For the first time since 2014 “meat” consumption is expected to fall even further than initially estimated says the new Baseline Update for U.S. Agricultural Markets report recently published by the researchers at the University of Missouri Food and Agricultural Policy Research Institute.
The report cites COVID-19 as one of the multiple reasons that include the government’s poor response to it as reasons for the drastic and continued impact on agricultural markets.
In the opening summary the report says:
“Beyond the near term opening of the economy, the macroeconomic contraction is likely to have longer-lasting effects.
In addition to those impacts, farmer intentions for acreage in 2020 have been published, prospects for achieving the Phase 1 trade agreement with China have narrowed and crop size in South America has become better known.
These impacts are significant and motivated an update to the 2020 Agricultural Market Outlook, which was produced under the prevailing conditions in early February of this year. This update was prepared for the first week of June 2020.
Macroeconomic assumptions are based on May forecasts by IHS Markit, which include a sharp economic contraction in 2020 and a recovery that keeps U.S. GDP below previous estimates for several years.”
Given important assumptions, key outcomes of the analysis are as follows:
- Total federal spending on various farm support and conservation programs in the current fiscal year reaches a record $50 billion.
- Net farm income in 2020 declines by about $3 billion in spite of record government payments of $33 billion. Another farm income measure—net cash income—declines by $18 billion in 2020, with much of the difference in the two measures explained by changes in inventory values.
- Given projected market developments and the assumption of no new government payment programs, both net farm income and net cash income decline again in 2021, with net farm income falling below $80 billion.
- As a result of supply chain disruptions, margins between live animal prices and wholesale meat prices have widened. Those supply chain impacts are assumed to be largely overcome in the months ahead. Projected levels of 2020 meat production are below previous estimates, but exceed those in USDA’s May World Agricultural Supply and Demand Estimates.
- Steer prices decline by more than $3 per hundredweight in 2020 and hog prices fall by nearly $5 per hundredweight, largely because of COVID-19-related foodservice slowdowns and packing plant closures.
- U.S. pork export growth in 2020 offers price support, with much of the growth in exports headed to China.
- Broiler prices are expected to fall 15% in 2020 in response to larger supplies and demand weakness.
- After several years of strong growth, total per-capita consumption of beef, pork and poultry consumption is projected to decline in 2020 as the COVID-19 crisis pushes up retail prices and reduces consumer disposable income.
- Milk prices are off sharply in 2020, as restaurant and school closures and supply chain disruptions push down milk and dairy product demand. Projected milk prices fall to $16.34 per hundredweight from the prior year’s $18.63 per hundredweight. Price recovery occurs over the next several years, but milk prices remain below 2019 levels.
While the agriculture industry as a whole is affected including crops, the impact on the “livestock” industry is substantial and long-lasting into 2025.
With reports estimating that the “milk” industry will be dead by 2030 and animal agriculture shortly thereafter the pandemic of 2020 may have helped to seal that fate even sooner than previously estimated.
The Plant Based Foods Association has published data showing that vegan meat sales dramatically increased by 148% at its peak in March and continued on to grow another 61% throughout June.
That growth of plant-based vegan meats means it’s now growing over two times faster than its animal-based counterparts.
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