‘ASF has created change never seen before’ – global strategist
Speaking to over 150 representatives from the Irish meat industry at Bord Bia’s Meat Marketing Seminar – currently taking place in Naas Co. Kildare – Justin Sherrard global strategist in animal protein at Rabobank explained that the next decade will provide many opportunities in terms of production.
However, he warned that it will not be without its challenges.
“African swine fever (ASF) has created change that we’ve never seen before – we have never seen a change in global animal protein like we saw in 2019,” he explained.
In relation to beef production, he explained that US beef production may increase slightly, while a slight decline or steady production is expected in most cases; however, he noted that Brazil is the only country where we will witness “real growth” in 2020.
He highlighted that poultry has a significant effect on beef.
“Poultry is offering more to consumers and we know that poultry production has had decades of growth. We know it has to do with convenience, cost and flexibility in the production system.
“And, beef continues to suffer as a result of that in terms of volume,” he added.
Touching on pork production, he said that this will continue to grow, expecting a 4% increase in production in the US. In Europe, Sherrard expects a 1% increase in production, noting that this is “remarkable”, also highlighting that strong prices will continue into 2020.
He also said that some countries are gearing up to increase production on the back of the strong prices.
However, he explained that a “mood of caution” is needed – the first of which is on ASF.
How long will China’s demand run for? Is there enough time for me to invest in expanding production and still capitalise on the strong trade? What happens when ASF lands here?
He highlighted that recent outbreaks in Poland, close to the German border, have increased this cautious approach.
In terms of poultry, Sherrard explained that, again, China is driving the demand for poultry meat, using this product as a substitute for pork.
“However, in Europe, we have had an oversupply. We have suffered with an oversupply for much of 2019, and we think we will see a challenging market situation for the first half of this year.
“We have seen with beef prices that oversupply of poultry has been a big reason that there has been downward pressure on beef,” he said.
Continuing, he said: “We have never seen a year like 2019 and we should not expect that things are going to recover in 2020. In China, pork production has been down 25% in 2019 and we think it will be down 10-15% in 2020.
While he noted that prices are at record levels, there has been a correction for many reasons.
“The main reason is the seasonal pattern of production. China’s new year is a time of year when you send hogs to slaughter and why should it be any different? People want to catch the top of the market.
“We have seen prices come down because more stock has come into the market. We have seen prices come down because the government has released frozen stocks into the market.
“The amount is not really high and it’s being done in a clever way where a small amount has had a big impact, but still prices are at record high,” he explained.