Meat, dairy producers gain global sales as rising middle class gains higher pay

KANSAS CITY, Mo. – Livestock and dairy producers can’t afford to ignore what goes on in the rest of the world, says Scott Brown, University of Missouri livestock and dairy economist.

Global population and income growth spurs more consumption. Potentially, that means more export business for meat and dairy producers.

U.S. demand for protein products remains sluggish, Brown said. But a rising middle class is poised to grow in other parts of the world, especially the Asia-Pacific region outside of Japan.

Look for areas of growing population that have growing income, Brown told livestock and genetic exporters meeting in Kansas City.

“The new middle class seeks more meat in their diet. And they’ll have money to buy.”

Consumers in already developed countries don’t show as much demand growth. “The U.S. economy turned upward, if slowly. Now, a lot depends on whether Congress does something that hurts job growth,” Brown added.

In developing countries, more consumption depends on mouths to feed. And money to buy food.

U.S. farmers must realize export markets demand high quality. The U.S. now fills the niche for providing corn-fed prime beef. This quality has helped sustain beef prices in the U.S., boosting farm prices.

That quality demand is so strong, Brown said, that future export growth might come not from increased U.S. production but from reduced U.S. consumption.

Changes in U.S. agriculture will affect future exports.

Agricultural prices continued higher over the past five years. At the same time, input costs rose for raising and feeding livestock.

Higher prices of meat and dairy products could moderate expected exports.

Price volatility remains a big issue facing U.S. farmers. That includes uncertainties in weather, international markets and domestic use.

While trade agreements smooth the way for many exports, trade impediments remain important in determining products traded.

Advancement in improved genetics affects trade as well. Better breeding allows U.S. farmers to produce more products more efficiently at lower cost.

Increasingly, genetics in the form of semen are being exported to livestock producers around the world.

Export of beef cattle semen straws far exceeds use by U.S. producers. On the dairy side, milk producers continue to use more artificial insemination than their foreign competitors.

Export of live animals increased almost three-fold in the last two years.

Brown said economics comes into play on where production grows. Much depends on comparative advantages, here or over there.

“Economics determines that a country specializes in producing and exporting only goods which it can make more efficiently – at lower opportunity costs. A country without that advantage should import products.”

U.S. farmers using improved genetics can compete in the world market. Genetics from tested and proven sires leads to higher quality.

Last year, MU Extension added an educational program: “Quality Beef by the Numbers.” It helps farmers produce and market sought-after USDA choice and prime grades of beef. Those grades dominate export sales.

Brown is senior economist of Agricultural Markets and Policy in the MU Division of Applied Social Sciences.

He spoke at the U.S. Livestock Genetic Export annual meeting.