Mounting US protein supply drives home need for niche

Mounting US protein supply drives home need for niche


Stock and Land Beef
A grassfed beef burger in the United States. Meat with 'natural' claims is recording big volume and value growth.

A grassfed beef burger in the United States. Meat with 'natural' claims is recording big volume and value growth.

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Chilled grassfed competition could intensify in US.

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THE big inroads Australian chilled grassfed beef has made in the United States courtesy of millennials chasing ‘all natural’ is not going unnoticed by savvy local producers.

As US ranchers deal with the threat of mounting pork and poultry supplies at a time when their cattle slaughter is also tracking higher, niche premium opportunities are likely to become even more attractive.

Australian exporters have big concerns about the effect the US “wall of meat” is likely to have on their business, and those who have tapped into the high end grassfed market expect competition will only intensify.

In the past six years, Australia has more than doubled its chilled grassfed beef trade to the US and it now sits at 25 per cent of total volume shipped there, which is our second largest beef market after Japan, according to Meat and Livestock Australia.

Export sales manager with NH Foods Andrew McDonald said the grassfed, HGP-free, antibiotic-free product range was a fast growing niche in the US.

This year’s Power of Meat publication, the prominent United States study that tracks consumer spend and demand interest, shows the concept of transparency is driving new dollars.

Meat with natural claims is recording a 4pc compound annual growth rate and meat labelled hormone and antibiotic free is growing at 9pc, the data shows.

“The US will develop more of a grassfed program going forward because that’s what more and more customers are asking for,” Mr McDonald said.

“Sure it is a relatively small market compared to US conventional production but with growth in sales of 10pc per year, every year, and it being a key focus of millennials who will be beef’s big future customers, it won’t be ignored.”

Other than the US, Uruguay is Australia’s main competitor in the chilled grassfed US space, analysts said.

They have been warning about the “mountain of protein” drifting on to international markets in coming years as the US looks to secure a home for its increased stockpiles across beef, chicken and pork.

Global pork production is forecast to be up over 2 per cent in 2018 to 113.5 million tons, analyst and meat broker Simon Quilty, Victoria, reports.

A Californian butcher breaks down a pig carcase.

A Californian butcher breaks down a pig carcase.

The US excess pork of both displaced exports due to tariffs and this year’s increased production will see close to 900,000 tonnes either needing to be absorbed by the domestic market or find new export homes.

Mr Quilty says in the end “cheap proteins impact each other” so falling US pork and poultry prices will eventually drag down US domestic beef prices.

That in turn results in cheap global beef which will impact Australian exports and Mr Quilty believes the flow-through could occur as early as next year.

Australia and the US overlap by 93 per cent in global beef markets, he said.

Meanwhile, Rabobank reports US cow slaughter is up 10pc year-to-date and the dry, and mounting protein supplies, might well prompt cow calf operators now heading into winter to offload extra numbers.

Senior analyst animal protein Angus Gidley-Baird said while greater substitution between pork and chicken was typical, cheaper cuts of beef could be at risk.

Australian beef exporters have described the situation as “scary.”

Of course, most of the big beef producing countries are also big consumers and demand, like supply, is growing.

Progressive exporters like NH Foods appear to have their eyes on key trends like transparency and branding.

They believe that is how they will be able to extract the most value from growing demand, particularly against a backdrop of fast-rising supply.

For US producers that will be even more pertinent.

Mr Gidley-Baird said in a high protein supply scenario, marketers had to look at how their products could justify retaining custom and asking a premium and the way to do that was providing an added characteristic.

When the US last had very large amounts of beef on the market, attempts were made to target niches and “all those names like organic and grassfed started appearing more.”

However, he pointed out, some of these attributes, particularly grassfed, require massive production system changes and are simply impossible in some cattle growing areas of the States.

The story Mounting US protein supply drives home need for niche first appeared on Farm Online.

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