Meat + Poultry - December 2005 - 14

International News & Trends
Meat and poultry trade to increase in '06
U.S. Export Trends
Trade of beef, pork and poultry by major exporters is forecast to reach record
levels in 2006 despite the instability of
continued disease outbreaks and resulting trade restrictions, according to the
U.S. Dept. of Agriculture's Foreign Agricultural Service.
Department economists anticipate
world economic growth will remain
strong throughout 2006, albeit at the
same level as 2005. The forecasted
positive economic environment will
promote investment in meat production
and processing capacity in many livestock and poultry producing countries.
Producers and processors in countries
where exports are growing are investing
in a range of capacity and quality improvement projects such as the modernization and construction of slaughtering
plants in Brazil and feedlot expansion in
South Africa.
While avian influenza in Asia and
Russia, foot-and-mouth disease in Brazil, as well as trade restrictions on U.S.
and Canadian beef due to bovine spongiform encephalopathy have impacted
global trade, increasing meat consumption in major consuming countries is spurring increased production
and growth in exports.
However, there are instances when
economic growth will not be enough
to support production and processing
expansion. For example, in the case
of the Indonesian poultry sector, outbreaks of A.I., escalating energy costs,
weak currency, and higher feed costs
will minimize profits and constrain
growth in 2006.
Increases in worldwide real per
capita gross domestic product in
2006 will continue to fuel rising livestock and poultry consumption and
production. Asian economies, particularly China, Hong Kong, Taiwan
and Thailand, are forecast to experience strong growth, likely fostering
meat consumption as consumers will
have more disposable income.
During 2004 and 2005, outbreaks of
A.I. and B.S.E. caused trade distortions
14

MEAT&POULTRY

December 2005

that affected major exporters' (such as the $13
United States and Brazil) poultry and beef
prices. Consequently,
major exporters' pork
prices increased in the $11
last two years as exports mushroomed in
the wake of consumers
shifting their animal
protein consumption.
A weak U.S. dollar $9
has made U.S. exports
'96
'98
of meat and poultry
Actual
more competitive in
world markets since
2003. Even though
further depreciation of the U.S. dollar compared to competing countries
such as Brazil and Australia is not anticipated to continue in 2006, favorable
exchange rates will give U.S. exports a
competitive advantage.
The October 2005 outbreak of
F.M.D. in Mato Grosso do Sul, Brazil,
will constrain growth in the Brazilian
beef and pork sectors. Brazil will shift
beef production to F.M.D.-free states to
meet export demand in 2006, particularly to Russia. Mato Grosso do Sul is
not a major pork producing region, and
the impact on Brazilian pork exports
is anticipated to be small. At the time
these forecasts were generated, Mato
Grosso do Sul was the only state with
confirmed F.M.D. cases.
For the first time in history, broiler
meat exports by major traders are forecast to reach 7.5 million tons. Poultry
demand is expected to be strong due to
the absence of the United States in major
beef markets and constraints on growth
in Brazilian beef exports. The 2006 increase of nearly 7 percent is the result of
increased trade by a number of countries
including Argentina, Brazil, China, Thailand and the United States.
Global consumption trends

Increases in disposable income will
augment food purchases in low- and
www.MEATPOULTRY.com

(meat, poultry and dairy in $Bil)

'00

'02

Aug. '06 Forecast

'04

'06

Nov. '06 Forecast

Source: U.S.D.A. Foreign Agricultural Service

middle-income countries. Of these
boosts in purchasing power, a higher
proportion is spent on purchases of
higher-value products such as meat
and dairy. Thus, macroeconomic stability and growth in low and some
middle-income countries results in
higher consumption of red meat and
poultry, providing new growth-market
opportunities for domestic producers
and world suppliers.
Low- and middle-income countries
are increasing their per capita consumption. They are also accounting
for a greater share of world consumption. China's pork consumption, which
accounted for only 50 percent of pork
consumption in major pork consuming
countries in 2001, is forecast to account
for 53 percent in 2006. Alternatively, the
European Union's share of pork consumption is forecast to decrease from
24 percent to 22 percent from 2001 to
2006. Red meat and poultry demand in
developed countries such as the United
States is strong.
Given the elevated level of consumption, per capita consumption of these
products cannot be expected to gain
sharply. However, demand in higher
income countries is shifting to more
convenient and processed products,
creating opportunities for value-added
meat products.

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Meat + Poultry - December 2005

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