Beef production: India, South America gains offset U.S. decline

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click image to zoomExport ship According to the USDA's Livestock and Poultry: World Markets and Trade report, world production is forecast slightly higher for the second consecutive year.

Strong expansion by India and to a lesser extent, Brazil and Argentina more than offsets lower production forecast for the United States and the EU.

click image to zoomWorld Beef ProductionUSDA

U.S. Long Term Decline Accelerates
The world’s largest beef producer, the United States, is forecast to tumble 4 percent to 11.3 million tons. Tight supplies of cattle available for slaughter persist on declining inventories triggered by recent years’ sharp reductions in the calf crop and reduced imports of live animals.

click image to zoomWorld Beef ProductionUSDA

Mexico Follows Similar Decline
Mexico’s production is forecast 1 percent lower to 1.8 million tons largely on reduced supplies of slaughter-ready cattle although high feed prices and marginal pasture conditions will also limit weight gains.

EU Downward Trend Continues, Albeit at a Slower Rates
EU production is forecast to fall 1 percent to 7.7 million tons on increasing input costs and reductions in government support, despite increased efficiency. This reduction is a continuation over the past decade during which production fell 7 percent. The dairy herd is also shrinking due to increased milk production efficiency as smaller and less efficient farms exit the industry. Although continuing genetic improvements and the fading effects of the bluetongue disease are expected to raise reproductive efficiency, they are not expected to offset the decline in the breeding herd.

Steep Production Decline for Korea

Korea’s production is forecast to drop 10 percent to 301,000 tons. A drop in live cattle prices and the implementation of government policy to reduce the cattle inventory by encouraging cow slaughter resulted in a production surge in 2012. This will negatively impact the availability of slaughter-ready cattle in 2013 and reduce beef production.

click image to zoomWorld Beef ProductionUSDA India’s Surge Forecast to Continue

India’s bovine herd continues to expand in response to strong demand for dairy products, resulting in a 1 percent growth forecast during 2013 to almost 330 million head. Private sector investment has led to notable improvements in dairy management practices, including extension services, veterinary care and improved genetics. Rain deficits causing failed crops in parts of India during 2012 (Karnataka, Gujarat, Maharashtra, and Rajasthan) have led farmers to focus on dairying.

Beef production is forecast to climb 14 percent to nearly 4.2 million tons fueled by robust foreign demand. Rising exports are triggering the construction of slaughterhouses providing farmers with a new market for non-productive buffalo heifers, bulls and bull calves. Indian federal and state laws prohibit the slaughter of cattle for religious concerns. Buffalo slaughter is allowed, although it is restricted to bulls and unproductive heifers. Considering the profitability of meat production in India, farmers now have an incentive to salvage and sell buffalo bull calves which were previously unused. Given this option, some farmers are fattening calves for slaughter, although the practice is still uncommon and Indian carcass weights remain low compared to other countries.

Brazilian Production Higher on Domestic and International Demand
Brazil’s production is forecast up nearly 2 percent to a new record of almost 9.4 million tons on strong domestic and foreign demand. A potentially weaker Brazilian real combined with record increased cattle supplies (forecast to grow 3 percent during 2013) is likely to generate competitive prices in the world market.

Other Major Producers Forecast to Continue Gains Largely on Herd Rebuilding
Argentina’s production is forecast to continue to recover and is up 6 percent to nearly 2.8 million tons. Increased slaughter will be supported by growing cattle supplies as a consequence of herd rebuilding initiated in 2010 after severe drought and liquidation. Additional production growth is constrained as smaller exports (180,000 MT in 2013 compared with 621,000 MT in 2009) discourages marketing cattle at heavier weights as younger and lighter cattle are typically demanded by the domestic market. Despite expected high inflation rates and continuously increasing production costs, historically high cattle prices are still likely to provide positive returns to the cattle sector, encouraging the continuation of herd rebuilding, albeit at a more moderate pace.

Australia’s production is forecast to rise 2 percent to nearly 2.2 million tons. Following the end of a near 10-year drought in 2010, greatly improved pasture conditions and fodder supplies have supported herd rebuilding which is expected to continue through 2013. In addition to greater slaughter, weights are forecast to remain near record levels.

For the first time since 2007, China’s production is forecast higher (up nearly 1 percent to 5.6 million tons) on robust domestic demand, continued government support and expansion of larger-sized commercial operations. The government has subsidized beef cow genetic improvement over the past few years and invested in protecting and improving natural grasslands in major cattle grazing areas in west China. Larger commercial slaughterhouses are signing more contracts with cattle producers and offering better prices than private cattle collectors, improving profit margins and sector efficiency.


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