Rabobank’s latest Beef Quarterly Report suggests opportunities for innovation in the global beef sector are growing, driven by new investment and increasing industry awareness of the need to improve environmental and societal outcomes.
Maximising the potential of genetics, genomics and breeding, improved nutrition and feed additives, improved monitoring and data analysis, and landscape management are expected to have the largest impact on the beef industry.
The agribusiness report reveals new investment, including large components of venture capital, is starting to flow into animal protein supply chains.
RaboResearch senior animal proteins analyst Angus Gidley-Baird says when the food and agribusiness sector started attracting the interest of venture capital 10 years ago, most investments were made in cropping.
There are now signs investor interest is shifting more towards animal protein with the focus on, and opportunities for innovation in larger livestock supply chains increasing.
Social and environmental factors are another catalyst for increased innovation within beef supply chains.
“Heightened societal concerns surrounding the environment are motivating leading companies across the sector to invest heavily in research that will help produce better environmental outcomes,” Gidley-Baird said.
“This sustainability drive not only seeks to identify production improvements, but also creates wider community interest in driving improvements, and thereby in itself generates further investor interest.”
The report identifies several innovations expected to have the largest impact on the beef industry.
“While many innovations exist across the industry, we have identified several focus areas that we anticipate will yield the most significant results,” he said.
“These include maximising the potential of genetics, genomics and breeding, improved nutrition and feed additives, improved monitoring and data analysis and landscape management.”
In the global scene trade agreements and recovery from covid-19 shape as key watch factors for beef industry participants over coming months.
“Foodservice operations remain restricted in most parts of the world and this is unlikely to change in the first half of 2021,” he said.
This means beef consumption depends on how successfully the industry can market beef for at-home consumption, with China and the US leading this trend.
“We expect foodservice to start recovering in the second half of 2021 and the reopening of these channels could support increased consumption, depending on price,” he said.
Brexit developments and the possible expansion of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) have the potential to impact global beef trade flows.
The EU and the UK reached a trade agreement at the end of 2020, allowing free trade between the two parties from 2021.
Gidley-Baird says the UK will introduce custom checks and regulations in the second half of 2021 and uncertainty remains as to how the new UK regulations will impact the trade of beef products from the EU.
“The UK also recently requested that it be allowed to join the CPTPP and, given US President Biden’s long-standing support for trade liberalisation, opportunities exist for the US to enter the trade agreement as well,” he said.
“The UK’s addition to the agreement would support NZ’s current negotiation with the UK for a trade agreement, while, if the US was to join, it would possibly lead to elimination of beef tariffs into the US, the largest beef market for NZ.”
The report shows NZ cattle prices have increased in the new year, after falling through quarter four of 2020.
The North Island bull price as of February at $5/kg was equal to its position in 2020 and 1.3% lower than the five-year average.
This lift in price is further supported by the significantly reduced volumes of Australian exports following the commencement of their herd rebuilding process.
Total NZ beef production for the 2021 season continues to be up on 2020, driven largely by strong volumes in the earlier part of the season.
Total beef production was up by 12.8% as of January, however, volumes through January show the pace easing off a little.
Export markets continue to perform relatively well and production volumes were up by 6% in quarter-four 2020 on 2019 levels.
Per unit export values for the 2020-21 season are down by 9.5%, due in part to a stronger NZ dollar, but still, they remain similar to the values of 2018-19.
Beef returns are expected to remain solid from key export markets over the next quarter, with farm gate prices generally holding firm.
“Despite the seasonal increase in domestic supplies, there is potential for some upward price pressure, but unforeseen climatic and, or covid-related disruptions still represent a downside risk,” he said.
