UK pork production could increase modestly in 2024, while EU pork production continues to decline, albeit at a slower rate, according to meat industry analysts at Rabobank.
Rabobank’s annual Global Animal Protein Outlook report forecasts that, globally, animal protein production growth will slow as margins remain tight in 2024, with producers and processors needing to adapt to sustain success.
Input costs and inflation are likely to fall, but will remain at a higher level than pre-pandemic, and higher production costs and tighter supplies will push animal protein prices up and constrain global consumption in 2024, it predicts.
There are signs, however, that consumers are growing used to higher prices and, in some markets, willing to pay a quality premium.
Rabobank’s analysts forecast that, overall, pork production will ‘contract modestly’. Poultry and aquaculture will be the only two species groups to see production grow in 2024, while beef will continue the decline seen in 2023, moving with changes in cattle cycles in North America, they predict.
However, plant-based meat alternatives will continue their decline with customers and investors. Foodservice is expected to be the key buyer for players in the category in 2024.
The report is broken down into the different markets. Marginal year-on-year protein production growth is predicted in the major markets of North America, Brazil, Europe, Oceania, China and Southeast Asia of 0.6 million tons – or 0.5% – to a total of 247 million tonnes next year. This compares with 1% production growth of 2.1mt in 2023.
Brazil and Southeast Asia will show the fastest production growth for poultry and meat. In Brazil, production will grow across all species Rabobank tracks, led by pork and poultry, though it will slow against 2023 levels. Meanwhile, China and the Oceania countries of Australia and New Zealand will see marginal growth, with poultry best placed in China and pork and beef under pressure. Europe and North America will see an overall production contraction.
Rabobank analysts forecast that EU pork production will decline by 3% next year, a slowing of the contraction seen over the past two years. The return to positive margins on the back of record prices and easing feed costs has slowed the decline of the sow herd in the eight main EU pig producing countries.
However, in the UK ‘cautious’ growth of 2% is forecast, on the back of ‘higher production intentions’ on pig farms in the second half of 2023.
In China, the key global market, pork production is predicted to remain flat or drop slightly on 2023 levels, following a herd contraction this year, with more rationalisation expected in Q4 2023 and Q1 2023 to rebalance supply and demand. Pork production growth is also forecast in Vietnam.
Chinese pork imports increased by 6% in the first nine months if 2023, slowing in the fourth quarter, and Rabobank analysts predict further growth of 0 to 5% next year, as Chinese demand recovers, and inventory levels decline.
Brazilian pork production is forecast to increase by 3-4% in 2024, with Brazilian pork exports, which are set to reach a record this year, predicted to increase again, by 2-4%, next year due to slightly higher import volumes in China and elsewhere.
North American pig breeding herds are expected to see ‘modest contraction’ next year, as pig prices continue to lag behind rising costs. Rabobank is forecasting a 0.6% decline in North American pork production, with larger falls in the US and Canada and a 1.6% increase in Mexico.
US exports are, nonetheless, expected to rise by a further 3% after a ‘strong’ 2023
Commenting on the overall protein picture, Justin Sherrard, global strategist animal protein at Rabobank, said: “It’s a testament to the resilience and flexibility of companies along animal protein supply chains that they continue to grow production and deliver on customer expectations, amid such challenging market conditions.
“Despite a cost-of-living crisis putting pressure on consumer finances, there continues to be demand for animal protein, and companies have been able to overcome challenges, from high costs to regulatory uncertainty and disease, to capitalise on it.”
“For companies to sustain the success of the past few years, it’s essential that they adapt to the structural changes in the market. Instead of simply riding out the storm, animal protein businesses need to take stock of their strengths and prepare to transition their supply chains to operating in an environment with high costs and tight margins.
“Companies should double-down on improving their productivity, review their existing portfolios, strengthen supply chain partnerships, increase investment in new product development and adjust their pricing strategies to navigate the challenges of the coming year.”