Animal protein production is expected to grow at a slower pace in 2024 as margins continue to tighten due to structural changes in market conditions, according to a new report by Rabobank.
The annual Global Animal Protein Outlook report noted that higher production costs and tighter supplies will push animal protein prices up and constrain global consumption next year, adding that producers and processors will need to adapt in order to sustain success.
Justin Sherrard, global strategist animal protein at Rabobank, stated, "It’s a testament to the resilience and flexibility of companies 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 companies have been able to overcome challenges, from high costs to regulatory uncertainty and disease, to capitalise on it."
Other Findings
The report anticipates that input costs and inflation are likely to fall, but will remain at a higher level than pre-pandemic times.
Shoppers are growing used to higher prices, and it has been observed that they are willing to pay a quality premium in some markets, it noted.
Rabobank also foresees some permanent market changes, such as tightening of the labour market and increased production costs due to changes in demographics and a slowdown in consumption due to reduced population.
Companies will be under pressure to invest in upgrading production systems to meet emerging market needs, meet regulatory requirements and cater to changing consumer preferences around sustainability.
Adverse weather conditions and disease also present challenges, Rabobank added.
Sherrard explained, "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.
“Companies should double-down on improving their productivity, review their existing portfolios, strengthen supply chain partnerships, increase investment in new product development and adjust their pricing strategies to navigate the challenges of the coming year."
Production Outlook
Analysts at Rabobank predict a marginal year-on-year production growth of 0.5% to 247 million tonnes of animal protein next year in the major markets of North America, Brazil, Europe, Oceania, China and Southeast Asia.
Poultry and aquaculture are the two categories that are expected to see growth in production in 2024.
Beef production will continue the decline seen in 2023, moving with changes in cattle cycles in North America, while pork production will also contract modestly, the report added.
Elsewhere, wild catch seafood will return to its longer-term pattern of declining production after a year of expansion in 2023.
Salmon supply is expected to expand by 4% to 5% after two years of production contracting and flatlining.
Its relative price competitiveness against other proteins will boost demand, Rabobank added.
Growth By Regions
On a regional level, Brazil and Southeast Asia will see the fastest production growth for poultry and meat, according to the report.
In Brazil, production will grow across all species, led by pork and poultry, though it will slow against 2023 levels.
Meanwhile, China and the Oceania countries of Australia and New Zealand will see marginal growth, with poultry best placed in China and pork and beef under pressure, Rabobank noted. Europe and North America will see an overall production contraction.
"Not all structural changes in the market are detrimental – many present new opportunities for businesses to improve their processes and products," Sherrard added.
"Those companies that can demonstrate agility in adapting to the new environment and navigate consumer willingness to pay for certain preferences will be able to take advantage of the tighter market and come out on top."
