USDA: growth for pork industry until 2019
The US Department of Agriculture has recently released its ten-year outlook, this time stretching to 2019. Further growth is expected, but in all livestock sectors strong figures as in the past years will not be reached.
What follows is an extract from this year's USDA's Agricultural Projections to 2019 http://www.ers.usda.gov/Publications/OCE101/OCE101.pdf, published this month. Livestock projections can be found on the pages 79-87.
The livestock sector continues to make adjustments in the first several years of the projections in response to high grain and soybean meal prices in 2007 and 2008, followed by weak meat demand caused by the global economic recession.
Figure 1. Projected US red meat and poultry production until 2019.
With producer returns squeezed, production incentives fell, leading to declines in total US meat and poultry production through 2011. These production adjustments combine with strengthening meat exports to reduce domestic per capita consumption through 2012. The result is lower production at higher prices, which improves net returns and provides economic incentives for moderate expansion in the sector later in the projection period.
Pork production declines in 2009-11 in response to high feed prices and lower demand and then grows for the remainder of the projection period as higher hog prices improve returns. However, high feed costs are expected to limit growth in producer returns.
Continuing near-term production reductions in the livestock sector, along with some recovery in meat and poultry exports, result in higher consumer prices and lower per capita consumption. Annual consumption of red meats and poultry falls from over 221 pounds per capita in 2004-07 to less than 206 pounds in 2012. As production increases over the remainder of the projection period, per capita consumption of red meats and poultry resumes growth, but only rises to about 215 pounds by 2019.
Figure 2. Projected per capita US meat consumption, 2010-2019.
Reductions in pork production combine with rising pork exports to push per capita pork consumption down in 2010-12. A gradual rebound in per capita pork consumption occurs over the remainder of the projection period as production gains strengthen.
Price developments & exports
After the price declines seen in the livestock sector in 2009, largely due to recession-related effects on meat demand, prices rise over the projection period. A moderate pace of expansion combined with improving domestic and export demand support prices in the projections.
Figure 3. Projected nominal US livestock prices until 2019.
Reduced demand resulting from the global recession lowered overall US meat and poultry exports in 2009 by more than 7%. After 2009, exports are projected to rise as global economic growth resumes and the US dollar depreciates. With this growth, exports account for a growing share of US meat use, although the domestic market remains the dominant source of overall meat demand.
Although efficiency in US pork production enhances the competitiveness of US pork products in global trade, longer term gains in US pork exports will be determined by costs of production and environmental regulations relative to competitors. Production costs tend to be lower in countries that are developing integrated pork industries, such as Brazil.
Figure 4. Projected US meat exports until 2019.
However, Brazilian pork producers' ability to compete in some markets is limited because some countries do not recognise Brazil as free of Foot-and-Mouth Disease (FMD). Thus, Pacific Rim nations and Mexico remain key markets for long-term growth of US pork exports, while Brazil's pork exports expand to markets such as Russia, Argentina, and Asian markets other than Japan and South Korea.
• US Department of Agriculture (USDA)
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