Global sheepmeat and beef market
developments
Presentation to MIA, B&L conference, Auckland
July 8th 2013
Richard Brown
+44 1323 870144 rbrown@girafood.com
1
© Gira 2013
Optimistic agenda
1. Global all meats outlook
2. Global sheepmeat outlook


EU and UK focus (GMC)
China (GAMC)
3. Global beef market context


EU beef market situation (GMC)
Indian beef outlook (GAMC)
© Gira 2013
2
2012/13 total meat consumption growth rates lower than historical
average due to higher prices (higher production costs … and caution)
Fig SYN-GEN World Meat Consumption, 2008-2013(f)
Poultrymeat
280 000
Pigmeat
260 000
Sheepmeat
Total: 240 mio t
(+1.1%)
Total: 243 mio t
(+1.3%)
Beef & Veal
240 000
220 000
200 000
80 711
82 043
(+1.6%)
83 360
(+1.6%)
74 679
75 037
77 818
93 227
95 939
98 600
97 882
99 123
(+1.3%)
100 619
(+1.5%)
8 277
8 263
8 318
8 219
8 261 (+0.5%)
8 425 (+2.0%)
51 958
51 884
52 023
51 139
51 058
(-0.2%)
51 224
(+0.3%)
2008
2009
2010
2011
2012
2013
('000 t cwe)
180 000
160 000
140 000
120 000
100 000
80 000
60 000
40 000
20 000
0
© Gira 2013
3
Higher producer prices: Apparent 2012 price downturn for
pork is heavily influenced by CN price
All meat producer/wholesaler price indices, 2001-2013(f) (2001 L.C.)
Including China
200
Based on 2001 producer prices
190
Price indices, constant prices
180
170
160
150
SHEEPMEAT
BEEF & VEAL
140
PIGMEAT
ALL
130
POULTRY
120
110
100
90
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Weighted (consumption) averages
Source: GIRA GMC 2012
© Gira 2013
4
Excluding Chinese influence: sharp price increase for BF,
PK & PY since 2009 … but SH down (consumer resistance?)
All meat producer/wholesaler price indices, 2001-2013(f) (2001 L.C.)
Excluding China
170
Based on 2001 producer prices
Price indices, constant prices
160
150
140
130
SHEEPMEAT
BEEF & VEAL
ALL
120
POULTRY
PIGMEAT
110
100
90
80
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Weighted (consumption) averages
Source: GIRA GMC 2012
© Gira 2013
5
(Incl. China:) Meat expenditure was strong in 2011.
Slowing down in 2012 for PK but up for all meats in 2013
All meat expenditure* index, 2001-2013(f) (2001 L.C.)
280
Based on 2001 producer prices
Expenditure index, constant prices
250
220
190
SHEEPMEAT
PIGMEAT
POULTRY
160
ALL
BEEF & VEAL
130
100
70
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
* Expenditure = producer/wholesale prices x total consumption
Weighted (consumption) averages
Source: GIRA GMC 2012
© Gira 2013
6
(Excl. China:) the meat expenditure trend is strongly
upward … mainly reflecting higher meat prices
All meat expenditure* index without China, 2001-2013(f) (2001 L.C.)
190
Expenditure index, constant prices
Based on 2001 producer prices
160
POULTRY
130
ALL
BEEF & VEAL
PIGMEAT
SHEEPMEAT
100
70
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
* Expenditure = producer/wholesale prices x total consumption
Weighted (consumption) averages
Source: GIRA GMC 2012
© Gira 2013
7
Unemployment rates EU, 2012(e)
High rates, and getting worse in most MS’s in 2013
Unemployment rates within the EU, 2012(e)
Source: GIRA from European Commission
© Gira 2013
8
Not surprisingly, EU per-capita meat consumption slowly
declining since 2007. We forecast -1% decline in 2013
Per capita Meat Consumption,
2000-2013(f)
100
EU average consumption per
capita 2012 and % changes
12/11 and 13/12
─ Beef & veal: 15.4 kg
-3.6% in 12
-0.9% in 13
Meat consumption (kg / capita)
90
80
70
─
60
Sheep
50
Poultry
Beef & veal
40
Pigmeat
30
Pigmeat : 40.7 kg
-1.5% in 12
-1.8% in 13
─ Poultry : 24.5 kg
+1.3% in 12
+0.2% in 13
─ Sheep : 2.1 kg
-4.9% in 12
+ 1.2% in 13
20
10
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
Source: Gira
© Gira 2013
─ TOTAL : 82.8 kg
• -1.1% in 12
• -1.0% in 13
9
2012 price increases, especially for BF&PK
2013: big PK price rise, BF&SH prices down (Wrong!)
EU Meat Producer Prices (2000 EUR/t cwe), 2000-2013(f)
5000
4500
X
4000
Beef & veal
3500
Average
Pig
3000
X
Poultry
2500
2000
1500
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
1000
2000
2000 EUR / t cwe
Sheep
Note : wholesale prices for poultrymeat and producer prices for other meats
Source: Gira GMC Dec 12
© Gira 2013
10
EU expenditure increase in 2012 & 13 for all meats excl.
sheepmeat.
EU Meat Expenditure Index, 2000-2013(f)
190
Expenditure index (2000=100)
constant 2000 prices
180
Beef & veal
Pigmeat
170
Poultry
160
Sheep
150
TOTAL
GFC
HPAI
140
EU in
recession
+feed price
shock
AI in the NL
130
120
FMD
110
100
90
BSE
80
70
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Note : wholesale prices for poultrymeat and producer prices for other meats
Source: Gira GMC Dec 12
© Gira 2013
11
Optimistic agenda
1. Global all meats outlook
2. Global sheepmeat outlook


EU and UK focus (GMC)
China (GAMC)
3. Global beef market context


EU beef market situation (GMC)
Indian beef outlook (GAMC)
© Gira 2013
12
Sheepmeat Net Production by Country 2001-2013: Small upward
trend but more of a long period stability
© Gira 2013
13
Sheepmeat Consumption by Country, 2001-2013:
Supply & price constraints…
© Gira 2013
14
Sheepmeat Consumption per Head by Country, 2001-2013:
Erratic movements in export-oriented countries... Difficult meat for many
young urban consumers... But ethnic demand
© Gira 2013
15
Lamb Importers: Trade moving upwards, with declining prices... More
to MENA, CN, North America... EU demand enough to raise imports?
© Gira 2013
16
Lamb Exporters: Increasing from the main shippers from Oceania
South America remains constrained
© Gira 2013
17
Sheep Producer Prices (USD/t cwe), 2001-2013: After a decade of
upward movement, a pause??... Amplified by stronger USD
Sheep Producer Prices, 2001-2013 (Current USD/t cwe)
9 000
EU (light lamb)
EU (heavy lamb)
8 000
NZ (lamb)
UY (lamb)
7 000
AU (mutton)
6 000
5 000
4 000
3 000
2 000
1 000
0
2001
2002
2003
2004
2005
2006
2007
© Gira 2013
2008
2009
2010
2011
2012
2013
18
Sheepmeat producer price trend: downward trend after 3-4 years
growth linked with supply constraints… EU flat… RU further growth
© Gira 2013
19
Sheepmeat demand: long term demand trend dominated by CN …
and illustrates a problem but not a disaster in EU
?
© Gira 2013
20
Trends in Trade Prices
Sharp declines in both Oceania exporters
Trends in trade prices. Sheepmeat, 2003-2013 (Legend values for 2011)
400
AU chilled lamb; 11 000 USD/t pw
NZ lamb FOB; 7 924 USD/t pw
350
NZ mutton FOB; 5 179 USD/t pw
300
250
200
?
150
100
50
2003
2004
2005
2006
2007
2008
© Gira 2013
2009
2010
2011
2012
2013
21
EU production stabilising? … almost? due to higher prices
Concerns over demand
EU Sheepmeat Balance 2001-2013f
1 600
EU25
EU15
EU27
1 400
Consumption
1 200
Net production
?
800
600
Imports
400
200
Exports
© Gira 2013
2013f
2012
2011
2010
2009
2008
2007
2007
2006
2005
2004
2004
2003
2002
0
2001
'000 t cwe
1 000
Source:
Gira
EU ‘heavy’ lamb prices reflect supply tightening
again: ‘light’ lamb a S.EU problem (of economies)
Development of the EU average market price for
Heavy and Light Lamb carcases
750
€uro / 100kg
650
550
450
350
Light lamb
Heavy Lamb
250
|
2007
|
4. News
2008
|
2009
|
2010
© Gira 2013
|
2011
|
2012
|
2013
|
23
EU production seems to be stabilising @ lower level
Sheep and Goat meat supply in the EU
2003 = EU 15 2004 = EU 25 2007 = EU 27
59
59
179
178
157
750
54
51
178
178
25.0
714
15.0
707
730
717
748
949
1 021
971
500
985
20.0
250
Sheep Carcase weight in KG
60
111
78
30.0
111
68
155
222
226
226
72
175
73
263
256
75
985
in 1000 Tonnes
1 000
278
35.0
1 250
10.0
0
5.0
2004
2005
sheep
4. News
2006
2007
Non official
2008
goat
2009
2010
2011
Imp - Exp (Pw)
© Gira 2013
2012
Cw Heavy
2013
Cw light
24
Sheepmeat Net Production: UK 2012 climate impact but
price stabilising key producers except ES
Figure EU-SH 1: Sheepmeat Production (Net), 2001-2013f
350
300
?
Spain
250
000 tons cwe
United
Kingdom
France
200
Greece
150
Ireland
100
Romania
50
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013f
© Gira 2013
25
EU per capita Sheepmeat consumption
Stabilisation at EU level? Further declines in ES
Figure EU-SH 3: EU Sheepmeat Consumption, 1999-2013f (excl. GR, CY)
8
7
United Kingdom
Romania
France
EU-15
Spain
EU-27
Bulgaria
Belgium/Lux
Italy
Germany
5
4
3
2
© Gira 2013
2013f
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
0
2002
1
2001
kg. per capita
6
Source: Gira Meat
Club
26
With weak GBP, UK prices are more motivating for producers
… but a concern for retailers (and processors)
UK Livestock producer prices, 1990-2013
6.00
5.00
Lamb (pre '01)
4.00
Steers
Pig
3.00
Chicken & other
table fowl
2.00
2 per. Mov. Avg.
(Lamb (pre '01))
1.00
2 per. Mov. Avg.
(Chicken & other
table fowl)
4. News
© Gira 2013
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0.00
1990
Livestock producer prices (deadweight £/kg)
Lamb
Source: Gira based on
AHDB & DEFRA
27
UK BF producer price rise … but still respectable
cash ‘margin’ for retailers
UK Beef share of revenue
6.00
5.00
4.00
Processor &
retailer share
3.00
Producer share
2.00
1.00
0.00
1990
1995
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013*
Farm to retail spread (£/kg)
7.00
4. News
© Gira 2013
Source: Gira based on AHDB
Source: Gira based on
AHDB & DEFRA
28
Similar story for UK lamb … and the cash ‘margin’
should still be attractive for retailers
UK Lamb share of revenue
7.00
6.00
Processor &
retailer share
5.00
4.00
Producer share
3.00
2.00
1.00
0.00
Source: Gira based on AHDB
1990
1995
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013*
Lamb farm to retail spread (£/kg)
8.00
4. News
© Gira 2013
29
CN Sheepmeat – A Textbook Case
of Supply and Demand
Chinese Sheepmeat Balance

Domestically focused industry

Sustained by traditional minority
preference & culture …
─ Main meat in NW China
─ but spreading to wider China
GAMC: Singapore Feb’13

Per Capita consumption ~3Kg/hd

Degradation of grassland leads to
stagnation in production

Imports increasing
─ Volume is internationally significant
© Gira 2013
30
Retail prices for CN mutton at record levels
Chinese Retail Meat Prices (US$/Kg)


Prices have been rising since production stagnated in 2007
Price is getting higher relative to other meats
─ March 2004, Sheepmeat traded at a 34% premium to pigmeat
─ By July 2012, Sheepmeat was trading at more than 100% premium to pigmeat
GAMC: Singapore Feb’13
© Gira 2013
31
CN sheepmeat production has grown from West
to East
Top 5 by
size
Top 5 by
growth
GAMC: Singapore Feb’13
© Gira 2013
32
… but can China increase production
and meet the demand?






Land – But there aren’t any more provinces
Seeds – New grass seed varieties could
restore clapped out grasslands
Farmers’ switch – Some small dairy
farmers may switch to sheep
Finish sheep on concentrates (expensive)
Genetic improvement – increasing live
imports from Australia
Infrastructure improvements
Sheep herders in Shanxi Province
It won’t be enough!
GAMC: Singapore Feb’13
© Gira 2013
33
Sheepmeat imports rising (steadily?) … before
1Q13 boost
Import volume (tons pw)
100,000
Others
80,000
Via Hong
Kong
60,000
Uruguay
Australia
40,000
New Zealand
20,000

2012*
2011*
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
0
Source: Gira
from
trademap
Imports dominated by
─ NZ: 62% of market, up 53% in ’12
─ Australia: 37% of market, up 18% in ’12
─ Uruguay: sneaking in
GAMC: Singapore Feb’13
© Gira 2013
34
Storechecks reveal high offal
prices and added-value
Fresh Pig Liver Price Chart – January ‘13
BEIJING
BEIJING
BEIJING
BEIJING
SHANGHAI
SHANGHAI
NANJING
NANJING
NANJING
G'ZHOU
G'ZHOU
G'ZHOU
SU-Anhui
Average
Source:
Store Type
High-end
Mod retail
Mod retail
Wet Market
Mod retail
Wet Market
Mod retail
Mod retail
Mod retail
Mod Retail
Mod retail
Wet Market
Mod retail
Store/Loc
Solana BHG
Huapu
Wal-Mart
Jinsong
RT-Mart
Pengpuxincun
Carrefour
Suguo
Suguo
Park 'n Shop
Trust Mart
Longkoudong
Suguo
Rmb/kg USD/kg
158.00
25.16
Pengcheng
39.60
6.31
32.60
5.19
Pengcheng
20.00
3.18
Ai Sun
71.60
11.40
Ai Sun
59.60
9.49
Hefei Chunran
27.60
4.39
Sushi
20.00
3.18
Tianhuan
24.00
3.82
23.80
3.79
27.00
4.30
30.00
4.78
17.80
2.83
42.43
6.76
Brand
Gira survey
Cooked Pig Liver Price Chart – January ‘13
BEIJING
BEIJING
BEIJING
G'ZHOU
SU-Anhui
Average
Source:
Store Type
Mod retail
Mod retail
Mod retail
Mod retail
Mod retail
Store/Loc
Huapu
Huapu
Wal-Mart
Trust Mart
Carrefour
Branded fresh liver at Beijing Huapu
Brand
Wufu
Tianfu
Rmb/kg
USD/kg
75.60
12.04
73.80
11.75
71.60
11.40
59.80
9.52
36.00
5.73
63.36
10.09
Gira survey
©©Gira
and2013
Asian Agribiz 2013
Gira
Solana BHG Premium Supermarket - Beijin
Optimistic agenda
1. Global all meats outlook
2. Global sheepmeat outlook


EU and UK focus (GMC)
China (GAMC)
3. Global beef market context


EU beef market situation (GMC)
Indian beef outlook (GAMC)
© Gira 2013
36
2Q13 update



Weaker CN growth rates: but BF demand surprisingly robust
Feed cost high, but softened … with better global harvest prospects: still high risk
Lower PK producer price rises than expected … but at the high current levels
─ BF: prices firmer than expected – reflecting supply tightness, even with horsemeat scandal

Diseases threaten to be more disruptive:
─ Chinese H7N9 is bad: undermining consumer demand for PY: hence lower imports & lower
prices … but possible demand transfer to PK, which should be helpful to exporters
─ Mexican H7N3 apparently contained more quickly than Gira expected. Had potential to
boost demand for imports from US, and boost US prices
─ Russian ASF situation: contradictory but not clearly under control
─ Egyptian H5N1, FMD: situation deteriorating: boosting local prices

Slightly negative political developments :
─
─
─
─



US fiscal problems persist … but economy growing faster than expected
Middle East: Syrian civil war worsening
Eurozone: Cyprus saved from the brink … and contagion still a major risk (but seems better)
Russia: Ractopamine bans: another NTB in a long line … but in response to weaker RU prices
Smithfield : Shanghui takeover saga: after pressure from ContiGrain: an important,
frustrated shareholder seeking break-up into 3x parts, to create more shareholder value
Spectacular Vion retreat from UK …
Marfrig retreat … but JBS still buoyant
© Gira 2013
37
2012/2013 Main Assumptions: High feed costs
1Q13 prices have softened more than Gira expected. Still risk
Monthly Futures MATIF Prices (€/tonne),
Jan. 00 – Apr.13
550
500
450
Rapeseed
Wheat
Maize
(€/tonne)
400
350
300
250
200
150
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
100
Source: GIRA from HGCA
© Gira 2013
38
Cattle Herd by Country 2001-2013: Global flat to slight trend
down except in India, AU & AR …. BR cycle turns down?
39
© Gira 2013
Beef & Veal Net Production by Country 2001-2013:
further US & EU decline – for different reasons
40
© Gira 2013
Beef & Veal Consumption by Country 2001-2013:
Continuous declines in key US and EU markets
41
© Gira 2013
Global Beef & Veal Imports
2013: further growth for all major importers
42
© Gira 2013
Global Beef & Veal Exports
India fills the supply shortage (from other key exporters)
43
© Gira 2013
Global Beef & Veal Exports: Higher export prices (than
domestic) motivate Indian exporters
44
© Gira 2013
Exporter Demand Structure
Only IN (and MX, UY) able to increase significantly their export share
45
© Gira 2013
Producer Prices in current USD/t cwe: General increase
(not in BR) but nothing like 2011. Upward 2013 price trend
Figure SYN-BF 9a Cattle Producer Prices, 2001-2013 (current USD/t cwe)
6 000
US
5 000
EU Male beef R3
RU
4 000
EU Cow
3 000
AR
2 000
UY
1 000
AU
0
BR
2001
46
2002
2003
2004
2005
2006
2007
2008
2009
© Gira 2013
2010
2011
2012
2013
Trends in Beef Export Prices
Strongly up in 2011, easing in 2012 and up in 2013
Trends in Trade Prices - Beef Exports, 2003-2013 (legend values for 2011)
500
480
460
440
420
400
380
360
340
320
300
280
260
240
220
200
180
160
140
120
100
80
60
40
20
0
EU ch./fr.; 6 023 USD/t cwe
UY processed; 2 871 USD/t cwe
UY fresh/frozen; 4 014 USD/t cwe
BR fresh/frozen; 4 810 USD/t cwe
BR processed; 5 990 USD/t pw
CA to US; 5 677 USD/t pw
AR fresh/frozen; 5 822 USD/t pw
AU FAS to US; 3 942 USD/t pw
NZ to US; 4 294 USD/t pw
US chilled average; 5 755 USD/t
pw
AU FAS to JP; 5 628 USD/t pw
2003
47
2004
2005
2006
2007
2008
2009
2010
2011
© Gira 2013
2012
2013
AR processed; 1 684 USD/t pw
Trends in Beef Producer prices: 2012 prices increased
again after a strong increase in 2011 … tight supply
Beef & Veal producer prices indices, 2001-2013(f) (2001 L.C.)
260
250
Based on 2001 producer prices
Producer price index, constant prices
240
230
220
210
200
190
CHINA
180
RUSSIA
WORLD
170
SOUTH AFRICA
160
USA
150
E.U.
140
BRAZIL
130
AUSTRALIA
120
110
100
90
80
2001
2002
2003
2004
2005
2006
2007
2008
2009
2011
2012
2013
Weighted (consumption) averages
Source: GIRA GMC 2012
48
2010
© Gira 2013
Trends in Beef Expenditure: good increase reflecting
increasing prices rather than consumption increase
49
© Gira 2013
Changing personal farm revenue stream, with changing politics,
prices and evolution of the business
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Other revenue
Environmental subsidy
Arable subsidy
Arable Sales
Sheep subsidy
Sheep sales
Cattle subsidy
4. News
© Gira 2013
2013
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
Cattle sales
1991
Proportion of revenue
Revenue segmentation from a mixed English
Downland farm
50
Personal switch from the traditional steers (@22
months) to young bulls (grain fed)
14-15 month young bulls, in standard barn, UK






£50k capex cost for
barn
45-50 cattle spaces
@ 10m2/hd
5-6 month winter
Straw bedding
Rolled barley & wheat
with soy/rapemeal,
molasses & mineral
Young bull:
─ 300kg lw weaning
weight @ 8mo
─ 650kg lw @
slaughter
─ 180 day growing &
finishing
─ Implied 1.95kg
DLG
─ 370kg cw, 57% killout
© Gira 2013
51
… development of Brazilian feedlots, as a part of
their slow intensification
‘Backgrounded’ young Nelore bull, Goias
300m away …the feedlot, 20,000
young bulls
© Gira 2013
52
… and so what does this mean in BR?
Opportunity … but still mixed confidence
24 month young bulls, on feedlot, BR




Optimistic global
meat and beef
demand outlook
In a world short of
beef, with competition
for BR land
Scope for increased
production and meat
quality ….
More intensive
breeding
─ grass management
─ X-breeding


More intensive
finishing
Responding to the
varied demands of a
portfolio of customers
─ Deaf:mute giant!

© Gira 2013
But … conservative
53
EU market context: beef and sheep are minor
meats compared with pork and poultry
EU meat imports from 3rd countries 2001-2013f
EU meat production 2001-2013f
2,000
40,000
30,000
Sheep
Beef
20,000
Poultry
Pork
10,000






1,500
Pork
1,000
Sheep
Beef
500
Poultry
2013f
2012e
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
Source: Gira
Meat Club,
Dec 12
2001
2013f
2012e
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
0
2000
0
Imports ('000t cwe)
Production ('000t cwe)
50,000
Source: Gira
Meat Club,
Dec 12
Eurozone wobble but not crash … and EU enlargement
Common Agricultural Policy (CAP). … getting there.
overall EU figures mask the dynamic changes between Member States and more
importantly, companies: processor problems, Vion … Doux, BM …
Imports from 3rd countries slightly increasing again. Intra-EU trade is much more
important.
WTO Doha Round threat disappeared. Some progress on Free Trade Agreements (FTA)
create selective opportunities and threats.
Horsemeat scandal
54
© Gira 2013
EU Beef Balance: declining consumption and
production … in spite of the higher producer prices
GMC : December 2012
© Gira 2013
55
EU Cattle prices continue at record levels …
helpful for farmers … but tough for processors


Short supply has been dominant story of 2012 prices ( €/t cw)
Strong demand for cow beef
GMC : December 2012
© Gira 2013
56
In fact EU prices continue to firm
450
A R3
400
C R3
350
D O3
300
E R3
250
200
Last Update : Week 19 - 2013
Source : Member States
2007
2008
2009
2010
© Gira 2013
2011
2012
2013
EU slaughtering supply is tight … tough for
processors
Beef & Veal Production (E27 Slaughtering) - Tonnes
750
1.000 Tonnes
700
650
600
2011
2012
2013
550
Jan
Feb
Mar
Apr
May
Jun
Source : EStat-Newcronos
© Gira 2013
Jul
Aug
Sep
Oct
Nov
Dec
The top EU processors are large … but (very) long
industry tail … and all face margin pressure
Top 15 EU 27 meat companies by meat production volume ('000 t cwe) - 2010/11
Two Sisters Food Group (UK)
353
353
Moy Park (Marfrig) (UK)
355
355
Irish Food Processors (IE)
342
20
0 362
Terrena (FR)
170 40
B&V
PG
PY
200 410
Plukon Food Group (NL)
416
Doux Group (FR)
450
Cooperl (FR)
470
Veronesi Group (IT) 087
HK Scan (FI)
89
LDC (FR)
450
470
487
170
497
558
558
Westfleisch (DE) 105
Bigard Group (FR)
622
500
Tönnies (DE)
132
Danish Crown (DK)
154
VION (NL)
727
941
441
1,546
1,414
0
2,040
1,886
441
Source: Gira compilations and estimates
2. Executive
Summary
59
416
400
238
SH
1,854
500
1,000
1,500
200
2,000
Total meat production (' 000 t cwe)
© Gira 2013
2,500
2,525
3,000
Top EU processors only just feature in Global top 10: a list
which is changing … and not entirely for positive reasons
Major Global Meat Processors
Approx primary processing volume '000t cwe
Next Ten
Yuron
Linyl Xincheng
Danish Crown
Bf
Pk
Py
Sh
Vion
BRF
Marfrig
Smithfield
Cargill
Tyson
JBS
Source: Gira
'09/10 volumes
adjusted for M&A
Top 10 share
Next Ten share
0
2000
4000
BF
23%
4%
6000
PK
14%
3%
© Gira 2013
8000
10000
PY
13%
4%
12000
SH TOTAL
1%
15%
0%
3%
60
India- Buffalo Export strong growth
the mega story of Asian meat exports!






National herd: vast … but growing
─ Buffalo growing at ~3%p.a. (dairy industry)
─ Cattle herd growing at 1.8%p.a. despite religious
constraints.
─ Ultra-low offtake-rate even allowing for live export
Farmers encouraged to produce better male calves
for feeding.. Improving yields
Buffalo is the lowest priced protein, eaten globally by
poor.
─ Little / no processed margin possible
─ Consumption falling, better prices at export
Export Buffalo strongly up at cost of local market
─ Excess sold on domestic market
─ Exports will be limited by supply… NOT YET.
Exports price increases as they move better markets
& beef prices increase, lifting ceiling…
─ Main destination now Vietnam 28% (269kT pw) of
exports… Grew by 164% in 11-12!!
─ Middle East Market slow due to recession, but
growing...
─ Other Asian regions increasingly important
Soon to be biggest Bovine exporter …. by vol.!!
GAMC:
February 2013
© Gira 2013
Indian Bovine Balance
61
Indian bovine slaughtering rates very low

2 key issues with Indian slaughter data:
Indian Cattle off-take 2000-2013f
─ It can not capture all informal slaughter
─ There is no accounting for live grey
exports to Bangladesh…


Cattle protected by Hindu law makes this
very complicated…
Buffalo offtake rate is also surprisingly
low… given;
─ High value export markets,
─ Worthlessness of male buffalo calves
─ Not protected like cows
GAMC:
February 2013
© Gira 2013
Indian Buffalo off-take 2000-2013f
62
Black market export of live cattle to Bangladesh
is big business on the 2,400 mile border

Cattle smuggled to Bangladesh are
thought to be worth US$920 mio /
yr
Cows from as far away as; Rajasthan, Haryana & Punjab
the cattle markets of West Bengal state

¾ of cows slaughtered in
Bangladesh are thought to come
from India… ~150,000 t cwe of
production!
Organized gangs buy the cows
Smuggled live to Bangladesh

Discussion now in India on
legalising trade…

BUT strong opposition from Hindu
lobby means that there is unlikely to
be a change…

In the mean time high numbers of
human deaths continue
GAMC:
February 2013
© Gira 2013
63
Buffalo Balance: The bovine meat that was the
export story of the world in 2012




Buffalo exports have been at the
expense of domestic consumption
Pulled by high export prices, which
have increased rapidly
The BIG question…
is India running out of
capacity to expand Buffalo
exports ?
or
can they grow production?
There are clearly buffalo calves that
are not making it into the export
system… or registering in
statistics…
Indian Buffalo Balance 2000-2013f
─ Potentially 4-5 times the number
recorded in slaughter figures…
GAMC:
February 2013
© Gira 2013
64
Indian Buffalo export prices now ~US$2.90/kg
Indian Buffalo Export Price 2000-2012
Indian Buffalo Export value 2000-2012
3.50
3.00
US$/ kg
2.50
2.00
1.50
1.00
0.50
0.00
2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009- 2010- 201101
02
03
04
05
06
07
08
09
10
11
12
F. Year


Value increase driven by price and
volume…
Should be capped by:
─ supply
─ Br Bf price
GAMC:
February 2013



© Gira 2013
Prices up 200% in 10 yrs
Still Cheaper than Brazilian
beef…
Exporters gaining access to
higher value markets
65
Indian Buffalo Exports have grown rapidly to a
very wide variety of low value destinations
Indian Buffalo Exports, 2000-01 to 2011-12 (t pw)


Strong demand in Muslim countries for Halal product
Vietnam exports are for China via the grey market … at higher prices
(US$3.11 in ’12 up from US$1.52 in 2007...)
GAMC:
February 2013
© Gira 2013
66
NZ – terrific 1Q13 growth of NZ exports to CN
NZ red meat sector exports to CN
NZ Meat Industry Exports to China - Rolling 12 Month FOB Value - by Product Type
600,000,000
Source: Compiled by MIA from Statistics New
Zealand overseas merchandise trade data
Beef
500,000,000
Beef offal
Sheepmeat
400,000,000
Sheep offals
Value (NZD)
Tripe and casings
Tallow
300,000,000
Hides and skins
200,000,000
100,000,000
0
12 Month period to
GAMC:
February 2013
© Gira 2013
67
NZ BF exports dominated by US, with new CN volume
substituting for ID+. More balanced future portfolio
Monthly
beef exports
selected
by volume
NZ
SH sector
monthlytoexport
volmarkets
& prices
to UK (tonnes)
30,000
Source: Compiled by MIA from Statistics New
Zealand overseas merchandise trade data
25,000
20,000
15,000
10,000
5,000
0
United States
GAMC:
February 2013
Japan
Taiwan
Korea
© Gira 2013
Canada
China
Indonesia
68