Meat - OECD-FAO Agricultural Outlook 2012-2021

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Poultry is expected to become the largest meat sector in the decade to 2021, according to projections in this edition of the Outlook.

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Market situation

The market situation for the meat sector is characterised by high nominal output prices for all meats, underpinned on the demand side by rapidly growing developing economies and on the supply side by high input costs, notably for feed grain and energy related inputs such as transport and cold chain storage. As feed costs moderate somewhat, increased profitability should assure expansion. These factors tend to favour greater domestic supply responses in developing countries, particularly for cheaper meats and meat cuts (poultry), and also where low input systems, including pasture, predominate.

On the policy front, the prospects of a further opening of international meat trade that may result from the accession to the WTO of the Russian Federation, which is a large importer of poultry and pigmeat, will render a favourable trade environment for the sector. While growth in production and trade is envisaged in the short term for poultry, pig and sheep meats, beef will initially be constrained by herds which have depleted in recent years in major exporting regions. 

Projection highlights

• The strong rise in feed grain prices in the past five years is now moving substantially through the market chain and, with the exception of poultry where adjustments have largely been made already, is being reflected in higher meat prices. Prices are projected to remain high throughout the next decade, and in real terms about 11%, 17%, and 4% above base period (2009-11) values for bovine, pigmeat, and sheep meat respectively. Real prices for poultry are projected to remain close to current levels. For all meats, real prices are currently at their highest levels of the past 15 to 20 years, and little moderation is expected as long as feed and energy prices remain high.
• Higher prices for meat will induce supply response, albeit limited by higher input costs in addition to competition for land and water. The combined effect of these factors will slow global production growth for meat to 1.8% p.a. in the outlook period compared to 2.2% p.a in the previous decade. Bovine meat production is projected to increase 1.8% on average each year, while that for pigmeat and sheep meat may grow 1.4% and 1.8% respectively. Poultry remains the fastest growing meat sector, with growth projected at 2.2% p.a. Developing countries will increase their share of global production in all meat categories, and by the end of the period will account for 58%, 64%, 63% and 78% of bovine, pig, poultry and sheep meat production respectively. Increasing returns to scale will continue to concentrate production in fewer and larger farm units, not only in developed countries, but increasingly also in emerging countries. This structural change will continue to increase the reliance of meat production on feed grain inputs. 
• World meat consumption continues to grow at one of the highest rates among major agricultural commodities. Growth in developing countries will capture 82% of the additional global consumption over the projection period. Per capita consumption will increase by 3.2 kg p.a., with poultry accounting for 70% of this increase. By 2021, consumers in developed countries will eat an extra 3.6 kg of meat per capita relative to the base period, which will also be mostly poultry, except for Eastern Europe where consumption of red meats still has a substantial growth potential.
• Despite strong meat prices through the projection, meat imports by developing countries are expected to increase, driven by population and income growth and high income elasticity of demand. Equally so, strong prices will result in sustained export earnings, which will encourage large meat exporting countries to invest in international meat markets despite the high prevailing incidence of food-safety and sanitary import bans.