Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Expanding Animal Protein Production to Increase Competition

Expanding Global Production Set to Increase Competition in Animal Proteins Sector in 2018

Animal protein production is expected to expand around the world in 2018 increasing both trade competition and competition between different meat types, according to a new industry report from agricultural banking specialist Rabobank.

Rabobank’s Global Outlook for animal protein in 2018 says production increases are likely in most regions with Brazil, China and the US expected to record particularly strong production growth. In New Zealand, beef and sheepmeat production is forecast to remain similar to 2017 levels.

The report says beef and pork will be the strongest contributors to global animal protein expansion – with global beef production projected to increase for a third consecutive year in 2018, and a further year of significant growth in pork production anticipated. Poultry and seafood production are also set to register production growth in 2018, but the growth rate in these sectors is anticipated to be slightly lower than that recorded during 2017.

Rabobank animal proteins analyst Blake Holgate says two of the impacts of the expected production increase would be more competition between species for share of consumer wallet, and between exporters for access to trade flows.

“Many countries will be looking to increase their level of animal protein exports in 2018 and we expect to see intense competition in key importing markets, particularly in the Chinese market,” he said.

“We also expect the increased production will create margin pressure along the supply chain - with food retailers and foodservice companies best placed to benefit.”

Mr Holgate said while price and margin pressure were likely to be central themes for the sector in 2018, production growth would also create areas of opportunity for the industry.

“As the changes brought about by increased production take shape, new areas of opportunity will open up in all markets and we believe animal protein companies and supply chains that are well connected to markets, and most agile and innovative in responding to these opportunities, will be best placed to benefit.”


New Zealand

For New Zealand, the report says, farm-gate beef prices are likely to come under downward pressure as rising global beef production increases competition through 2018.

“However, provided consumer demand remains positive in New Zealand’s key export markets of the US and China, cattle prices are expected to hold up reasonably well and sit above long term average returns,” Mr Holgate said.

The report says signs are also positive for New Zealand’s sheepmeat producers, with low levels of global lamb inventory expected to support strong prices in 2018.

Mr Holgate says while New Zealand’s sheep flock is forecast to reduce by close to one per cent in 2018, favourable breeding and lambing conditions are likely to result in a marginal increase in the supply of New Zealand lamb onto the global market in 2018.

“Lamb prices are now at near-record levels and the challenge for exporters will be to maintain the current level of consumer demand given the availability of other less-expensive animal protein alternatives,” he said.

“Mutton prices are also likely to remain high due to an expected reduction in New Zealand export volumes and continued high demand out of China.”


Key Watch Factors

Looking beyond trade, the report highlights four key watch factors which are anticipated to play a major role in the direction of the animal proteins sector in 2018 and beyond - industry consolidation, the evolving retail landscape, increased adoption of agricultural technologies and the rise of alternative proteins.

Mr Holgate says industry consolidation was expected to advance most swiftly in the poultry and beef industries.

“The poultry industry is likely to continue its rapid move from a nationally-organised industry to a more regional and global industry, while in the beef industry further consolidation is expected, albeit at a slower pace,” he said.

Animal protein companies would also be wise to keep an eye on the evolving food retail landscape in the coming 12 months, according to the report.

“Food retail is being re-shaped at a rapid rate and the Amazon/Whole Foods deal is a great example of this. This deal, and others like it, is resulting in the availability of more food products via an increasing number of channels,” Mr Holgate said.

“These changes will create opportunities for the sector and we expect to see more investment from animal protein companies into new product development and increasing the efficiency and the visibility of their supply chains.”

The report says uptake of agricultural technology is a further factor to watch over the coming 12 months.

“There are a number of drivers behind increased uptake of technology such as cost efficiency, improved productivity and the reduction of environmental footprint and we anticipate more use of technologies like automated robotics will be utilised allowing processors to increase meat yields, improve cut quality, reduce costs and fill gaps in the workforce,” Mr Holgate said.

“Despite this, widespread adoption of technologies is still likely to be hindered by barriers such high technology costs, lack of sufficient infrastructure and, in some cases, the lack of a clear value proposition.”

The report says alternative proteins would also be much talked about in 2018 and generate additional competition for animal proteins.

Mr Holgate said alternative proteins had broken out of the niche of vegetarian products and high growth rates were expected in future years.

“The current market for alternative proteins is largest in the EU and in North America and in these regions alternative protein products have captured the attention of flexitarians and the interest of sustainability and animal welfare-minded customers,” he said.

“Rapid growth of alternative proteins is likely in coming years, however, it’s important to note that the market for alternative proteins is still very small in comparison to the total animal proteins market.”


ENDS


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 


Contact: Business Drops, New Generation On Hold

New Zealand’s second-largest energy company Contact Energy (‘Contact’) released its full year financial results for the 12 months to 30 June 2020 (‘FY20’) this morning. More>>

Mining: OceanaGold Announces Receipt Of WKP Mining Permit

MELBOURNE, Australia, Aug. 6, 2020 /CNW/ - OceanaGold Corporation (TSX: OGC) (ASX: OGC) (the 'Company') is pleased to announce it has received the mining permit for Wharekirauponga ('WKP') on the North Island of New Zealand. ... More>>

ALSO:

Economy: COVID-19 Lockdown Has Widespread Effects On Labour Market

In the June 2020 quarter, the seasonally adjusted unemployment rate fell to 4.0 percent, down from 4.2 percent last quarter, while underutilisation rose, Stats NZ said today. More>>

ALSO:

NZ Post: New Research By NZ Post Shows Online Shopping Grew 105% In Alert Level 3

New research by NZ Post into how the COVID-19 response has impacted the way Kiwis shop online, shows online shopping increased 105%* when the country moved into Alert Level 3, and may have changed the way Kiwis shop permanently. Online spend peaked ... More>>

ALSO:

Banking: Westpac NZ Lowers Merchant Fees For Small Businesses

Westpac NZ is rolling out a new merchant fee pricing structure that will lead to cost savings for more than 10,000 small and medium Kiwi businesses, and could make contactless transactions more widely available for customers. On 1 September, most ... More>>

REINZ: Million Dollar Plus Property Sales Increase 11.7% Nationally

The number of properties sold around the country for one million dollars or more during the first half (H1) of 2020 increased by 11.7% compared to H1 2019, with 5,426 million-dollar plus properties sold (up from 4,858 in H1 2019) according to the Real ... More>>

Antarctica NZ: Ice-Olation

Antarctica New Zealand is gearing up for a much reduced season on the ice this year and a very different deployment to normal! Before they head to one of the remotest places on the planet, all personnel flying south with the New Zealand programme will ... More>>

ALSO:

QV Valuations: July House Price Index Illustrates Market Resilience

According to the July 2020 QV House Price Index (HPI) results out today , property values recorded a marginal increase, up 0.2% over the month. This is somewhat of a turnaround from June, after the national index edged 0.2% lower. More>>

ALSO:

Property: Queenstown Rents Experience Biggest Drop In Seven Years

Rental prices in the Queenstown-Lakes district saw the biggest annual percentage drop in seven years after falling 28 per cent on June last year, according to the latest Trade Me Rental Price Index. Trade Me Property spokesperson Aaron Clancy said ... More>>

Seismology: The Quiet Earth

As many daily activities came to a halt during lockdown, the Earth itself became quiet, probably quieter than it has been since humans developed the technology to listen in. Seismologists have analysed datasets from more than 300 international ... More>>

RNZ: James Shaw Says Kiwibank, Not Ministers Should Decide On Investors

Climate Change Minister James Shaw says Kiwibank's decision to stop doing business with companies dealing in fossil fuels is the right one. More>>

ALSO:

FMA: Kiwis Confident Financial Markets Will Recover From COVID-19, Plan To Increase Investments

Despite the majority (60%) of investors experiencing losses as a result of COVID-19, the outlook on investing remains positive, according to a Financial Markets Authority (FMA) survey. Most Kiwis (71%) were optimistic that the pandemic will pass eventually ... More>>

FIRST Union: Warehouse Using Covid For Cover As Extensive Restructure Makes Everyone Worse Off

(FIRST Union comments on The Warehouse consultation and proposed restructure) 'Unfortunately the Warehouse have done the disappointing thing and used Covid-19 to justify a bunch of operational business decisions that will leave hundreds of workers without jobs ... More>>

ALSO: