of red meat is expected to increase slightly in both 2017 and 2018, according to USDA projections.
Exports are important for U.S. livestock producers — last year America exported 25.8 percent of its pork and 13.7 percent of its beef — and foreign demand for U.S. meat is growing, too.
Japan is the leading importer of U.S. beef, followed by South Korea, Mexico, Canada and Hong Kong. Those six countries account for the vast majority of 2017 U.S. beef exports, which have gone to 111 different countries.
But consumers in Africa and Central and South America — who typically import very little U.S. meat now — are a growing opportunity for U.S. meat exports, according to the U.S. Meat Export Federation
Meat exports help U.S. livestock prices in ways that sometimes may go unnoticed,
For instance, so-called "variety meats" — items such as livers, hearts, tongues and chicken price — are seldom eaten by U.S. consumers but often are highly valued in other countries, Petry says.
What Petry calls "tastes and preferences" is benefitting sheep producers. Growing ethnic and religious demand for lamb has reinvigorated the long-struggling U.S. sheep industry in recent years.
Livestock production will remain a volatile industry, with feed costs and weather continuing to buffet ranchers from year to year, he says.
Even so, "Looking ahead to the next 20, 30 years, the future is as bright now as I can ever remember," Petry says.