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Is global meat trade overdone?

29 May 2018 John Miller

One of the tenets of 21st century globalization has been that Africa, Asia and Latin America's new middle classes will want and pay for a high-protein diet similar to that enjoyed by Europeans and Americans.

The outlook for global meat trade has seemed spectacularly promising, prompting food, commodity, shipping and logistics firms to invest in cargo space and fleets of refrigerated containers.

Mostly, that's been a good bet. Global meat trade boomed to $113 billion in 2017 from $40.2 billion in 2000, according to the IHS Markit Global Trade Atlas. Meat has been globalized: It's not hard to imagine Memorial Day barbecue in Mississippi with lamb from New Zealand, beef from Argentina and chicken from Chile. In China, meat imports increased to $9.5 billion in 2017 from $637 million in 2000.

The Food and Agriculture Organization recently estimated that global meat production will be 16% higher in 2025 than in 2015, with 10% of output traded, compared to 9% in 2015.

But the risks to global meat trade appear more severe than a decade ago, because of stronger environmental movements grilling industrial food production, changing tastes and meat's unique vulnerability to trade restrictions when politics turn protectionist.

To boot, it's no longer clear that everybody wants burgers. "Convergence toward Western diets appears limited," the FAO said in a recent report.

Instead of Big Macs, the main growth in global trade appears to be in chicken, a cheaper, more accessible form of protein than red meat, the FAO said. "Growth in poultry production accounts for almost half of total meat production expansion over the decade." That's good news for Brazil, easily the world's top poultry exporter.

Biggest poultry exporters, 2017

  • Brazil $6.6 billion
  • US $3.6 billion
  • Netherlands $2.6 billion
  • Poland $2.2 billion
  • Hong Kong $1.1 billion

Brazil has succeeded by pushing hard into markets outside Europe and the US, a tricky logistical feat, but a good template for all global meat producers.

Brazil's top poultry markets, 2017

  • Saudi Arabia $1 billion
  • Japan $908.5 million
  • China $760.6 million
  • UAE $520.6 million
  • Hong Kong $394.2 million

No country has more skin in this game that the US, which has a mighty industrial food supply chain, and which has established itself as the world's biggest overall meat exporter, shipping mainly to Japan, Mexico and South Korea.

Meat exporters, 2017

  • US $16.4 billion
  • Brazil $14 billion
  • Netherlands $9.9 billion
  • Germany $9 billion
  • Australia $9 billion
  • Spain $6.6 billion
  • Poland $5.3 billion
  • Canada $5 billion
  • New Zealand $4.7 billion
  • India $4.3 billion

It's no wonder that President Trump and his administration have aggressively touted US meat production. They're worried about seeing US exports go up in smoke if countries retaliate against new US tariffs by imposing more restrictions on US meat imports, which are often seen as riddled with hormones and additives. In a trade war, it's not hard to sanction meat, because trade rules are written to give governments maximum leeway to protect their consumers from foods they deem harmful. Although the US meat sector contributes around a trillion dollars to the American economy, it doesn't export as much as it could.

Top US meats exported, 2017

  • Pork $4.6 billion
  • Chicken $3.6 billion
  • Fresh or chilled beef $3.4 billion
  • Frozen beef $2.8 billion
  • Offal of red meat $1.6 billion

The European Union, which under ideal circumstances, should be a key market for US beef producers, only imports small amounts, under quota.

President Trump has called the EU's trade barriers "unacceptable" and said that "we have to make a change." European leaders have reportedly discussed a proposal to allow in more US meat.

Top markets for US meat, 2017

  • Japan $3.5 billion
  • Mexico $3.1 billion
  • South Korea $1.7 billion
  • Hong Kong $1.7 billion
  • Canada $1.4 billion
  • Taiwan $589.7 million
  • China $522 million
  • Colombia $224.7 million
  • Chile $221.5 million
  • Australia $186.1 million

Over the first two months of 2018, the fastest-growing meat markets were Iran, which roughly doubled to $126.5 million; Egypt, up 91% to $221.1 million; and Romania, up 50.5% to $133.6 million.

Last year, overall, the world's top meat importers were Japan, China and the US.

Top meat importers, 2017

  • Japan $10.1 billion
  • China $9.5 billion
  • US $8 billion
  • Germany $7.6 billion
  • Hong Kong $6.6 billion
  • UK $5.5 billion
  • Italy $5.1 billion
  • France $5 billion
  • Netherlands $4.9 billion
  • South Korea $4.4 billion

Japan's biggest import of meat is pork, $4.4 billion worth in 2017, much of it coming from the US. China's biggest category is frozen beef, $3 billion worth in 2017. Its biggest suppliers are Brazil, Uruguay and Australia. The US is only the seventh biggest shipper of frozen beef to China, with $19.9 million worth in 2017.

Last year, US beef producers were allowed to resume shipping beef to China after a 13-year ban triggered by worries over disease. With China and the US still negotiating trade terms, it's unclear how US beef will fare.

China has also stepped up inspections of imports US pork imports, which could hurt Chinese food giant WH Group, which owns pork producer Smithfield Foods in the US.

Meat is an industry where smaller countries can do well by setting up global supply chains. New Zealand, with a population of only 4.7 million, is the world's second biggest exporter of frozen sheep and lamb meat.

Top exporters of frozen sheep, 2017

  • Australia $2.5 billion
  • New Zealand $2.3 billion
  • UK $496.2 million
  • Ireland $338.6 million
  • Netherlands $336 million

And even if the smart money is in chicken, there will always be opportunity for trading niche meats still popular in some countries. In 2017, Italy, Belgium and France imported over $200 million worth of horse meat.

The Trade Numerologist is IHS Markit's unique weekly look at global trade by award-winning journalist John W. Miller, formerly of the Wall Street Journal, using proprietary numbers from IHS Markit's Global Trade Atlas database, the world's most complete and accurate set of trade numbers.

What topic would you like the Trade Numerologist to cover? Email tradenumerologist@gmail.com with comments and questions.

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