This month was a busy travel month as I attended and presented at three very different conferences.
First was the Global Protein Summit in Chicago, followed by the Rural Economic Outlook Conference at Oklahoma State University in Stillwater and ending the week was a series of seminars at the Expo Ganadero in Chihuahua, Mexico.
Though these conferences covered a wide range of topics, several themes were consistent across at least two or sometimes all three conferences.
All conferences included the widely discussed trend of global population growth and the challenges of feeding the world. Global population is projected to increase from the current 7.7 billion people to over 9.5 billion by 2050 and to exceed 11 billion before the end of the century.
One presentation noted that while current attention is on growing Asian populations, Asia will peak in the next two decades and population growth in Africa, which is just beginning to grow rapidly, will dominate global population growth in the last half of the century.
As important as population growth, perhaps more so for meat industries, is economic growth and the growing middle class.
Globally, the middle class is projected to expand from 2 billion to 4.9 billion people by 2030. China alone is projected to add 850 million new middle class consumers by 2030. It is well documented that meat consumption increases as growing incomes support better quality diets and increased protein consumption.
Two different presentations by speakers from the Federal Reserve noted the U.S. is currently experiencing a very long period of relatively weak economic growth. These and other presentations noted that the shrinking U.S. labor force is contributing to the slow pace of economic growth.
As the U.S. population ages, fewer new labor force entrants are available to replace those leaving the work force. It was also noted productivity growth will not likely be sufficient to offset the declining labor force.
Other presentations noted the important role of immigrants historically in food and agricultural industries and the growing need for low- to medium-skill workers to support all aspects of agricultural and food production, including vegetable and fruit harvest; dairy, ranch and feedlot workers; labor for food processing and manufacturing; and restaurant servers and chefs.
Recent research conducted by Oklahoma State University confirmed the pervasive labor issues and challenges in all sectors of the beef industry from packers to further processing and food distribution to retail and food service.
The growing reality of the massive impact of African swine fever (ASF) was another common topic in these conferences. The rapidly changing dynamics of this disease suggest that the impacts are global in nature and not only for the coming weeks and months but likely will fundamentally impact global protein markets for years or decades.
It appears at this time, that swine and pork losses in China, Vietnam, North and South Korea, and the Philippines along with other outbreaks of ASF in Europe and Africa is creating a protein deficit that cannot be currently filled by all proteins in the world.
The latest data from the
USDA Foreign Agricultural Service shows the pattern of impacts on global protein markets is beginning to be revealed. No doubt numbers will change with more time.
The epicenter of ASF is China which, as recently as 2018, produced nearly half (47.8%) of world pork production. Estimates of hog losses since 2018 due to ASF in China range widely, but most put the number at more than half of total hogs with some estimates up to 70-80% hog mortality.
As ASF impacts grew from initial reports in August 2018 to now, pork production in China is projected to decrease 14% in 2019 from 2018 levels with another 25.3% drop year over year in 2020. This contributes to a 15.7% decrease in global pork production from 2018 to 2020. The losses in China may well exceed these estimates.
In 2018, pork consumption accounted for 74% of total Chinese beef, pork and poultry consumption. The losses to ASF are creating a major protein deficit in China that is impacting all protein markets globally as China attempts to mitigate reduced meat supplies. Total Chinese consumption of pork, poultry and beef is projected to decrease by 14.9% from 2018 to 2020, with pork dropping to a 59.8% share of total meat consumption.
Pork imports are projected to increase 66.6% in 2019 over 2018 and another 34.6% year over year in 2020. Global pork imports are expected to grow 13.5% year over year in 2019 and another 11% in 2020 as China’s share of global pork imports grows from 19.7% in 2018 to 35.1% in 2020. The U.S. began to see direct impacts of this with a 479% jump in pork exports to China in July and August.
China is looking to other proteins as well. Beef imports to augment protein supplies in China will add to the rapid pace of beef import growth in China since 2013. Chinese beef imports are expected to increase 63.6% year over year in 2019 and another 20.8% next year.
China’s share of global beef imports is projected to be 30.0% in 2020, up from 8.6% as recently as 2015.
Total world beef exports are projected to grow 4.3% in 2019 over 2018 and another 4.4% year over year in 2020.
In total, global production of beef, pork and poultry is projected to decline by 1.5% year over year in 2019 and decrease another 2.4% in 2020 as a result of decreased pork production due to ASF. At the same time, global meat exports are expected to increase 6.9% in 2019 compared to 2018 and to grow another 6.1% in 2020.
As a result, global meat exports are projected to expand from 11.2% of total production to 13.2% in just two years.
ASF is not controlled in most countries where it is currently active, is difficult to eradicate and restocking is usually unsuccessful if the disease is not completely controlled. The rebuilding of the global pork industry is not a matter of months but rather will take years.
It is clear that ASF will have very significant impacts on global protein markets for the foreseeable future.
Finally, the conferences included discussions about alternative proteins, particularly plant-based proteins. Various perspectives noted that some in both the meat- and plant-based protein markets view each other as competitors battling to replace the other.
But there was also recognition the markets may be complementary, not only for retail and food service businesses to offer a more comprehensive set of protein product choices to consumers, but also the reality that it will likely take both meat and plant-based protein to feed the world through the remainder of the century.