2016 State of the Industry: Healthy diagnosis
Our industry is much healthier in 2016 than it was in 2015. There were no dramatic animal health issues. Inexpensive grain prices and moderate fuel prices are expected to continue. In the U.S., labor costs, the No. 2 cost component to most protein producers, will continue to rise. Export demand may moderate because the increasing strength of the U.S. dollar makes American goods more expensive.
The U.S. Department of Agriculture’s 2017 projections for protein show a 2.5 to 3.4 percent increase in production for pork, chicken and beef, as well as an increased demand for export of all three proteins in 2017. The per capita protein supply prediction by the USDA for 2017 is an estimated 216 pounds per person. The expected population growth and augmented per capita, however, will not be enough to account for the increased protein predicted, leading to uncertain prices.
Elanco’s Jeff Simmons’ 2050 predictions for world demand of clean, quality protein is still on target. The Chinese made a significant move in pork imports and stimulated a building trend in the U.S. pork industry never seen before in the pork market. Chicken producers continue to build and remain profitable. Players such as Sanderson Farms are building entirely new complexes from the ground up. Tyson has consolidated its Hillshire purchase, and the process has gone extremely well. Moving forward, broiler producers adopting antibiotic-free practices may be required to increase housing capacity by as much as 10 percent to maintain bird health. This will create a significant increase in building activity in the broiler industry. The future is looking bright.
The egg industry regained pre-bird flu supply levels this year, but demand has not recovered. This has resulted in low egg prices. While not yet a requirement at many retailers and foodservice operations, many in the egg industry are building or retrofitting their facilities to be considered cage-free. The top suppliers have led the way in an effort to stay ahead of consumer demand and will be most proficient when this market matures.
Changing trends have affected our industry in a variety of ways. While it is true more and more consumers have never been to a farm and/or have no idea where food comes from, their lifestyle choices come back to us via concerns and challenges. One worrisome trend for our industry is the growing population of Vegans. Other trends, such as smaller packaging, snack packaging and other portable foods are doing well. Families struggle with their inner dynamics when it comes to meal planning, as many now have multiple food options to accommodate the various dietary needs/wants.
Food safety continues to be a consumer concern as our industry continues to improve its practices and performances. Buzzwords such as “locally grown,” “GMO free,” “organic,” “clean label” and many more are in great demand by consumers, causing our industry to modify and adapt its practices to meet these needs.
Animal welfare concerns are accelerating. We must adopt humane-treatment certifications in order to reassure our consumers that what they eat has been handled with care. A series of studies at Stephen F. Austin University in Texas under the supervision of Drs. Joey Bray and Gregory Archer shows broilers thrive under quality, natural-like lighting, including sunrise and sunset. This optimal lighting results in calmer, healthier birds with lower cortisol (stress) levels. Consumer-driven concerns can lead to best practices in humane raising and processing of protein.
Overall, the outlook is bright for our industry as it continues to adapt to the changing environment, increasing consumer needs and the growing population of the world. Consolidation within all industries continues, as do international mergers.
Every year is a new adventure as we continue to become more and more global. At least currently, the adventure has been a little less bumpy than in the past. NP
State of the Industry 2016 segments
|Industry overview||Goes live Oct. 14|
|Beef (CAB)||Oct. 18|
|Beef (NCBA)||Oct. 19|
|Pork (Pork Board)||Oct. 20|
|Pork (Sun Trust)||Oct. 21|
|Food Safety||Oct. 28|