Global Animal Protein Outlook Shows Challenges and Demand
By Jennifer Whitlock
Animal protein supply chain will continue to experience sustained growth while facing challenges in four key areas, according to Rabobank Global Animal Protein Outlook 2022: Capitalizing on Ongoing Market Disruption.
Trends affecting supply chain costs include a consumer-led push for “more sustainable” animal protein, biosecurity efforts and the lingering effects of COVID-19.
Animal feed, labor, energy and freight remain major influencing factors for higher input costs, according to the report. Those who respond quickly and dynamically will thrive, but Rabobank warned that those who remain rooted in pre-pandemic routines will likely be left behind.
“Next year has the potential to accelerate structural change due to escalating costs,” said Christine McCracken, senior animal protein analyst. “Success will most likely go to those players who adapt to the changing business environment; embrace consumer preferences for sustainability and prepare for increased demand as economies continue to reopen and adapt in the wake of lockdowns induced by COVID-19. “
The pork, poultry and aquaculture sectors are expected to drive production growth, according to Rabobank. The pig will grow more slowly, due to the ongoing recovery of the Chinese pig herd following a massive outbreak of African swine fever.
Production of beef and wild seafood will contract slightly but remain broadly stable, the Rabobank report says.
In North America, the US beef cattle herd is expected to decline 1.8% year-on-year to about 30.6 million head in January 2022. Canada’s cattle herd is expected to decline similarly, but the drought in Mexico will slow down any growth of beef cattle in that nation.
North American poultry is expected to have another strong year, and Rabobank analysts forecast 2.4% year-over-year growth for US broiler productivity in 2022. Tight supplies and growth increased exports will support the continued rise in prices in this sector. But the production of broilers in Mexico is likely to decline due to high costs and weak demand, the group noted.
Growth in hog production is more uncertain in the United States, where hog producers face many regulatory uncertainties and rising costs. US and Canadian demand should keep pork values relatively strong. However, economic weakness could reduce pork consumption in Mexico.
“While demand is strong and supporting livestock prices, feed costs in North America are expected to remain at high levels,” said Don Close, senior animal protein analyst. “Producers will need to be vigilant to find opportunities to lock in profitable margins.”
The full report is available here.