Global beef demand has begun to run ahead of world supply
OPINION
Contributor
Global beef demand has begun to run ahead of world supply
October 20, 2014, 1:56 pm
It is accepted that suckled beef production is vulnerable at EU and world level, even though trans-global consumption, which is already increasing, is expected to soar as more middle class professionals in China, India, South America, Russia, South East Asia and the Middle East make beef their preferred meat purchase.
This is a contradiction that can only result in beef being retailed at much higher prices at both EU and world level than it is at present – especially if the provenance of the product is backed by even higher production credentials than it is now.
The latter include it being grass fed and suckler bred as well as being supported by high welfare and having its naturally produced testimonials reinforced through avoidance of unnecessary use of antibiotics, feed additives and growth promoters.
The problem at global level is that extensive suckler beef is running out of land. This is in part due to more persistent drought in previously high producing areas like Texas and also crowding out by new crops (maize, soya, sugar cane) across its former heartlands in Brazil and Argentina.
In Europe, the problem is that the high cost of in-wintering a cow, say €440, is not being recovered from the market – essentially because there is still no retail differentiation between suckler and dairy produced beef which are for the most part presented as baseline, commodity, items.
All of the above point to the EU’s suckler beef having more chance of securing a future if eyes are turned to selected export markets, outside the EU, instead of being over-focused on the handful of price competitive supermarkets which dominate internal (intra-EU) distribution.
It may even be that the world’s production of suckler beef has already plateaued at a level beyond which it cannot expand – although it may stabilise, instead of falling further, through a mixture of re-location and semi-intensification within an arable rotation.
Production stabilisation (at best) at a time of increased global demand should point (eventually) to higher prices and a more secure future.
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It also confirms that high provenance suckler beef, of the type produced in the UK and the Republic of Ireland, is routinely undervalued and under sold.
These conclusions are forced on me each week as I examine international and EU news covering the latest industry developments.
My most recent discoveries have done nothing to persuade me to change my mind. They continue to confirm that world prices are rising because global production has faltered at the same time as demand has increased.
The evidence is everywhere. Russia cannot produce sufficient beef of its own and is being forced to look at water buffalo beef from India because it is struggling to find beef in South America after turning embargoing product from Australia, the EU, and the US on August 7.
Across North America retail prices are soaring on the back of cattle scarcity to such an extent that journalists are saying the market is ‘running away’ and retail shelves are “empty”.
While export orientated Australia is currently struggling to supply China with beef and Indonesia with live cattle – even though it has still to begin re-building its drought scorched breeding herd by holding back large numbers of heifers.
Robert Forster is a UK-based journalist who produces his subscription-only Beef Industry Newsletter. It focuses on weekly market developments at UK, EU and global level as well as producing a detailed, Friday evening, slaughter cattle price forecast.
OPINION
Beef
Global beef demand has begun to run ahead of world supply
OPINION
Global beef demand has begun to run ahead of world supply
October 20, 2014, 1:56 pm
It is accepted that suckled beef production is vulnerable at EU and world level, even though trans-global consumption, which is already increasing, is expected to soar as more middle class professionals in China, India, South America, Russia, South East Asia and the Middle East make beef their preferred meat purchase.
This is a contradiction that can only result in beef being retailed at much higher prices at both EU and world level than it is at present – especially if the provenance of the product is backed by even higher production credentials than it is now.
The latter include it being grass fed and suckler bred as well as being supported by high welfare and having its naturally produced testimonials reinforced through avoidance of unnecessary use of antibiotics, feed additives and growth promoters.
The problem at global level is that extensive suckler beef is running out of land. This is in part due to more persistent drought in previously high producing areas like Texas and also crowding out by new crops (maize, soya, sugar cane) across its former heartlands in Brazil and Argentina.
In Europe, the problem is that the high cost of in-wintering a cow, say €440, is not being recovered from the market – essentially because there is still no retail differentiation between suckler and dairy produced beef which are for the most part presented as baseline, commodity, items.
All of the above point to the EU’s suckler beef having more chance of securing a future if eyes are turned to selected export markets, outside the EU, instead of being over-focused on the handful of price competitive supermarkets which dominate internal (intra-EU) distribution.
It may even be that the world’s production of suckler beef has already plateaued at a level beyond which it cannot expand – although it may stabilise, instead of falling further, through a mixture of re-location and semi-intensification within an arable rotation.
Production stabilisation (at best) at a time of increased global demand should point (eventually) to higher prices and a more secure future.
It also confirms that high provenance suckler beef, of the type produced in the UK and the Republic of Ireland, is routinely undervalued and under sold.
These conclusions are forced on me each week as I examine international and EU news covering the latest industry developments.
My most recent discoveries have done nothing to persuade me to change my mind. They continue to confirm that world prices are rising because global production has faltered at the same time as demand has increased.
The evidence is everywhere. Russia cannot produce sufficient beef of its own and is being forced to look at water buffalo beef from India because it is struggling to find beef in South America after turning embargoing product from Australia, the EU, and the US on August 7.
Across North America retail prices are soaring on the back of cattle scarcity to such an extent that journalists are saying the market is ‘running away’ and retail shelves are “empty”.
While export orientated Australia is currently struggling to supply China with beef and Indonesia with live cattle – even though it has still to begin re-building its drought scorched breeding herd by holding back large numbers of heifers.
Robert Forster is a UK-based journalist who produces his subscription-only Beef Industry Newsletter. It focuses on weekly market developments at UK, EU and global level as well as producing a detailed, Friday evening, slaughter cattle price forecast.
October 20, 2014, 1:56 pm
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