Rabobank’s annual “Global Animal Protein Outlook” is forecasting slowing animal protein production growth in 2024, following four straight years of growth. According to the report, higher production costs and tighter supplies will also push animal protein prices up and constrain global consumption in 2024.
“Slower production growth, given tight margins on elevated input costs, disease and weather challenges, and uncertain consumer sentiment amidst an uncertain macro-economic outlook, set the scene heading into 2024,” notes Justin Sherrard, global strategist animal protein at Rabobank.
Rabobank’s forecasts assumes that input costs and inflation will fall only slightly in 2024 and remain above pre-pandemic levels. Sherrard notes, “Despite a cost of living crisis putting pressure on consumer finances, there continues to be demand for animal protein.”
Sherrard says there are signs consumers are growing more accustomed to higher prices and, in some markets, are willing to pay a premium for quality. “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.”
Poultry and aquaculture are the only animal proteins forecast to see global production growth in 2024, according to the report. Global beef production is forecast to decline, continuing the trend in 2023, while pork will also contract modestly, Rabobank said.
Regionally, Rabobank’s analysts forecast marginal year-over-year production growth in the major markets by just +0.5% to 247 million metric tons next year. The bank notes that although production growth is slowing, it will still be relatively robust in Brazil, will marginally increase in China and Oceania, and will actually accelerate in Southeast Asia, while contracting in other markets.
Not surprisingly, the agribusiness bank expects US beef production will continue to contract with the cattle cycle. Meanwhile, poultry is expected to benefit from consumer preference, while pork still needs to rebalance.
“For companies to sustain the success of the past few years, it’s essential that they adapt to the structural changes in the market,” Sherrard said. “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.” He also recommends companies “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.” The full report is HERE.
