What does the future hold for North America’s livestock industry?

The industry is facing rapid change, both on a global level and inside national borders. But, though it faces a range of challenges, it is well equipped to meet rising world demand

by JIM DALRYMPLE

Many countries such as Brazil, Argentina, China and Mexico are emerging as producers and exporters of traditional North American products from poultry, dairy, beef cattle and swine farms.

Developing countries with rising living standards will increase world demand for meat, milk and eggs. Will North America share in this increased demand and supply a portion of the products needed?
Moreover, many of the developing countries are not facing the same concerns as western nations about sow housing, poultry management, GMO foods, pesticides and antibiotic use. They are only too pleased to have food on their tables.

North America has enjoyed a highly efficient livestock production system that has adapted and evolved to meet changing consumer demands, but it is also under challenge from a small minority of the population who question current production methods. Here’s how it stacks up against the rest of the world.

Beef.
In 2004, the North American beef cow herd was estimated to be 49.2 million head with the United States making up two-thirds of the total, Mexico 23 percent and Canada 10 percent.

In the same year, North American beef production of 14.9 million metric tonnes on a carcass weight basis amounted to 25 per cent of the world’s total production. The United States accounted for 80 per cent of this, Mexico 12 per cent and Canada eight per cent.

Pork.
North American sow numbers have declined over the past two decades from 11.7 million in 1980 to 8.5 million in 2004. Due to improved reproductive performance, pig numbers as a whole have not declined.

North American production is split 70 per cent United States, 20 per cent Canada and 10 per cent Mexico and totalled 12.4 million metric tonnes in 2004, about 10 per cent of the world’s total production. China produced 47 million metric tonnes and the European Union about 21 million tonnes.

Poultry.
Poultry meat production in 2004 in North America was 21.2 million metric tones, of which 84 per cent came from the United States, 11 per cent from Mexico and five per cent from Canada. North American production was down to 35 per cent of the world’s total from 39 per cent in 1993.
Chinese production has increased 300 per cent and Brazilian production 257 per cent in the past 10 years.

Dairy.
Milk production in North America was 95.4 million metric tonnes in 2004, 15.6 per cent of the world’s total output. Eight per cent of this was produced by Canada, 10 per cent by Mexico and 81 per cent by the United States.

India currently is the world’s largest milk producer with 87.2 million metric tones, of which 60 per cent is buffalo milk.

In the United States and Canada, increased output is coming from fewer cows with significant improvements in per cow production.

Figure 1. Animal production consolidation in Canada and the United States
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Increased consolidation and specialization is also occurring in the processing and retail sectors.

In the United States, the top four processing firms account for more than 60 per cent of pork processing, over 80 per cent of the beef and heifer slaughter and about 50 per cent of broiler processing.

The retail sector consolidation has resulted in four major grocery chains handling almost half the food in the Unites States, with three retailers doing a similar volume in Canada.

The demand for livestock products is related to income growth and demographic changes. In many countries, notably China, the rapid rise in per capita income, has generated a significant increase in per capita meat consumption. Similar income and consumption trends are occurring in India, Indonesia, Chile and other developing countries of Asia and Latin America.

So what does the future hold for North America? Animal agriculture is becoming more highly integrated and concentrated, with leading integrators often having operations in more than a single province, country or continent. These firms have the flexibility to shift sources of supply and markets.

Japanese companies have already invested in pork production and processing systems in several U.S. states and were looking at establishing operations in Canada.

The Canadian pork industry is undergoing restructuring, with major packers such as Olymel and Maple Leaf Foods reassessing their locations, pork marketing and support services. Labour costs will have a major impact on processing in Canada. This is not an issue in Mexico, China and other newly emerging producing countries.

Recent reports indicate that feed costs are higher in Mexico, but lower labour and management costs in Mexico offset them. Cost comparisons show Canada has a competitive advantage over the United States in the production of weaner pigs, but lower U.S. production costs for feeder pigs and processing are resulting in more Canadian hogs being exported to the U.S. cornbelt for finishing.

Ethanol production may also have a significant impact on animal production and feed costs. The rapid improvement in corn prices because of anticipated ethanol production is a boost to the grain industry, but it will add significantly to livestock production costs.

Packer consolidation will also have an effect on the beef industry’s future. Calving rates have improved. Calves born per cow inventory is over 80 per cent in the United States and Canada, while in Mexico it is less than 50 percent.

The packing industry has increased its involvement in production agriculture. In the United States, 10 per cent of beef and 24 per cent of pork production is believed to be owned by packers.

Climate change may also affect breed selection, feed production, water availability and even the location of livestock farms. Government regulations will have an impact on the availability of new growth enhancers and antibiotics, as well as environmental restrictions.

A burdensome regulatory framework, particularly evident in North America, may actually harm human health and the environment by restricting the development and release of animal innovations that can result in improved production of high quality, safe products.

Despite that, North America has realistic input costs and resource availability, modern technology and well-developed production, processing and marketing systems to meet the expanding global demand for existing and newly developed milk, meat, eggs. Canada is also well prepared to create and market many new bio products from the livestock industry. BF

J.R. (Jim) Dalrymple, P.Ag., CAC, is a former Ontario government swine specialist and owner of Livestock Technology Services in Brighton.