Latest developments in Asia & Oceania Peter Weeks Chief Economist Meat & Livestock Australia
Outline Beef production trends Drivers of beef production Beef trade issues Long term beef projections
Beef production growth 2 to 29 Selected Asia & Oceania 1, Annual growth ' tonnes cwe tonnes % change Annual % change 1 8 6 Brazil s production growth was 2.7mt 8 6 4 4 2 2-2 -2 China Indonesia Source: GMI Centre for International Economics NZ Australia Malaysia Korea Japan Philippines
Productivity is increasing in China & Australia 14 12 beef production per head (kg cwt) Japan 1 8 Australia 6 4 New Zealand 2 Brazil China 198 1982 1984 1986 1988 199 1992 1994 1996 1998 2 22 24 26 28 21 Source: USDA FAO
The drivers of production growth Price Growth in demand for beef Traditional diet Population growth Income growth Availability of inputs Land resources Water - droughts & climate change Feed
Global meat prices on the rise
Despite their production growth, prices within China have also increased rapidly in recent years 35 3 RMB/kg Beef Cattle Sheepmeat Pork 25 2 15 1 5 1995 1997 1999 21 23 25 27 29 Source: China's Ministry of Agriculture
Growth in demand for beef
Red meat is only a small part of Asian protein diets, well behind fish, pork & poultry Proportion of Total Meat Consumption by Major Species, Selected Countries, 29 per capita 118 kg 55 kg 81 kg 15 kg 18 kg 12 kg 12 kg % of total Source: UN FAO database & various Fisheries Departments From talk by Dr. David Hughes (Imperial College) at NTCA Conference 21
Meat consumption is driven by two basic factors population and income Growth in world population 1 billions 8 Growth in world GDP US$ (trillions) 8 6 Current crisis 6 4 2 195 197 199 21 23 25 4 2 198 2 216
Concentration of population growth in Asia Distribution of additional world population (21-23) -1% 35% 54% 4% 5% %
Rapidly increasing populations Indonesia (52 million growth - 24%) 3 millions Philippines (39 million growth - 45%) 14 millions China (15 million growth - 11%) 16 millions 25 12 14 2 15 1 5 25 21 215 22 225 23 1 8 6 4 2 25 21 215 22 225 23 12 1 8 6 4 2 25 21 215 22 225 23
China Forecast income growth to 218 1 Percent 8 6 4 2 Japan EU-27 US Canada NZ Australia Mexico Brazil S. Korea Russia Philippines Indonesia Vietnam Saudi Arabia Pakistan India Source: IDB Database, USDA Agriculture Long Term Forecasts
Hence, a substantial increase in demand for meat
Demand is trending up! Price is trending up! So why have we not seen a commensurate rise in beef production?
Scarce land & water resources (except Oceania) Acre Arable land and water availability comparison Source: FAO, World Development Indicators & United Nation m 3
Competition for land Urbanisation & Industrialisation Population growth urbanisation lack of land profitability crops Dairy, deer, forestry
Feed availability Pasture Oceania Cut & carry vegetation Indonesia & elsewhere in South East Asia Grass silage China Grains Japan, Korea & growing component in Australia, China
Asia and Oceania is getting drier Change in average precipitation 2s (2-29) on 197s mm
and the globe is getting hotter
Australia s dry decade 2-29 Rainfall deficits Cattle distribution wet dry
It is of little surprise that feedlots are becoming more important: such as in Australia 3, ' head Australian feedlot growth grainfed cattle marketings % 4 2,5 grainfed as % of adult slaughter 3 2, 1,5 2 1, 1 5 91 92 93 94 95 96 97 98 99 1 2 3 4 5 6 7 8 9 Source: MLA/ALFA Quarterly Feedlot Survey
Exports of feeder cattle to a rapidly expanding modern feedlot sector in Indonesia 1, ' head numbers value $A million 5 8 4 6 3 4 2 2 1 9 91 92 93 94 95 96 97 98 99 1 2 3 4 5 6 7 8 9 1f
Asia s beef trades Japan & Korea imports from US & Oceania - 616kt India to Asia - 26 tonnes Brazil to Asia - 126 tonnes Cattle from Cambodia and Burma to Malaysia and other countries?
The big emerging trades into Asia India s beef trade Brazil s beef trade ' tonnes swt 25 12 Malaysia Philippines Vietnam ' tonnes swt Hong Kong Philippines 2 1 15 8 6 1 5 1999 2 21 22 23 24 25 26 27 28 29 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 4 2
Key beef trade trends in Asia Demand downturn due to GCC & recessions Mainly in Japan other Asia & Oceania only small local demand impacts Major, disruptive currency shifts Lower beef and cattle prices US re-entry into Japan and Korea Increasing beef imports to China & South East Asia Strong competition from Brazil and India in some markets FMD outbreaks in Japan, Korea, China, Hong Kong & Taiwan Import barriers especially around 4% tariffs into Japan & Korea & difficult access to China & Malaysia
Long term trends Potential consumption growth substantial Production growth slow Import growth substantial Export growth from Australia and South America
World beef consumption projected to rise by around 1mt in coming decade 3 Beef consumption growth 21-22 (million tonnes) 2.5 2 1.5 1.5 Brazil USA India China Argentina Mexico Korea Indonesia Japan Russia & other
Little beef production growth expected in Asia with main growth in the big 4 plus Oceania 2,5 2, Projected beef production growth 29-22 (million tonnes) FAPRI GMI 1,5 1, 5-5 Brazil China US India Australia New Zealand Indonesia Argentina South Korea Thailand Canada Philippines Mexico Japan European Union
Models confirm expected growth in net imports by Japan, Korea, the Chinas and South East Asia 2,5 2, Net export growth 29-22 (million tonnes) FAPRI GMI 1,5 1, 5-5 -1, Brazil Australia India NZ Argentina Canada Thailand Indonesia Philippines the Chinas Korea US EU Mexico Japan
Cattle prices expected to trend up 35 3 25 US /kg lwt Aust grass fed Aust grain fed US grain fed projections 2 15 1 5 199 1995 2 25 21 215 22
Questions?