Animal protein firms must pivot in 2023 to secure future, Rabobank says

'Inflection point' as animal protein companies face strategic challenges of sustainability, animal health and market volatility, report says

Animal protein companies face an ‘inflection point’ with a need to respond to structural changes in the market even with production levels and prices likely to remain elevated next year, according to Rabobank.

Producers and processors of meat, poultry and seafood approach 2023 after a year marked by rising input prices, supply chain disruption and geopolitical issues.

Yet at a structural level they also face the need to adapt to sustainability challenges and disease threats to animal health if they are to remain competitive in the market over the longer-term.

In its Global Animal Protein Outlook 2023 report, Rabobank predicts prices will be supported in 2023 by high feed costs and elevated energy prices.

Animal protein production levels are expected to increase, with analysts forecasting year-on-year growth in major markets of 5 million tonnes – or 1% – to a total of 430 million tonnes next year.

This will be driven by demand for poultry, fish and seafood offsetting the weaker performance of beef and pork. However, the production growth rate will be lower than 2022’s 2%.

Salmon is set to continue to enjoy strong demand, with weak supply growth supporting prices, Rabobank’s analysts predicts.

Chicken will benefit from its value proposition against the tough economic backdrop, with the bank forecasting global economic growth of just 2% in 2023.

By contrast, consumers are likely to cut back on more expensive cuts of meats, such as fillet steaks

Structural and cyclical headwinds

To prosper in future, animal protein companies must pivot to become more sustainable businesses.

Rabobank expects producers and processors to intensify their emissions commitments next year, but this will require greater investment in areas such as smart data to make their operations and supply chains more sustainable.

The most successful businesses are also moving on to a more proactive footing to manage disease risks, such as African swine fever and avian influenza.

This includes sensors that can recognise unusual animal movements and predictive technology to limit herd loss.

Meanwhile, companies are responding to high costs by shrinking packet sizes and reducing ranges, Rabobank’s analysis says.

They must also factor in consumer behaviour in a recessionary environment, such as the move towards convenience products, like fish fingers and hot dogs, and trading down.

Justin Sherrard, global strategist for animal protein at Rabobank, said: “It has been a year like no other for the animal protein industry.

“Companies have grappled with rising input prices, supply chain disruption and geopolitical strife, many of which are unresolved as we head into 2023.

“These factors have increased costs across the market, but while prices rise quickly, they tend to fall more slowly.

“We therefore expect prices to remain high next year, even as the market enjoys steady production growth on the back of a growing supply of aquaculture and poultry.

“This masks reductions in the supply of beef, due to contraction in the US after years of drought, and the weakening pork market in Europe.

“There is then the greater challenge of how animal protein companies approach the next decade of growth, not simply the next year.

“Structural changes in the market, such as increasing awareness of carbon footprints and a proactive approach to managing disease, offer opportunities for the most forward-thinking companies to invest and prosper. In other words, it is now decision time.”

Animal protein firms must pivot in 2023 to secure future, Rabobank says

Leave a Reply

Your email address will not be published. Required fields are marked *

Scroll to top