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Rabobank
 

New investment and growing sustainability awareness drive beef industry innovation – Rabobank Beef Quarterly

Opportunities for innovation in the global beef sector are growing, driven by new investment and increasing industry awareness of the need to improve environmental and societal outcomes, according to a new report by agribusiness banking specialist Rabobank.

In its recently-released Beef Quarterly Q1 2021 – New drivers in Cattle Innovation, Rabobank says new investment, including large components of venture capital, is starting to flow into animal protein supply chains.

“When the food and agribusiness sector started attracting the interest of venture capital about a decade ago, most investments were made in cropping,” RaboResearch senior animal proteins analyst Angus Gidley-Baird said.

“However, there are now signs investor interest is shifting more towards animal protein and the focus on and opportunities for innovation in larger livestock supply chains are increasing.” 

Mr Gidley-Baird says social and environmental factors are another catalyst for increased innovation within beef supply chains.

Angus Gidley Baird, RaboResearch Senior Animal Proteins Analyst

Angus Gidley Baird, RaboResearch Senior Animal Proteins Analyst

“Heightened societal concerns surrounding the environment are motivating leading companies across the sector to invest heavily in research that will help produce better environmental outcomes,” he said.

“This sustainability drive not only seeks to identify production improvements but also creates wider community interest in driving improvements, and thereby in itself generates further investor interest.”

The report identifies several innovations that are anticipated to have the largest impact on the beef industry.

“While many innovations exist across the industry, we have identified several focus areas that we anticipate will yield the most significant results,” Mr Gidley-Baird said.

“These include maximising the potential of genetics, genomics and breeding, improved nutrition and feed additives, improved monitoring and data analysis and landscape
management.”

Global outlook

The report says trade agreements and recovery from Covid-19 shape as key watch factors for beef industry participants over coming months.

“Food service operations remain restricted in most parts of the world, and this is unlikely to change in the first half of 2021. This means beef consumption depends on how successfully the industry can market beef for at-home consumption, with China and the US leading this trend.” Mr Gidley-Baird said.

“We expect food service to start recovering in the second half of 2021, and the reopening of these channels could support increased consumption, depending on price.”

Mr Gidley-Baird said Brexit developments and the possible expansion of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) had the potential to impact global beef trade flows.

“The EU and the UK reached a trade agreement at the end of 2020, allowing free trade between the two parties from 2021. The UK will introduce custom checks and regulations in the second half of 2021 and uncertainty remains as to how the new UK regulations will impact the trade of beef products from the EU,” he said.

“The UK also recently requested that it be allowed to join the CPTPP and, given US President Biden’s longstanding support for trade liberalisation, opportunities exist for the US to enter the trade agreement as well.

“The UK’s addition to the agreement would support New Zealand’s current negotiation with the UK for a trade agreement, while, if the US was to join, it would possibly lead to elimination of beef tariffs into the US — the largest beef market for New Zealand.”

New Zealand

The report says New Zealand cattle prices have increased in the new year, after falling through quarter four of 2020.

“The North Island bull price as of 8 February at $5/kg was equal to its position in 2020 and 1.3 per cent lower than the five-year average,” Mr Gidley-Baird said.

“This lift in prices is further supported by the much-reduced volumes of Australian exports following the commencement of their herd rebuilding process.”

Mr Gidley Baird said total New Zealand beef production for the 2021 season continues to be up on 2020, driven largely by strong volumes in the earlier part of the season.

“Total beef production was up by 12.8 per cent as at 16 January, however volumes through January show the pace easing off a little,” he said.

“Export markets continue to perform relatively well, and production volumes were up by six per cent in quarter four 2020 on 2019 levels. Per unit export values for the 2020/21 season are down by 9.5 percent, due in part to a stronger NZ dollar, however they remain similar to values in 2018/19.”

The report says beef returns are expected to remain solid from key export markets over the next quarter with farmgate prices generally holding firm.

“Despite the seasonal increase in domestic supplies, there is potential for some upward price pressure. However, unforeseen climatic and/or Covid-related disruptions still represent a material downside risk,” Mr Gidley Baird said.

 

Rabobank New Zealand is a part of the global Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has nearly 120 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 40 countries, servicing the needs of about 8.6 million clients worldwide through a network of close to 1000 offices and branches. Rabobank New Zealand is one of the country's leading agricultural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 32 branches throughout New Zealand.

 

Media contacts:

David Johnston
Marketing & Media Relations Manager
Rabobank New Zealand
Phone: 04 819 2711 or 027 477 8153
Email: david.johnston@rabobank.com


Denise Shaw
Head of Media Relations 
Rabobank Australia & New Zealand 
Phone: +612 8115 2744 or +61 2 439 603 525 
Email: denise.shaw@rabobank.com

 

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