FAO/GIEWS - Food Outlook No.4, September1998

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Global meat production 1/ is put at 219 million tonnes in 1998, up two percent on 1997, bolstered by a favourable feed situation world-wide which has compensated for falling producer prices. Moderate production growth is anticipated in all sectors, except for bovine meat, which is forecast to stagnate. In sharp contrast with the previous years, preliminary estimates of international trade in meat point to zero or negative growth in 1998, influenced by the financial crises in Asia and the CIS. The combination of depressed import demand and abundant export supplies is anticipated to depress international meat prices.

1/ In 1998, following the disclosure of the results of a recent national agricultural census, China’s official estimates of meat production in 1996 and 1997 have been revised downward. FAO statistics have been adjusted accordingly.


1996 1997 1998

( . . . . million tonnes . . . . )
WORLD TOTAL 208.5 214.2 219.3
Poultry meat 57.7 60.0 61.6
Pig meat 79.5 82.1 85.2
Bovine meat 56.3 7.0 57.4
Sheep meat and

goat meat 10.8 11.1 11.5
Other meat 4.1 3.9 3.8
DEVELOPING COUNTRIES 107.3 113.4 117.0
Poultry meat 28.8 30.3 31.4
Pig meat 43.5 46.9 48.5
Bovine meat 25.3 26.2 26.9
Sheep meat and

goat meat 7.4 7.7 8.0
Other meat 2.4 2.3 2.3
DEVELOPED COUNTRIES 101.2 100.7 102.3
Poultry meat 28.9 29.7 30.2
Pig meat 36.1 35.2 36.6
Bovine meat 31.0 30.8 30.5
Sheep meat and

goat meat 3.5 3.4 3.5
Other meat 1.7 1.6 1.5

Note: Total computed from unrounded data.


Bovine meat

Global bovine meat production in 1998 is currently forecast at 57.3 million tonnes, only half a percent above last year, as a further contraction in the developed countries should be offset by moderate gains in the developing countries. Despite an on-going reduction in cattle inventories in the United States, output is anticipated to be boosted by heavier slaughter weights, brought about by low grain prices. Likewise, larger output is expected in New Zealand, in the wake of El-Niño induced-droughts, which have boosted slaughtering. By contrast, output might fall in Australia despite increasing slaughtered numbers, reflecting lighter carcass weights. Production in the EC is anticipated to decline for the third consecutive year under the effect of the various schemes to reduce surpluses launched in the aftermath of the BSE crisis in 1996. A further drop in output is likely to be recorded by the CIS and most central and eastern European countries, reflecting a continued contraction in breeding herds. Production growth in China is expected to remain high, despite adverse weather conditions. Substantial increases are also expected in India and Pakistan. In Africa, production is set to rise in Egypt, the Republic of South Africa and Nigeria while some cattle losses have been reported in eastern Africa following flooding. In Latin America and the Caribbean, increases are expected in Brazil and Paraguay, mainly as a result of improved management practices. By contrast, a contraction is likely to occur in Argentina and Uruguay, which are currently expanding their herds.

Preliminary estimates point to an almost unchanged international trade volume of 5.1 million tonnes. Imports by the United States are anticipated to be higher as, unlike in 1997, its preferential access quota should be filled. In Asia, beef imports by Japan are anticipated to recover fully from the 1996 and 1997 lows, as consumer health scares over BSE and E-coli have shown signs of receding. Imports by the Republic of Korea are expected to

remain unchanged at the level of its tariff import quota. By contrast, Brazil and Canada might reduce imports as a result of increased domestic production and strong competition from other meats. Similarly, shipments to the EC, which enter under preferential trading arrangements, are forecast to fall, mainly because of the inability of supplying countries to meet their specific quotas. The substantial reduction in EC export refunds will probably depress sales to Egypt and the CIS.

Australia, the top world beef exporter, is expected to raise its shipments somewhat, assisted by a continuing weakening of its currency, while increased output should boost those from Brazil, Canada, India and New Zealand. Little change in exports by Uruguay and the United States is currently anticipated while those by Argentina are expected to be constrained by high domestic prices. Shipments by the EC are also expected to fall in line with the URA commitments. However, the decline could be more pronounced if the Russian Federation, a major market for the EC beef sector, effectively introduces a compensatory levy on supplies subsidized by exporters, as announced in August 1998.


1996 1997 1998

( . . . thousand tonnes . . . )
WORLD 13 672 14 555 14 598
Poultry meat 5 384 5 941 6 020
Pig meat 2 662 2 575 2 488
Bovine meat 4 716 5 096 5 133
Sheep meat and

goat meat 673 707 721
Other meat 236 266 236

Note: Total computed from unrounded data.
1/ Includes meat (fresh, chilled, frozen prepared and canned) in carcass weight euivalent,; excludes live animals, offals and EC intra-trade.

World prices for bovine meat have trended downward in 1998, reflecting a slackening of import demand in major growth markets and abundant supplies of other meats. During the first seven months of the year, FOB prices of Australian manufacturing beef fell by 6 percent compared with the same period in 1997, while Japan CIF prices of fresh, boneless beef were 8 percent lower during the first quarter of 1998. Although the market could become tighter later in the year, world beef prices are expected to stabilize around the current low levels.

Sheep and Goat Meat

World production of sheep and goat meat in 1998 is currently estimated at 11.5 million tonnes, three percent above last year. In Asia, an expansion is foreseen in China, the world top producer, the Islamic Republic of Iran and Pakistan, generally supported by good pasture conditions. An increase is also anticipated in Australia, following several years of flock rebuilding, and in New Zealand, as well as in Nigeria, the Republic of South Africa and Sudan. A recovery in the United Kingdom should sustain a rise in the EC. By contrast, a contraction is expected in the United States, Argentina and Uruguay. Production is also forecast to fall in the CIS and Bulgaria, reflecting the continued scaling down of breeding herds.

Trade in sheep and goat meat is forecast to reach some 720 thousand tonnes in 1998, up two percent from last year. The increase should be sustained by larger imports by the Republic of South Africa, the United States, Mexico and Saudi Arabia, while purchases by the Islamic Republic of Iran could fall. Imports by the EC should change little. Most of the increase in global exports should be accounted for by Australia, with New Zealand’s sales stagnating.


1996 1997 1998

( . . . . . US$/tonne . . . . . )
Chicken parts 1/ 978 843 766 5/
Fresh, frozen pork 1/ 2 733 2 724 2 238 5/
Manufacture cow beef 2/ 1 741 1 880 1 799 6/
Frozen mutton 3/ 1 113 1 072 1 012 5/
Lamb frozen whole carcass 4/ 3 295 3 393 2 853 6/

1/ U.S. export unit value.
2/ Australia, cif prices the the United States.
3/ Australia, cif prices to the United Arab Emirates.
4/ New Zealand, wholesale prices London.
5/ January- May 1997.
6/ January- July 1997.

International prices for sheep and lamb meat have fallen during the first part of the year, with FOB prices for New Zealand frozen lamb carcasses exported to the EC down by 15 percent and Australia FOB mutton prices down by 5 percent, respectively in January-July 1998 and January-May 1998 compared with the same periods in 1997. The downward tendency for prices is expected to continue during the rest of 1998, also reflecting keener competition from pig and poultry meats.

Pig meat

Global pig meat production in 1998 is currently put at 85 million tonnes, four percent more than last year, with a large expansion anticipated in all major producing countries. Following favourable returns in 1997 and large investment in pig operations, pig meat production is expected to rise in the United States and in Canada. In the EC, a recovery from the swine fever outbreaks last year as well as the effect of high producer prices in 1996 and 1997 should boost output. A substantial increase is also expected in Poland, underpinned by low feed prices. Output is set to grow in Japan as reduced imports in 1997 encouraged a slight expansion in the breeding herd. Increases are also forecast in Argentina, Brazil, Chile, Mexico and Paraguay, sustained by abundant feed supplies. Among the Asian countries, higher output is expected in China where favourable pig to maize price ratios in 1997 encouraged the retention of breeding animals. By contrast, a contraction is forecast in Indonesia and Thailand, due to rising costs and falling domestic demand. Output should also be down in the Chinese Province of Taiwan with an on-going restructuring of the sector after the occurrence of several cases of foot-and-mouth disease (FMD) in 1997 and the associated loss of the Japanese market. The long-term downward adjustment of the pig sector in the CIS is set to continue.

The decline in pig meat trade in 1997, mainly as a result of the withdrawal of the Chinese Province of Taiwan from export markets and a fall in Japan’s imports, is expected to continue, pointing to a further three percent cut in the volume of trade in 1998, despite dynamic trading in the first half of the year. However, much will depend on the impact of the financial situation on import demand by the Russian Federation, the second most important destination for pig meat. The currency devaluation and the introduction of an additional import tax in mid August could curtail shipments heavily to that country during the last quarter. A buoyant production performance and low domestic prices could also reduce purchases by the United States, the Republic of Korea and Poland. In the latter country, the fall could mirror the recently reported introduction of thresholds on the level of imports, beyond which additional levies would be applied. By contrast, imports by Japan are forecast to recover, driven by growing demand for consumption and stock rebuilding.

Despite a bright export performance at the beginning of the year and a sharp increase in export refunds in May 1998, export growth in the EC is expected to be dampered by poor sales to the CIS during the last quarter. However, a major area of uncertainty lies in the possibility of the EC utilizing export subsidies not used under its Uruguay Round commitments for 1996 and 1997 in 1998. Exports by China, which also relies heavily on the Russian Federation market, are forecast to contract, both as a result of keen competition from other suppliers and the recent flooding problems, which may have disrupted trade flows. Brazil's shipments are likely to suffer from weak import demand, especially in south-east Asia, where it had made large inroads in recent years. Exports by the United States could finish up in 1998 at around last year’s level, despite a 40 percent rise in the first five months of the year because of the deteriorating prospects for sales to markets in Asia and in the Russian Federation. By contrast, shipments from the Republic of Korea should increase as the country fills part of the gap left by the Chinese Province of Taiwan in the Japanese market.

International prices for pig meat products have fallen since the last quarter in 1997. During the first five months of 1998, the USA unit export value for frozen pork dropped by close to 25 percent, compared with the same period in 1997 and import prices in US dollars in Japan recorded the same decline. International prices for pig meat are likely to weaken further during the rest of the year, possibly reaching their lowest level in the 1990s, under a combination of ample export supplies and shrinking import demand.

Poultry Meat

Global poultry meat production in 1998 is forecast at 61.6 million tonnes, three percent more than last year. Output growth in China, which reached double digit levels in the 1990s, is estimated at less than 8 percent in 1998, reflecting falling returns to producers 1/. Growth in Brazil and the United States is also expected to be dampened by sluggish domestic and export demand. Steady growth is forecast in the EC. In the CIS, diminishing government support combined with keen competition from imports contributed to the closing down of some producing firms. Likewise a strong decline is expected in Bulgaria, as the state farm sector there is undergoing a major restructuring, and

in Romania. A marked contraction is also likely in Indonesia, where producers are being squeezed between rising feedstuff prices and falling domestic demand. Poultry meat production is also anticipated to fall in the Chinese Province of Taiwan, following a decline in domestic demand, which had been boosted in 1997 by the FMD outbreak in pig herds. In the SAR Hong Kong, the tightening of the sanitary requirements on farms following the occurrence of avian influenza in 1997 may depress output this year. A small contraction is also anticipated in Japan.

In sharp contrast with the very strong expansion recorded in recent years, world trade in poultry meat is forecast to rise by only 1 percent to 6 million tonnes in 1998. Much of the thrust in the 1990s came from dynamic growth in imports by China and the Russian Federation. This year, China is anticipated to lower its purchases in light of larger domestic supplies, slackening domestic demand and increased competition in the Japanese market, where a sizeable part of the imported poultry is re-exported after processing. Large purchases of poultry by the Russian Federation during the first months of the year are forecast to come to an halt during the last quarter following the currency devaluation last August and the tightening of import tariff collection. As for the other markets, shipments

to Argentina, the Islamic Republic of Iran, Mexico, Poland, the Republic of South Africa and Saudi Arabia are all expected to be smaller, generally reflecting increases in domestic production. By contrast, imports are forecast to recover in Japan and to increase in the Chinese Province of Taiwan, which recently opened up its chicken market to US supplies. The removal of the import ban on poultry meat by Nigeria could also help purchases to resume after many years, despite the imposition of a 150 percent tariff.

Poor import demand is anticipated to dampen growth in exports by the United States to less than 2 percent, the lowest rate in the 1990s. By contrast Chinese exports are expected to shrink, because of growing competition with Thailand after the devaluation of its currency. For the same reason, Brazil is anticipated to lose part of its traditional markets in Southeast Asia, while competition with EC's exports may weaken its position in the Near East. Although the EC is forecast to use fully its 375,200 tonnes URA subsidized export allowance, depressed world prices could hinder sales without subsidies, resulting in a small contraction in total shipments. Exports by Hungary could also fall.

International prices for poultry meat, represented by the US export unit value for chicken cuts, have averaged 15 percent lower over the January-May 1998 compared with the same period last year. CIF Import prices by Japan have also indicated a clear tendency to weaken. An even steeper fall could occur during the rest of the year, depending on the effects of the financial crisis in the Russian Federation on global import demand.

1/ The chicken meat/maize price ratio declined from 9.6 in 1997 to 8.5 in January-May 1996.

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