The "Agricultural Outlook - Horizon 2030" report is a collaborative effort between the Organization for Economic Cooperation and Development (OECD) and the Food and Agriculture Organization (FAO) of the United Nations. The document, from which we are quoting in this edition of Meat.Milk magazine, brings together the products, policies, and expertise of both organizations and the contributions of member countries to provide an annual assessment of prospects for the next decade in regional and global agricultural commodity markets. Here are the forecasts for the global meat and dairy sectors.

Meat: Global Overview

At the global level, this year's Outlook projects that meat production and consumption will reach a low point in 2021 due to multiple African Swine Fever (ASF) outbreaks in Asia. In the early years of the outlook period, the global growth in meat production will be negatively impacted by a decrease in the availability of pork, only partially offset by increased production of other types of meat.

It is estimated that meat consumption volume in the next decade will grow by 12% by 2030 compared to the base period. However, medium-term growth rates are expected to decline in response to slower income growth in several regions, aging populations, and reduced per capita meat consumption in high-income countries due to saturation and dietary preferences for higher-quality meat.

Considering these factors, it is anticipated that the global per capita meat consumption volume will increase to only 34.9 kg retail weight equivalent (r.w.e.) by 2030, which is slightly more than 1% compared to the base period. Almost all of this per capita growth is attributed to increased consumption of poultry meat. Global meat supplies are expected to expand by 40 million metric tons by 2030 compared to the base period.

Key Drivers of Growth

Over the outlook period, a combination of increased stocks in the Americas and the European Union, as well as productivity growth, will support market supply orientation. Developing countries are expected to account for most of the total poultry production growth, which will remain the main driver of overall meat production growth.

Pork production is expected to remain constrained in the first five years of the outlook due to ASF outbreaks, especially in China and Vietnam. The share of meat traded globally is expected to increase in the early part of the outlook, primarily due to market supply provisioning to China.

In the medium term, it is estimated that the share of traded meat will increase to meet growing demand in low-income countries, especially in the least developed countries (LDCs) in Africa, Asia, and the Middle East, where domestic production will remain insufficient to meet demand. The recent ratification by 28 countries (starting in December 2019) of the African Continental Free Trade Agreement has encouraged more trade within Africa, with the agreement entering into force in July 2020.

Outbreaks of animal diseases, sanitary restrictions, and trade policies will remain the primary factors driving the evolution and dynamics of global meat markets. Uncertainties related to existing or future trade and agreements over the outlook period (e.g., the UK's exit from the European Union) will alter meat trade patterns.

Other factors that could influence meat prospects in the medium term include changing consumer preferences and attitudes towards meat consumption, given its impact on health, the environment, animal welfare, and global greenhouse gas emissions, which may lead to more modest demand growth.

Meat Consumption (by Geographic Regions)

Meat consumption is expected to increase in developing regions due to high population levels and birth rates. This is expected to lead to a global increase in meat consumption volume in developing countries, approximately five times higher than in developed countries. This will be particularly relevant in Africa and Asia, where growth rates are expected to be higher over the outlook period compared to the last decade.

The ratification of the African Continental Free Trade Agreement is expected to have a positive impact on trade flows within the continent, driven by additional consumption resulting from lower prices. Gains in per capita consumption are expected to remain small. However, growth is occurring from a low base.

High population growth means that total consumption volume will increase more rapidly than for any other region, despite limited and sometimes negative per capita gains. Meat consumption growth in Asia will come from a combination of increased availability as ASF recedes and increased per capita consumption due to income growth, lower real meat prices, and trade liberalization.

Meat Consumption (by Country)

At the country level, changes in per capita meat consumption will vary widely by country and meat type over the projection period. Global per capita consumption volume of meat is expected to increase slightly by 0.4 kg compared to the base period.

Consumption levels in higher-income regions are, in some cases, nearing saturation. This outlook forecasts an annual per capita increase in meat consumption of 0.24% in developed countries, one-quarter of the annual growth rate of the previous decade, but 0.8% per year in developing countries, twice the rate of the previous decade.

Consumer spending on food is also changing. In high-income countries, there is a shift from purchasing fresh foods prepared at home towards ready-made and convenience foods. This is the case in Japan, especially among the elderly and single-person households, and it is a trend the Japanese government expects to grow over the next decade. Moreover, as the Japanese population is expected to decline by 4% compared to the base period, global meat consumption is expected to decrease marginally. Other factors, such as quality, will become increasingly important for consumers in high-income countries and will influence their choices.

Dairy: Global Projections

World milk production is projected to grow at an average annual rate of 1.6% over the projection period, reaching 997 million metric tons by 2030. This growth is faster than for most other major agricultural commodities and higher than the projected average yield growth rate of 0.7%. It is expected to grow faster in low-yield countries.

India and Pakistan are expected to contribute more than half of the world's milk production growth over the next ten years and will represent over 30% of global production by 2030. Production in the European Union is expected to grow more slowly than the global average due to environmental restrictions and limited domestic demand growth.

Milk must be processed shortly after collection since it cannot be stored for more than a few days. Dairy production is consumed in the form of fresh, unprocessed, or lightly processed products (pasteurized or fermented). The share of fresh dairy products in global consumption is expected to increase over the next decade due to strong demand growth in India, Pakistan, and Africa driven by income and population growth.

The global per capita consumption volume of fresh dairy products is expected to increase by 1.0% over the next decade. In Europe and North America, global per capita demand for fresh dairy products is stable or declining, but the composition of demand has shifted in recent years towards dairy fats, such as full-fat milk and cream. Consumers may be influenced by recent studies that have shown positive results regarding the health benefits of consuming dairy fats.

Moreover, this shift may reflect consumer preferences for less processed foods. The largest share of cheese consumption occurs in Europe and North America, where per capita consumption is expected to continue to increase, especially as an ingredient in processed foods.

Cheese consumption will also grow in regions where it has traditionally not been part of the national diet. This is the case, for example, in Southeast Asian countries, where urbanization and income growth have led to increased consumption of fast food like burgers and pizza. The dominant use of skim milk powder (SMP) and whole milk powder (WMP) will continue to be in the manufacturing sector, especially in confectionery, infant formula, and bakery products.

While some regions are self-sufficient, such as India and Pakistan, total dairy consumption in Africa, East Asia, the Middle East and North Africa, and South Asia is expected to grow faster than production, leading to increased dairy imports. As liquid milk is costlier for trade, this additional demand is expected to boost demand for milk powders.