"The international economic recession, changes in exchange rate, biofuel, animal diseases and the global power of distribution are only a few of the factors that have a major impact on the meat trade and they are hard to predict", René Maillard, manager of the VLAM’s Belgian Meat Office, summarises the conclusions.
Meat consumption worldwide is increasing
A growing world population and the evolution to more urbanisation. These two factors are making meat consumption worldwide increase. "The fast evolution of the last few years has slowed down however. Above all poultry and pork are still benefiting from the greater demand for meat," adds Maillard. "A great part of the growth can furthermore be attributed to the developments in China. And it is precisely there that the economy has suddenly geared down."
2008 a year of two halves
However well the meat trade was doing in the first half of 2008, that same meat trade had a very tough time of it at the end of 2008. Until August there was still clear economic growth; during the fourth quarter the economy plummeted in all areas. The oil price followed the same sharp rise and sudden fall. This had an immediate effect on the purchasing power in oil-producing countries such as Russia for example. "This has immediate consequences for the European meat trade", Maillard clarifies. "Less consumption of meat in Russia led to a sharp fall in the German export to Russia. From Germany as the pivot of the European meat trade, the effect quickly spread to the other meat-producing countries."
In 2009 the international economy will not pick up straight away. Maillard expects the recession to continue in the United States, Europe and Japan.
Meat consumption depends on standard of living
The bigger the available income of a section of the population, the greater the amount of meat consumed. The United States are the absolute number one with their meat consumption of over 120 kg per person. Australia, Argentina, New Zealand and Brazil have a greater meat consumption than their purchasing power would have you suspect. Even meat consumption in China is clearly on the up and up. The big European countries on the other hand have slight underconsumption compared to the median.
Expensive euro makes export difficult
Exchange rates determine the relative competitiveness of a country. Since the credit crisis, export out of Europe has been difficult. After all, the rate of the euro is very high. "This makes our export to countries where the currency is weaker such as Great Britain, Russia and Poland difficult", according to Maillard, who also notices a hopeful evolution in the United States. "The American dollar on the other hand recently regained terrain on other currencies. This plays into the cards of the European meat suppliers."
Competition between feed crops and biofuel
"Every year biofuel is becoming increasingly important. Last year, 25% of the production of corn and maize were used for biofuel in the United States. And initiatives for energy production are also developing on other countries too. With immediate consequences for feed crops", Maillard emphasises. "The costs of feed and food crops are rising due to the imbalance caused by supply and demand. In Europe we are furthermore being confronted with a negative attitude to GMOs, whilst our competitors in North and South America are resolutely opting for GMOs and thus gaining a considerable advantage in international trade."
Attention to animal disease and animal welfare
In the past, BSE and other animal diseases have seriously disrupted the market. The biggest impact seems to have ebbed away but the meat sector has to remain very vigilant for new occurrences. Maillard sketches the impact on the meat trade: "In the meantime the sector is struggling with lasting costs due to stricter measures. Now the amended legislation imposes feeds and inspections are also increasingly strict. The government furthermore increasingly shifts responsibility to the sector itself and offers less and less financial intervention."
In addition, animal rights activists have upped the fight to improve animal welfare. "Transport of live animals, castration of piglets without anaesthetic, suffering during slaughter and intensive livestock farming are the most recent subjects that are being played on in the media. And the solutions to these issues will also be accompanied by an increase in production costs", Maillard predicts.
Conclusion
"2009 is clearly a year with many question marks," concludes Maillard. "In any case the consumer won’t eat less, even in times of crisis. But he will adapt his buying behaviour. For example he will opt for cheaper products more and he perhaps demand less quality. Even when he buys meat." Maillard finally predicts that the hard discounters will profit from the recession and that they will further expand their range of fresh meat.
