World agricultural power in the balance

Power in the world’s meat market is expected to stay concentrated in Europe and North America despite growing pressure from emerging economies, a new report shows.

The ‘Power in Agriculture’ report expects shifts in the top beef, pork and poultry meat traders, but predicts that major North American and EU economies are likely to consolidate their economic power through transnational corporations.

“Although the emerging economies, in particular China and Brazil, have clear advantages in certain commodity markets, their corporate power in agriculture is still not on a par with that of North American and European countries,” the report says, adding that 75% of the top 150 agribusiness transnational corporations are located in North America and the EU.

The research, commissioned by the Oxford Farming Conference and carried out by the Scottish Agricultural College (SAC), studied various factors to determine where the power lies in global agriculture. It came up with a regional power index based on trade, corporate, political, natural and mineral power.

It points out that the meat industry is largely dominated by very few players, with only 15 countries accounting for most of the trade. While some of the major EU economies, such as Germany and the Netherlands, top world trade in certain commodities, the EU-27 as a single entity is not very engaged with the outside world, though crucial for trades between member states.

Th report adds: “In terms of global power, this provides a degree of self-sufficiency, and may help to reduce the vulnerabilities of individual member countries.” The EU’s export capabilities are expected to decline, due to pressure on natural resources.

Brazil and Australia stand out as net beef and veal exporters (in contrast with the US and EU’s net trade decline over the last decade) but the report adds that depending on large importing countries makes these two economies vulnerable. “In terms of market power, this means that these export-only countries depend on the large importing countries for the viability of their beef and veal exports, again raising the question as to who ultimately has the power,” the report says.

The US is expected to increase beef imports by 2020, maintaining its top place, while the EU is predicted to reduce beef imports, going from fourth to fifth place in favour of Mexico. A shift will also take place in the beef export market, with the US expected to catch up with Australia at the second place behind Brazil by 2017. Similarly, Argentina is likely to catch up with Canada and New Zealand by 2020.

Russia’s pork imports are expected to decline dramatically, with South Korea taking the third place behind Japan and Mexico by 2020, while the pork export market, led by the US, the EU and Canada, is likely to stay the same, the report adds.