“What this says is – all that concern about gestation crates, cages, and about antibiotics and millennials and Meatless Mondays, it doesn’t matter,” Meyer said. “If you bring the product to them at a reasonable price, Americans will eat meat.”
Meyer’s meat-centric presentation was part of Marel’s unveiling of its Progress Point Demo & Training Center and its Meat Showhow customer event, held Oct. 25-26 in Lenexa, Kansas. Meyer, vice president of Fort Wayne, Indiana-based EMI Analytics and Express Markets Inc., was one of several speakers to address attendees about industry trends and new technologies during the event, which included a full slate of equipment demonstrations. Meyer was joined by his colleague, Dave Weaber, vice president of EMI Analytics and Express Markets Inc., and Mark Dopp, senior vice president,
Regulatory Affairs and Scientific Affairs/General Counsel for the North American Meat Institute.
Meyer explained the current risks he sees facing the pork industry:
- Trade impacting disease outbreak – If there are any disease outbreaks in the pork industry, the export market would close immediately, and would stay closed for a period of months or longer. The US currently exports 23 percent of its pork. Disease outbreaks are a constant concern for the US pork industry, Meyer said.
- Trade issues – Trade continues to affect what happens in the meat industry specifically in relation to NAFTA. Mexico continues to be an important market for US hams.
- Diseases – Although the US pork industry has been in better shape recently when it comes to diseases like PEDv than in recent years, it remains a constant risk and concern.
- Feed costs
- Demand – While meat demand continues to grow, what will happen to pork prices (and as a result, demand) after the new pork plants are at capacity in 2019? Meyer suggests that the industry will need to export the excess product because US consumers will not be able to consume it all at a decent price.
Weaber shared insights about the beef market during his presentation. One challenge on the beef side is handling the increasing demand for specialty product (organic, natural, no antibiotics, etc.). While Weaber said there is a demand for these meats, which do collect larger prices, there’s a huge cut disparity with non-conventionally raised meats. Consumers looking for these products are just buying middle meats – ribs and strips – and 85 percent lean grind. They aren’t buying chuck and round cuts. “All the chuck and round meat is going to have to go through the grinder, which doesn’t add any value.”
According to EMI numbers, cattle inventory is going to peak in 2020. “In 2020 we might be at packing capacity,” he said. “There’s no real plan for expansion in the US at the moment.” Weaber explained that there are a few facilities around the country that aren’t at capacity, but with carcass weights continuing to be on the rise, packaging capacity is going to be at peak soon – and that will be a challenge for the entire beef industry.
“The trend from 1980 to 2015 was that the average carcass increases were about 5 lbs. per year. We all hear foodservice and retail guys complain about the size of ribeyes,” Weaber said. “Everybody insists that we still get paid on pounds. The economics are going to continue to drive carcass weights in all the proteins. It’s the same math in the chicken business. It’s the same math in the pork business.”
With higher carcass weights comes higher production – and with that price impacts.
“We’re going to be in record beef production in the next year or so, followed by two years of huge growth on top of that,” Weaber said. “The previous peak was about 27 billion lbs., and now we’re looking at close to 30 billion lbs. There are huge price impacts when you have a market that large. We can’t get American consumption to move up that that level. To get that much extra through the system you either have to export it or discount it to the point people are trading out of pork and poultry…There are huge price impacts coming on the beef side.”
An additional concern is finding the labor needed to handle the increase in slaughter coming from record production amounts. “Trying to find the labor to slaughter an extra million head in beef packing plants today isn’t an easy task,” Weaber said. “Handling the 10 percent growth in pork packing capacity is not going to be done by growing the labor force, it’s going to be done through automation. We have to provide the margins and incentives to the packers to make those kinds of changes in operations.”