Animal protein production growth will slow as margins remain tight in 2024, with producers and processors needing to adapt to sustain success, according to Rabobank’s annual Global Animal Protein Outlook report.
After four years of growth in animal protein production globally, 2024 will see the pace slow or even decline across some protein types.
The shift comes as producers and processors navigate tighter margins due to structural changes to market conditions while higher production costs and tighter supplies will push animal protein prices up and constrain global consumption in 2024.
Input costs and inflation are likely to fall but will remain at a higher level than pre-pandemic however there are signs consumers are growing used to higher prices and in some markets, willing to pay a quality premium.
Demographic shifts will see the labour market tighten and raise production costs, while reduced population growth will slow consumption.
Elsewhere, there will be pressure to invest in upgrading production systems to serve emerging market needs, meet regulatory requirements and cater to changing consumer preferences around sustainability.
Adverse weather conditions and disease also present challenges.
Rabobank global strategist animal protein Justin Sherrard said, it’s a testament to the resilience and flexibility of businesses along animal protein supply chains that they continue to grow production and deliver on customer expectations, amid such challenging market conditions.
“Despite a cost-of-living crisis putting pressure on consumer finances, there continues to be demand for animal protein and businesses have been able to overcome challenges, from high costs to regulatory uncertainty and disease, to capitalise on it,” Mr Sherrard said.
“For businesses to sustain the success of the past few years, it’s essential they adapt to the structural changes in the market. Instead of simply riding out the storm, animal protein businesses need to take stock of their strengths and prepare to transition their supply chains to operating in an environment with high costs and tight margins.”
Rabobank analysts forecast marginal year-on-year production growth in the major markets of North America, Brazil, Europe, Oceania, China and Southeast Asia of 0.6
million tons – or 0.5 per cent – to a total of 247 million tons next year. This is against a 2.1 million tons, or one per cent growth, in 2023.
Poultry and aquaculture will be the only two protein groups to see production grow in 2024, predicts Rabobank, though it will be slower than in 2023.
Beef will continue the decline seen in 2023, moving with changes in cattle cycles in North America, while pork production will also contract modestly.
Wild catch seafood will return to its longer-term pattern of declining production after a year of expansion in 2023.
Salmon looks set to be one of 2024’s success stories.
Following two years of production contracting and flatlining, supply will expand by four to five per cent, and its relative price competitiveness against other proteins will boost demand.
However, plant-based meat alternatives will continue their decline with customers and investors.
Foodservice is expected to be the key buyer for players in this category in 2024.
Increasing livestock numbers and the expectation of dry conditions in the year ahead will see production continue to rise.
After two to three years of favourable conditions, increased livestock inventory and the likelihood of drier seasonal conditions will see an increase in livestock turnoff in 2024.
RaboResearch senior protein analyst Angus Gidley-Baird says despite a recent reprieve from the dry conditions in some parts of the country, the longer-term climate outlook for the year, coupled with higher inventory is expected to see cattle slaughter numbers increase in 2024.
“With a slight contraction in average slaughter weights caused by drier conditions affecting producers’ ability to finish stock, and by cull animals being added to the system, we expect beef and lamb production to increase by four per cent and one per cent respectively in 2024,” he said.
He said while Australian livestock slaughter and production volumes are expected to rise in the coming year, several uncertainties exist that will influence the size and impact of the increase which include producer confidence.
