Global Meat Consumption Is Undergoing A Massive Shift
11. Developed nations may become big suppliers instead of consumers (9 min read)
Dear reader, this post is the second of a two-part series.
Would you like to support Climatonomics? Just click the link below or forward this email to your friends, enemies, relatives and that “friend of a friend” whose Netflix account you are leeching on. In return, you will get my strong good vibes.
In my previous post, we discussed how the world consumes meat and how trends are unique to different nations.
The data provided a key insight that, in countries where people reduced their meat intake, the driving force was demographics and economics… and not because the vegan movement made a lot of converts. At least for now.
But the world has changed its meat consumption in subtle, yet consequential ways. The demographics of developed nations continue to age, while the economic strengths of developing countries have also grown, and the world population continues to increase. I wondered if I can guesstimate how meat consumption will trend in the future, and I think I can see some broad trends.
Let’s dive in.
World Has Only Changed the Type of Meat It Consumes
The overall meat consumption has only increased globally. To understand the details, I picked up the annual report from the OECD and UN Food and Agriculture Organization. This report paints a comprehensive picture of food grains, meat and essentially all food produced on the planet, with detailed data on each nation. I believe this is the most accurate publicly available information we can access to understand our path.
There are some interesting trends in the OECD projects:
People are increasingly shunning red meat, i.e. beef, in favor of white meat, i.e. poultry, in most high-income developed nations.
Over the next few years, pork will see a stable demand, with slight decreases in favor of poultry.
The sheep and lamb market will continue to grow, but will not be as significant as other meats.
In terms of environment and climate, this is a promising trend, since the developed nations have the highest per capita meat consumption.
Of all the meat, beef has by far the highest resource consumption, in terms of water and grains. Pork farming emits around 10 times lesser CO2.
In contrast, poultry emits around 20 times fewer emissions than beef.
In Chart 1 we see that there are also differences in where the meat is raised, as developed nations have fewer emissions for the same meat, compared to underdeveloped nations - and this trend is the most significant for beef. Poultry has become less polluting over time in all countries, and the gap between low and high-income nations is reducing. Pork is an outlier, with high-income nations having higher emissions than low-income nations, because of their preference for industrial pig farming. The industrial process is more carbon intensive than “backyard farming”, which is prevalent in Asia - at least that is the theory that comes out of another FAO report on pig farts pig supply chains1.
The overall trend of reducing meat consumption in the developed nations and switch to poultry, and more efficient meat farming points to lower emissions per kilogram of meat produced. Poultry consumes three times less resources to produce a kilogram of meat compared to beef. This is a positive step.
So why has beef consumption dropped despite it becoming cheaper?
Not morality, but health. People are concerned about the long-term negative health implications of red meat and are switching to leaner meat like poultry as a substitute. This is promising, because it shows that increased awareness can change consumer habits, independent of economics.
The OECD report acknowledges this, but claims that overall emissions will rise because demand will increase from parts of the world that have been biding time for their economic golden age…
… The market of the future is in the South, while production remains in the North.
The meat industry needs large markets to keep riding the gravy train (pun intended, sorry). From my earlier post, the biggest markets in the global north - the developed nations - are declining because of ageing populations. Although demand in China will grow for at least another decade, it will also flat-line because its population is ageing faster (courtesy of the one-child policy).
But there is another source where demand will explode, and likely sustain over the long term: Africa. Africa’s population is undergoing the highest growth rate compared to any part of the world, with the fertility rate far exceeding any other region, as you see in Chart 2 below.
You may well wonder why Africa’s population increase is a big deal now - after all, its fertility rate was three times higher in the 1970s, compared to today. In fact, Africa today is seeing its lowest fertility rate on record. This is because even though Africa saw massive birth rates in the past, the actual population that survived to working age adulthood was considerably lower because of high childhood mortality.
So what makes this time different?
Factor 1: Medical Interventions
Africa has seen massive success in reducing childhood mortality rates, for children under the age of five (when they are the most vulnerable), as I show in Chart 3 below.
The success of this intervention is reflected in the number of children in Africa today. Despite its fertility rate reducing compared to previous decades, it has more children in its population than any other region on earth, as seen in Chart 4.
Factor 2: Africa’s Economy Is Growing
Although not as dramatic as other parts of the world, Africa’s per capita income has risen over three times its level in the year 20002. While it may seem hard to believe given the constant negativity in the media, large swathes of the continent are free of the perpetual conflict that plagued their past, are rich in mineral resources and are trying to compete in the global economy with a nascent service sector.
All this points to only one outcome.
Africa will see a massive population boom with a large, young workforce available at a time when the developed world will have fewer young people available to manage its economy beset by an ageing population. What do young people consume? Lots of calories. Lots of protein. Lots of meat.
But… Africa’s capacity to consume meat far, far outstrips how much meat it can produce. From Economics 101, demand meets supply, and there is plenty of supply in the developed world. The meat producers there will rely on the African market to compensate for the ever reducing demand at home. In fact, a University of Illinois publication that I greatly respect on all topics of agriculture makes the same claim. It also says that the US demand for meat will plateau, while the meat production capacity would remain roughly the same.
According to the OECD, the key competitors for this large market will be Brazil and the US, with Brazil emerging to be the biggest supplier because of its lower labor cost, plentiful soy production and well-developed animal farming sector. The relative strength of the US Dollar will make it cheaper for Africans to buy from Brazil instead of the US.
Large-scale animal farming means large-scale soy and corn cultivation, which means Brazil needs more land. This will lead to painfully obvious outcomes for the Amazon rain forest. But if there was ever a reason to be optimistic about vegans and vegetarians finally having their time in the sun, it is now.
Gen Z may be the most likely to be Vegan
There is not enough high-quality data on how many vegetarians are in the global population, but I will take data from reliable sources for the US, Canada and the UK to get a glimpse of the broader western world. I will distill it down to some key points.
Studies in Canada found that most vegetarians and vegans were under the age of 35… and it’s highly likely they will raise their kids with the same dietary preferences3.
A British study from The Lancet reported that younger people < 18 years wanted to reduce their meat consumption. But they were unsuccessful, because they live with millennial parents, who feast on more meat than any generation.
A study looking into large-scale trends and reasons for choosing diets mentioned that older people eat meat because it’s a part of the cultural habits they were raised with, and do not question it. Younger adults are making more conscious decisions because of awareness, and hence the rise in vegetarianism among this cohort.
At this point, I will wave a big red flag because we may have bad data for an unlikely, yet all too familiar reason. I’ll just leave this here:
To those of you who were mocked as a teenager for your vegetarian affliction, I’m sorry. You were born a few decades too early. Because apparently, not eating meat is now “cool” amongst teenagers. As a natural consequence, teenagers are lying to fit in, screwing with the data. If you told me 10 years ago that in the future, teenage guys would lie to be vegan to impress a girl4, I would have told you that even a North Korean democracy would have a higher likelihood.
Yet, here we are. What has the world come to?
But herein lies my biggest reason for optimism: Our next generation thinks a meat-free diet is a virtue, and not the signs of a social deviant, which was most of the millennial, Gen X experience.
If this trend is indeed as pervasive as these studies claim, this is big. Really big.
Since you might think I am being overly dramatic, I would remind you that several social issues such as same-sex marriage, racial equity, civil rights and women’s rights all seemed radical and abnormal at some point - but often first embraced by the younger generation. The older population, which would label them as naïve or immoral, quickly derided them.
Yet, these were the future politicians, industrialists, and leaders. And when they got the reins of power, they promptly delivered on their beliefs with public support. Today, if our teenagers’ formative years are molded with the belief that a meat-free diet is desirable - even though they may not follow it now - they have planted the seed for transformation down the road.
Heck, I’ll chalk this as a (small) win5. I’m a “glass is 20% full” kind of guy.
Final Thoughts and Uncertainty
If you were looking for a final verdict on meat consumption in the decades ahead, a reliable number is hard to find. Despite the demographics showing a shift in meat demand from the high-income to low-income nations, it remains to be seen if the low-income nations can grow their economy enough to afford meat on a scale of the developed world. So while there is demand, and there is supply, there are doubts about how big the market truly will be. After all, meat industries in the developed world have higher labor costs and to make a profit, the purchasing capacity in the low-income countries has to increase proportionally.
I have not yet factored in climate-change induced droughts and loss in agricultural yields that are already being felt. This will make meat more expensive on the supply side and suppress the growing economies on the demand side. Another major wildcard is zoonotic diseases such as bird and swine flu outbreaks that decimate supply, also increasing prices. This is already happening.
Long story short: Meat demand will increase, no doubt. But I am not convinced that the demand will translate to actual supply and consumption. There are too many headwinds and economic variables that can change the outcome either way, but hopefully, this thought experiment was helpful? Would love to hear your thoughts. Comment away!
Did you like this edition of Climatonomics? Subscribe to get more awesome content Friday evenings (US Eastern) every week.
Know someone who might find this useful? Climatonomics is free so go ahead and share!
Both US and Canada have similar proportions of vegetarians in their population, around 8-10% based on various polls.
Worldwide, statistics consistently show that women are twice more likely to be vegetarian/vegan than men. Hence, the virtue signalling is likely from desperate boys…
Maybe this cohort will make a difference in the next decade. Stay tuned for Climatonomics in November 2033.