What more demand for meat means for the future

October 21, 2012

Here is an excerpt from We Will Reap What We Sow, the book I published in May 2012. The recent difficult climatic conditions for agriculture and their impact of agricultural markets have made the issue quite relevant. Here it is then:

As the economy in emerging countries is improving, their population becomes wealthier. Just as it happened in Western countries during the 20th century, the increase in wealth translates into dietary changes. The consumption of animal protein, especially the consumption of meat, increases.

To realize what the consequences of a higher consumption of meat might be, it is interesting to make calculations for China. When 1.5 billion people eat on average one more kg of chicken meat per person, world production needs to increase by about 750 million chickens. That represents about 2% of the world’s production. Similarly, when each Chinese consumes on average one more kg of pork, the world must produce 15 million more pigs. That number represents 1.5% of the world pig production. For beef, an increase of consumption of one kg per capita per year means the need for a production of 2.4% higher than today.

Meat consumption in China has already passed the milestone of 50 kg per capita per year, and projections indicate that it should reach 80 kg per capita per year in 2030. Clearly, consumption will increase by much more than just one kg.

An increase of 10 kg of chicken meat per capita per year in China means that the world’s chicken production would have to increase by 20% to meet the new demand! This represents almost the entire US chicken production volume, and more than Brazilian production. In the case of pork, an increase of consumption of 10 kg per capita means that the world’s pig production would have to increase by 15%. That is five times the current pig production of Iowa, USA. That is 60% of the EU production. For beef, the world’s production would have to increase by 24% to meet an increase of 10 kg per capita per year! This number also represents about 125% of the current total US beef production.

Different animal productions have different feed conversion ratios (FCR). The FCR is the quantity of feed needed to produce 1 kg of meat. For chicken meat, the FCR is of 1.8. For pig meat, the FCR is about 3. For beef, depending on the proportion of grass in the cattle’s diet, the amount of grain used to produce 1 kg of beef varies. With an average FCR of 3 for the various types of meat productions, an increase of meat consumption of 30 kg in China would result in the need to produce three times 30 kg times 1.5 billion. Depending on the consumption of which type of meat will grow the fastest, the need for feed, excluding grass, would vary between 100 and 150 million tons.

The world’s second largest population, the Indian population, is still largely vegetarian. Although India is among the countries with the lowest meat consumption, with less than 4 kg per capita per year, Indians are gradually changing their eating habits. Meat consumption is increasing in India, too, but not in proportions as dramatic as in China. Nonetheless, with a growing population, any incremental meat consumption will have physical consequences. Some simple math can show the magnitude of the higher demand for meat.

Between 2010 and 2050, the world’s population will increase by 2.2 billion, from 6.8 billion to nine billion. If everything stays equal, the consumption would increase by about a third (2.2/6.8). According to the FAO, the average consumption of meat per capita in the world in 2010 was of about 47 kg. The population growth alone would represent a meat consumption increase of 2.2 billion times 47, or 103 million tons. This number represents about a third of the 2010 meat consumption.

In the example of China mentioned earlier, the predicted increase of 30 kg per person represented an increase in meat consumption of 45 million tons.

Even if the world average meat consumption per capita remained stable between 2010 and 2050, the need for additional meat production would be of 2.3 (103/45) times the numbers in the China example. This represents an additional need for animal feed, excluding grass, of between 230 and 345 million tons compared with 2010.

The situation becomes even more interesting when the average consumption per capita increases. For every 10 kg increase of individual consumption, the need for additional meat production increases by nine billion times 10 kg, or 90 million tons of meat. For each 10 kg increase of average meat consumption, an additional volume of 600 to 900 million tons of animal feed is necessary. The following table presents the effect of the population increase to nine billion people and its meat consumption on production volumes.

Average individual meat consumption increase from 2010 (kg/capita/year)

0

10

20

30

40

50

Average individual meat consumption(kg/capita/year)

47

57

67

77

87

97

Total meat consumption(million tons)

423

513

603

693

783

873

Total meat consumption increase from 2010 (million tons)

103

193

283

373

463

553

Percentage of increase from 2010

32%

61%

89%

117%

145%

173%

An average meat consumption of 97 kg per capita per year would be about the current average of developed countries. If the average meat consumption per capita per year in the world were to meet such a number, meat production would have to almost triple from 2010 volumes.

Most of the gloomy scenarios about the challenge of feeding the world are based on the assumption that the diet model would have to be the Western diet, and in particular the American diet. This is far from certain. Actually, it probably will not be the case. As the world’s population increases, one of the sensitive issues, especially in the overfed world, will be what to eat and how much of it. Higher food prices will also force people to indulge less. It is important to understand the difference between nutritional needs and consumer desires. Today, the world produces enough calories and protein to meet the actual nutritional needs of nine billion people. If the nine billion people expected for 2050 all want to have a Western diet, the amount of calories needed would be equivalent to the nutritional calorie needs of 17.5 billion people.

It would be normal to expect feed conversion efficiency to improve in the future. Nonetheless, the production for animal feed would then increase with 3,000 to 4,500 million tons above the volumes necessary in 2010. Since a third of grain production goes to animal feed, a tripling of meat production means that grain production would have to double, just because of the desire for more meat.

Clearly, the challenge of feeding the world will depend increasingly on meeting the demand for meat. The challenge for producers of agricultural commodities will be to keep up with the demand for animal feed. As demand for meat increases, there is no doubt that more and more questions will arise about how much meat the world can afford to eat. The world food situation will depend on how much meat people want to eat, not on calorie count.

How much meat should we eat?…

The rest of the text for this topic and much more is in the book.

Copyright 2012 – The Happy Future Group Consulting Ltd.


Lady Gaga, PETA and lack of knowledge about meat

September 25, 2010

At the last Video Music Award, Lady Gaga showed up with a garment (including hat) made out of meat. I read about the event in an article from Time. In this same article, Ingrid Newkirk, the founder of PETA (People for the Ethical Treatment of Animals) made some statements that I found just as outrageous as the singer’s outfit.

According to Ingrid Newkirk, “Meat is the decomposing flesh of an abused animal who didn’t want to die, and after being under the TV lights it would smell like the rotting flesh that it is and likely be crawling with maggots”.

Ingrid, here is some more info for you.

  • Meat is not decomposing flesh. If it were decomposing, it would not be edible. Meat is flesh. Period.
  • To get maggots, a fly is necessary, and it has to lay eggs and the eggs must hatch. That would not happen during the duration of the show.
  • What the heat from the lights would do though is to stimulate the growth of bacteria. Bacteria are what cause decomposition.

I have spent quite some time with farm animals in my life and I really could not make any statement about  them having any sense of wanting or not wanting anything. They mostly follow their instinct and do not walk around with a plan. They may not “want to die”, and we may not want it either, but this is life. In the end, we all die. In Nature, it is about eating or being eaten, and herbivores are at the bottom of the food chain. Eating meat is not unnatural. The purpose of farm animals is to feed humans. They are not pets. Adding the word “abused” in her statement is only rhetoric. Like in every profession, there are slobs, but they represent a tiny majority. The overwhelming majority of farmers treat their animals with respect. Similarly, in slaughterhouses, animals are handled with care, because stress causes poor meat quality, which in turn causes economic losses for the processing companies. It is a well-established fact in the industry that proper handling of animals is the economically right thing to do as well.

Quite a bit of misstated facts from the activist who knows it all. But I will leave PETA and its extremist activism here, and get back a bit on Gaga’s “clothes”.

The singer is an adept of excessive and outrageous behavior. We all know this by now. Yet, using meat as garment is beyond bad taste. To produce meat, an animal must be killed. This is not a mundane act. This used to be referred to as sacrifice, which indicates its true value. Our urbanized consumption society (two concepts that defined the New Yorker artist) has made many of us forget about this, though. That meat spoiled because of the stage lights, and was surely discarded and thrown away. In a world where one billion people do not have enough to eat, and where already 40% of all food is wasted, the meat dress is an obscenity. I do not mind provocation, but I do mind vulgarity. Meat is for eating, not for wearing. The justification that Gaga gave for using meat was that she was making a case for gay rights is lame at best.

For me, the final score is a tie. Gaga: zero - PETA: zero.

Copyright 2010 – The Happy Future Group Consulting Ltd.


Future Harvests – The book is coming soon!

April 9, 2010

 

The editing of my book “Future Harvests – The next agricultural revolution” is about completed. All that is left to do is developing the cover and start the publishing.

I have already received orders, even before the book is out. That is quite a good sign. And a great surprise for me.

If you wish to be updated automatically when the book is published, just subscribe in the sidebar window on the right.

To describe the topics addressed, I have posted three short promotional videos on YouTube. In previous articles (The fun of writing this book and The next agricultural revolution), I had already given an idea about the content of the book.

Video #1: The Fundamentals (duration 2:37) – Introduction to the background and fundamental principles mentioned in the book “Future Harvests – The next agricultural revolution” to achieve food security for 9 billion people in 2050. Topics such as demographics, the shift in economic power, the control of food  and food security strategies are reviewed. Sustainability, innovation, efficient market driven food production and strong leadership are required.

or click here if video does not appear

Video #2: The Actions (duration 2:12) – A short review of some of the actions mentioned in the book to achieve the objectives. Solving the water challenge, finding new land for production, urban farming, hydroponics, farming the desert, rebuilding fisheries and developing aquaculture further are all possibilities.

or click here if video does not appear

Video #3: The Questions (duration 3:08) – A sample of some of the questions raised in the book. They cover technology, land deals in Africa, improving yields, restoring soil fertility, change in consumer needs, organic farming, risks of conflicts, biofuels or meat are some of the topics presented.

or click here if video does not appear

If you know someone who could be interested by the topics on this page, please pass it on!


World meat consumption up by 21.3% between 2005 and 2015

December 5, 2009

According to research from GIRA, meat consumption will increase by 21.3% during the period 2005-2015. Two third of the increase will take place in China only!

Poultry and pork show the strongest increase.
Poultry will increase with 24 million tonnes to 105 million tonnes (+29.6%).
Pork will increase with 21 million tonnes to 125 million tonnes (+20.2%).
Beef will increase with 8 million tonnes to 70 million tonnes (+12.9).


Uruguay, the quiet leader in beef?

November 12, 2009

Here is an interesting article about how Uruguay works towards a healthier future.

Not only does the country invests a lot in renewable energy but it works in improving its beef, too.

Uruguay’s  100%-traceable, hormone-free, grass-fed beef farming is offering many answers to the concerns of today’s consumers, and the system rewards the farmers doing the right thing, too! Read the article at http://www.benzinga.com/36898/hamburgers-in-montevideo

Not the largest producer, but certainly among the smartest.


Health and environment as growing drivers of food production

September 10, 2009

Health concerns will gain more importance in the future in the decision process of consumers when they buy their food.
More and more, we can hear and read about concerns and even rejection of the current production systems. Although this bad publicity is not always based on the most objective facts, it has been able to find a growing audience.

It must be true, it was in the newspaper

It must be true, it was in the newspaper

Since most consumers have little or no knowledge of agriculture and food, their only source of information is in the popular media. On the other side of the discussion, the agri-food industry is not getting through, because its message tends to be too defensive and too technical. Unfortunately for the industry, errors from the past (for example, the use of DDT) or cases from other industries (for example, tobacco) contribute to cast a shadow on its credibility. As I wrote my previous article “Less controversy thanks to transparency”, the agribusiness will achieve much more by opening up and having consumers visit their premises so that they can tell what they saw. They must organize more Open House days.

Therefore, for now, consumers have a certain perception of how food is produced, and it is not so relevant to argue whether this perception is correct or not. Perception simply is reality, and consumers act according to what they believe is true.
A little bit of this...There is a growing concern about environmental and health aspects of food production. About the environment, you can list very diverse things such as the depletion of wild fish stocks in the oceans, the interaction between aquaculture and wild fish stocks, manure and smell of intensive animal husbandry and impact of manure on soils and drinking water, deforestation of rainforest for ranching of beef or about growing GMOs (Genetically Modified Organisms). On the health side, consumers worry about food poisoning due to bacteria, such as E. Coli, listeria, campylobacter and salmonella, but also about residues of pesticides or antibiotics, as well as they worry about the use of hormones in animal productions. As the discussions get more animated in the US about the reform of health care and the cost of obesity, more and more people are wondering about whether the fast food diet is a proper one. Next to this, animal welfare is a growing concern by more and more consumers.
The answer to many of these worries has started to appear in the last few years with the growth of the organic market segment. When we see the growth and the performance of a retailer such as Whole Foods, there is no doubt that organic foods have a growing audience.

The concerns about the environment are forcing retailers, food service and businesses involved in the production chain of food to make changes. Some of the actions they have taken can be seen as marketing or PR, but they also have become mainstream. Just a look at how many restaurant and supermarket chains have already implemented sustainable seafood programs indicates how serious this change in consumer attitude is. Fast food chains are also actively working on reducing their environmental impact and set standards on where they source their meat, based on environmental concerns, such as no beef from ranches deforesting the Brazilian rainforest.
In the past, we have seen some examples of production methods that had to be abandoned, simply because no solution to cope with environmental problems could be found. This has been the case in The Netherlands where the level of intensification caused such manure surpluses and risks of animal disease to such a point that after many years of looking for viable technical solutions in vain, the government decided that the size of the national herds had to be reduced.
Similarly to what happened in Europe over the last decade, we can expect that much stricter rules in the use of antibiotics will be applied, and I expect a similar trend to a progressive elimination of the use of hormones in animal husbandry. About animal welfare, there should not be any surprise the day that only husbandry systems that allow enough “recreation” area for animals will be allowed. All of the above is going to have an impact on how and where food is produced. Systems will become less intensive, and progressively we will see more techniques to improve efficiency to compensate.

Past Food?

Past Food?

As I also had mentioned in another article (Future price of fish and meat: up), it is simple logic that with more people to feed, food is going to become more expensive. However, the relative prices of various food products also need to go along their relative health benefits. Today, it looks like only wealthy people can afford a healthy diet, as the price of “good” food is substantially higher than the price of what makes a nutritionally unbalanced meal. This clearly does not work in the direction of a healthier population at large.

The way consumers think will define the way we eat and produce our food. Many changes in consumption patterns, in production systems and in product offering are under way. I will get back later with more details on what my views are on this.

Copyright 2009 The Happy Future Group Consulting Ltd.


Corn seen staying below $4 through 2014

August 30, 2009

Update on April 11 2011: Obviously forecasting is a difficult task!

For May 2011, Corn  is at $7.60/bu and Soybean at $ 13.84/bu

(Original article was of August 2009)

Here is a report about a research of the University of Missouri on some agricultural prices through 2014.

Prices are not seen increasing much, which tends to confirm an earlier report of the FAO.

Corn: $ 3.47/bushel in 2009/2010 to $3.98 in 2014/2015
Soybean: $9.44/bushel in 2009/2010 to $9.74 in 2014/2015
Nebraska direct steers (1,100-1,300 lbs.): $85.07 in 2009 to $100.05 in 2014
Twelve city wholesale broiler price: $.80/lb. in 2009 to $0.91 in 2014


The future price of meat and fish: up

July 17, 2009

With a world population increasing strongly and an agricultural area that will not grow accordingly, the law of offer and demand clearly indicates that agricultural prices will increase in the future. This is true for agricultural commodities such as grains, but the increase will be even stronger for animal products, such as meat, poultry, dairy and fish.
This will be the result of an increasing and very likely quite aggressive competition between the need to feed people with the basic commodities, the need to feed farmed animals and possibly for some time the need to produce biofuels.
Since it takes more than one and even several kilograms of animal feed to produce one kilogram of meat, the feed conversion ratio (FCR) will affect by which factor the price of the various animal products will increase.
Efficient productions like chicken will be successful and will remain quite competitive pricewise against other sources of animal proteins, thanks to its low FCR, to its low water use and to the good agricultural value of its manure. In the aquaculture sector, efficient productions such us tilapia and pangasius have a bright future ahead, as they can help feed a large population for an affordable price. In general, aquaculture has the opportunity to fill the huge gap left by depleted wild fish stocks, although it will have to solve some issues in order to be successful (see my article titled “The lessons of intensive animal husbandry to aquaculture“). In terms of price, the scarcity of wild fish will make these quite expensive for the future.
Less efficient species such as pigs and beef cattle will see the price of their products increase relatively much more. Pigs also have the disadvantage of producing low quality manure, which will limit the level of intensification. However, pork plays an important role in some cultures, and therefore, it will still show a reasonable volume growth, with geographical variations.
A high FCR species such as beef cattle will probably undergo the most dramatic change. Higher feed costs, linked to a relatively high capital need will probably push a number of farmers to shift to other more efficient productions. Highly intensive systems such the feedlots will also undergo major changes, as regulations on the use of antibiotics and hormones will make them financially inefficient. Further, their high impact on the environment because of the manure will also work against them. I do not expect the 99-cent beef burger to be here for all that much longer, burgers will continue to exist, but just quite a bit more expensive. On the other hand, I can see good possibilities for specialty beef products, such as grass-fed beef, but customers will have to pay the right price for it. Grass is the animal feed that we all seem to underestimate, yet it covers vast areas of very often fragile soil, and cattle is one of the few species that can transform it into high value protein.
In the aquaculture sector, a carnivore species such as salmon will also meet its own limitations. Although, salmon feed has shifted from mostly fish oil and fishmeal to a much more complex mix of vegetal oils, this production will see its production costs rise strongly. I expect salmon to become a luxury product again.

Consumption per capita will decreaseWhat will a higher price mean?
There again, simple economics tell us that this will influence the level of consumption per capita. The price increase will moderate the level of consumption and the price differential between the type of protein, as well as health concerns, will cause a shift between the respective consumption of the different products. In Western countries, people consume quantities of animal products that are substantially higher than what they actually need, and this has led to many health issues. The decrease in consumption will help make people healthier, and reduce the burden of health costs in that part of the world.
In developing countries, the situation is different, as consumption trends show an increase of consumption of animal products, from rather low levels, though. In these countries, consumption per capita will increase, but will not reach the levels that Western countries have shown, simply because prices will be too high to get to such levels.
The decrease of consumption per capita that we will see in developed countries does not mean that the meat industry will get into trouble.  Less average consumption per capita in the West will be more than compensated by the growth in emerging countries, where population numbers are significantly higher, and this will lead to a higher global demand of animal products. The main change is that the consumers will be distributed geographically rather differently than they are today. This also means that production will be located in different areas than today.

Just as a teaser: if Western countries consumers were to reduce their meat consumption to just the necessary maintenance needs, it would free volumes enough to cover the maintenance needs of meat for the whole population of China!

Copyright 2009 The Happy Future Group Consulting Ltd.


World Nutrition Forum: The future starts now

July 8, 2009

Here is an article reporting about the World Nutrition Forum held recently in Austria.

It presents the future of animal productions quite along the same lines as I think.

Efficiency, innovation and location will become the key components for the future.

Efficiency will act as a “natural selection” between the species farmed, as an increasing need for protein combined with a limited volume of feedstuffs and water will decide what productions can grow the most and which ones might not be able to do so. Poultry is definitely a winner thanks to its low feed conversion ratio and to its relatively high water use efficiency, pork is uncertain, and cattle will have the toughest time, although cattle is the only production that can transform cellulose into animal products, so the production systems will likely change and offer a different kind of future for beef.

Location of production will follow the location of the consumer markets. With a population increasing strongly, as well as their standard of living is improving, Asia will become a very active production area. This probably will also be the result of a need to reduce transport costs, as well financially as environmentally speaking.

Innovation, as I have mentioned in previous articles, will be a key driver for the future of animal feed and of animal productions. I am quite glad to read that the industry is fully aware of this need, and also that they see their future in “creating value” more than just “cutting costs”.

Although the conclusions of this forum are quite encouraging and positive, the next step might be the challenging one: how to turn these great ideas into systems that will work and will ensure the long term future of the production side as well as of the consumption side? It will all be in the proper planning and execution that this will succeed.


Rabobank: Sourcing grains critical in animal feed-to-food chain

June 22, 2009

This is an article from World-Grain.com about a report from Rabobank on their outlook of a growth for meat of 50% between now and 2025 and its consequences on feed-to-food value chains.

Albert Vernooij, author of the Rabobank report ‘Changing Industry Landscapes’ says “The global feed-to-food value chain has switched from being supply driven with a long-term sustainable share for each link in the chain, to being demand driven. This is placing the retail and food service sectors in the leading positions, and farmers and abattoirs (slaughterhouses) have become the weaker links”.

Certainly the retail and food service, because they are the closest to the final consumer have the best position to connect to market demand, but I disagree with his statement that the value chains are demand driven. Most of meat products are commodities and retailers and food service companies buy at the lowest price a rather undifferentiated product. Most slaughterhouses and farmers are still purely production driven, or more accurately put, volume and cost driven, instead of being profit and niche driven. Only very few value chains are really market driven, although most are marketing driven, but that is not quite the same.


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