Last week was a busy travel week as I attended and presented at three very different conferences. First was the Global Protein Summit in Chicago; followed by the Rural Economic Outlook Conference at Oklahoma State University in Stillwater; and ending the week with a series of seminars at the Expo Ganadero in Chihuahua, Mexico. Though these conferences covered a wide range of topics, several themes were consistent across at least two or sometimes all three conferences.
All conferences included the widely discussed trend of global population growth and the challenges of feeding the world. Global population is projected to increase from the current 7.7 billion people to over 9.5 billion by 2050 and to exceed 11 billion before the end of the century. One presentation noted that while current attention is on growing Asian populations, Asia will peak in the next two decades and population growth in Africa, which is just beginning to grow rapidly, will dominate global population growth in the last half of the century.
As important as population growth, perhaps more so for meat industries, is economic growth and the growing middle class. Globally, the middle class is projected to expand from two billion to 4.9 billion people by 2030. China alone is projected to add 850 million new middle class consumers by 2030. It is well documented that meat consumption increases as growing incomes support better quality diets and increased protein consumption.
Two different presentations by speakers from the Federal Reserve noted that the U.S. is currently experiencing a very long period of relatively weak economic growth. These and other presentations noted that the shrinking U.S. labor force is contributing to the slow pace of economic growth. As the U.S. population ages, fewer new labor force entrants are available to replace those leaving the work force. It was also noted that productivity growth will not likely be sufficient to offset the declining labor force.
Other labor presentations noted the important role of immigrants historically in food and agricultural industries and the growing need for low to medium skilled workers to support all aspects of agricultural and food production, including vegetable and fruit harvest; dairy, ranch and feedlot workers; labor for food processing and manufacturing; and restaurant servers and chefs. Recent research conducted by Oklahoma State University confirmed the pervasive labor issues and challenges in all sectors of the beef industry from packers to further processing and food distribution to retail and food service*.
The growing reality of the massive impact of African Swine Fever (ASF) was another common topic in these conferences. The rapidly changing dynamics of this disease suggest that the impacts are global in nature and not only for the coming weeks and months but likely will fundamentally impact global protein markets for years or decades. It appears at this time, that swine and pork losses in China, Vietnam, North and South Korea, and the Philippines along with other outbreaks of ASF in Europe and Africa is creating a protein deficit that cannot be currently filled by all proteins in the world.
Finally, the conferences included discussions about alternative proteins, particularly plant-based proteins. Various perspectives noted that some in both the meat and plant-based protein markets view each other as competitors battling to replace the other. There was also recognition that the markets may be complementary, not only for retail and food service businesses to offer a more comprehensive set of protein product choices to consumers; but also the reality that it will likely take both meat and plant-based protein to feed the world through the remainder of the century.
2019 Cattle Handling Contest
On Thursday, October 17th, the Payne County Cattle Producers held their annual Cattle Handling Contest. There were six teams in attendance. Through this contest, the youth in Payne County are given the opportunity to showcase their skills. Each team was awarded a scholarship at the end the day. Payne County would like to thank all those who attended, sponsored and supported this event.
Special thank you to:
Payne County Jr. Cattle Producers Association
Payne County Cattle Producers Association
Payne County Fairboard
Payne County Bank
Bank of Cushing
Cimarron Valley Coop/Ampride
Stillwater Milling Company
Japan and trade
Foreign trade discussions in the cattle business have picked up steam in the past couple of years. On the crop side, the US exports almost half of all its US production of soybeans and wheat along with about 20% of the US corn production. By comparison, The US Meat Export Federation (USMEF) cites 14.6% of total beef production was exported in 2018. The same USMEF report tells us that $323/hd. of fed slaughter value is attributed to trade. Trade at its core helps strengthen demand and facilitate specialization. Additionally, it provides an additional outlet for our increased commercial beef production. Moving forward, favorable trade agreements should help support prices. Japan plays an important role as a destination for US beef and appears to be a vital market moving forward.
The history of US beef in Japan is certainly intriguing. As a country that relied heavily on rice and fish, meat consumption did not take off until the late 70’s. Since that point, the relationship has flourished and yet had to overcome some obstacles along the way. In the early 90’s Japan shifted away from its import quota strategy which limited the amount of beef that could be imported and began to utilize a tariff system where the product that was imported would be taxed. This opened the market for more US beef and as the graph below shows, coincided with significant growth in the market. The obvious hitch in the relationship is illustrated in the massive reduction of beef exports in 2004 as a result of bovine spongiform encephalopathy (BSE) being identified in the US. Japan soon banned US imported beef. Since then, the access to the market has been recovering as cattle age restrictions have been relieved in stages. There was concern over the US pulling out of the Trans-Pacific Partnership (TPP) a couple years ago, but recently the positive news revolves around the US and Japan reaching an agreement to lower tariffs on US ag products including beef.
One of the important components to understanding the headlines and interpreting their impact on the markets is knowing who we have significant trade relationships with. The following table shows several of our most important trade partners for beef. Note the importance of Japan along with others in this beef trade relationship. Certainly, there are important emerging prospects (China for instance) where there is a tremendous opportunity to add to our export markets. Trade is and has been vital to expanding the demand for US beef and will continue to be a necessity for supporting US beef producers and the prices they receive.
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