World meat industry news

Trade, production, consumption, slaughter and storage all face significant disruption

 Ukrainian crisis is having ripple effects throughout the entire agricultural supply chain, and exchange rates are having a “massive impact” on product going in and out of different markets.

That’s according to Rupert Claxton, meat director at Gira, who spoke during a Pork Checkoff webinar on March 30 about the Ukraine-Russia crisis and the meat and livestock value chain.

“We’re seeing across the system – fertilizer, feed, energy, transportation – nearly everything is bearing this oil price at the moment. So, thinking about fertilizer, it was already expensive before we came into the situation. It’s now really very expensive,” Claxton said.

With fertilizers so expensive, farmers will use less and therefore crop yields will be lower, leading to higher grain prices through 2023. Add to that less-than-ideal weather conditions and the  Ukrainian crisis and the world markets are in for a supply shock.

“The world was already concerned about what feed outlook would be in 2022. We know it’s very dry in North America. China’s reporting that they’ve got some concerns about conditions there as well. Feed prices have already pushed up. Clearly the outbreak of this crisis pushed speculation prices to go higher, and now we’re really concerned about supply in the world market,” he said.

While the normal flow of trade has been disrupted because of the crisis over Ukraine, agricultural products will still move around the world, albeit in different ways.

“A transfer of buyers is inevitable. We are not going to lose Russian exports to the world market as a result of this, but they’re going to flow to different places,” Claxton said. “There are some countries that just can’t afford not to buy from Russia. If I talk to a trader in Egypt, they have to buy affordable grain to keep people fed. It’s not about geopolitics. It’s just about food.”

Other European countries are placing export bans on some products to ensure food security within their own countries.

“When we’re talking about the poor African countries, they need to look elsewhere for product, notably at the Asian markets, and also in the Middle East. And the question is, if these guys have to look elsewhere for feed, they’re going to come to North America and Brazil, which means they’re going to take some of your supply and lift prices. So, it’s the knock-on effect for the North American market to think about,” he said.

Claxton said he also expects global meat consumption to decline as inflation squeezes consumer spending.

“This is a serious problem everywhere. It doesn’t matter where we look. High oil prices are making consumers think about where they spend their money,” he said. “This is most apparent in developing markets, where feed cost hikes will limit production, pricing some consumers out.”