It means producers and processors will need to adapt to sustain success, he wrote in the bank’s annual forecast for the sector.
Higher production costs and tighter supplies will push animal protein prices up and constrain global consumption in 2024, he said.
Input costs and inflation are likely to fall but will remain at a higher level than pre-pandemic. There are also signs that consumers are growing used to higher prices and, in some markets, willing to pay a quality premium. But they will continue to reduce purchases of plant protein alternatives, he wrote.
Demographic shifts will see the labour market tighten and raise production costs, while reduced population growth will slow consumption.
Elsewhere, there will be pressure to invest in upgrading production systems to serve emerging market needs, meet regulatory requirements and cater to changing consumer preferences around sustainability.
Adverse weather conditions and disease also present challenges.
Sherrard said “for companies to sustain the success of the past few years, it’s essential that they adapt to the structural changes in the market. Instead of simply riding out the storm, animal protein businesses need to take stock of their strengths and prepare to transition their supply chains to operating in an environment with high costs and tight margins.
“Companies should double-down on improving their productivity, review their existing portfolios, strengthen supply chain partnerships, increase investment in new product development and adjust their pricing strategies to navigate the challenges of the coming year.”
Poultry and aquaculture will be the only two species groups to see production grow in 2024, predicts Rabobank, though it will be slower than in 2023. Beef will continue the decline seen in 2023, moving with changes in cattle cycles in North America, while pork production will also contract modestly.
So my personal forecast is that the supermarket chains will pressure suppliers and they, in turn, will pressure farmers and we know from experience how that ends.
