The financial institution’s Global Animal Protein Outlook 2023 forecasts that the meat industry in general and white meat in particular will face high costs throughout the entire supply chain, swings in consumption, and other areas of uncertainty for producers, such as elevated disease pressure, and regulatory and market-driven changes.

Rabobank’s RaboResearch Food & Agribusiness report on the global animal protein industry states that 2023 will be a year for companies to recalibrate their growth expectations and plans, as it will be favorable for efficient producers and processors, agile companies, exporters benefiting from foreign exchange transactions, and biosecure producers.

According to Rabobank, the year will be mainly determined by factors such as swings in consumption patterns, biosecurity risks and the efforts to contain losses, the production of sustainability reports, low margins, and high raw material prices. All of this will impact the meat industry in general, and white meat in particular.

“It should be noted that the Chilean white meat producing and exporting industry has been focusing on today’s pressing matters for years. Anticipating regulatory changes and being pioneers in biosecurity and sustainability has helped Chile be better positioned than other countries. Our companies have been incorporating many of the priorities for 2023 listed by Rabobank’s report into their production for years, which is why we are confident that we will continue to be a resilient industry, capable of growing by seizing opportunities and challenges,” said Juan Carlos Dominguez, President of ChileCarne.

Changes in consumption patterns

According to Rabobank, in 2023 consumers’ reactions to prices might be more complex than anticipated. The report notes that consumption patterns will be determined by many factors, with price being just one of them. Consumer trust, household income, employment, the impact of government relief packages, and alternative protein prices are all relevant in shaping animal protein consumption patterns. According to the Dutch bank’s report, new dynamics will coexist with the usual responses, shaping these patterns.

Biosecurity challenges will continue in 2023

Diseases such as African swine fever (ASF) are headline-grabbing animal health challenges, and the industry will double down on efforts to control the risks given the high cost of lost production in key regions and the uncertainty they create.

In 2023, the industry will shift from reactive to proactive disease management. Rabobank notes that additional measures are being taken that restrict on-farm traffic and the unnecessary moving of animals between operations; but the acceptance rate still varies geographically. Producer organizations and governments are sharing and supporting a better global understanding of effective mitigation strategies, which should speed up implementation. Higher investment in predictive technologies should help limit losses related to animal health.

The report highlights that the industry is still investing in animal protection despite higher costs. Widespread culling as a tool to contain the impact of an outbreak poses a costly challenge for all parties involved. The rising cost of the governments’ responses to the disease could be particularly challenging in developing countries with limited resources for control measures. This restriction could make it necessary to reexamine current methods and accelerate investment in preventive and predictive technologies in 2023.

Sustainability reports in 2023

According to Rabobank, significant progress in sustainability measurement and reporting is expected in 2023. Greenhouse gas (GHG) emissions mitigation targets are now set for the main production regions, and their focus is shifting towards actions that can be measured and reported. This is happening as the global economy slows down, so animal protein supply chains face the added challenge of obtaining return on investment from emission reductions while strengthening consumers’ trust in these topics. Thus, according to the report, emission certification schemes are expected to broaden their focus in 2023, not limited to supply chains but also considering accreditation at the farm and labeling stages.

Prices and margins for 2023

The Dutch bank estimates that feed and forage prices will stay high throughout 2023. Global grain and oilseed prices nearly doubled (+94%) from May 2020 to May 2022 due to stronger demand, persistent supply concerns, and growing geopolitical uncertainty. Rabobank expects prices in 2023 to stay within this relatively high range, as the main factors that led to the latest hike still exist.

According to the report, the situation in Ukraine and other countries’ restrictions to Russia will add more pressure to production, trade, and consumption. Another determining factor will be the macroeconomic environment, as higher interest rates and restrictions for passing the costs to consumers will continue in a high inflation scenario. Government interventions will also be a factor, as they are likely to keep offering support for households to manage rising costs and ease the pressure on consumption.

High input prices in 2023

According to the Global Animal Protein Outlook, the cost increases in feed, energy, fertilizer, freight, finance, and labor costs faced by the animal protein supply chain in 2022 are likely to continue through 2023.

Food costs will remain high, as will energy prices, particularly in Europe. High energy prices have ripple effects throughout the chain, impacting the availability and prices of fertilizers, which impacts the production of grain and oilseeds. Grinders, feed mills, and animal producers are directly impacted by price hikes as well. Processing plants will also feel the impact, as they will face rising raw material prices and decreasing purchase power.

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