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28 February 2022

The meat sector today: between consumption moderation and technological transition

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Household consumption and export figures for domestic meat products reflect a return to normality after unusual growth due to the pandemic and ASF in other markets. The meat sector is also facing a period of transformation in which technology and digitalisation are set to improve the efficiency of the entire chain at operational, environmental and food safety levels. All of this, driven by the policies and economic aid planned for the coming years, including the Perte Agroalimentario and the new strategy for the application of the CAP in our country.

Household meat consumption has decreased in 2021 compared to the previous year. In the rolling year TAM December 2020-November 2021, based on data published by the Ministry of Agriculture, Fisheries and Food (Map), Spaniards have consumed around 2.1 Mt of meat products in their homes. The figure is 8.4% lower than that reported for the same dates in the previous period (December 2019-November 2020). This reduction in purchases has similarly affected the proceeds from these purchases, which in the latest available TAM stood at around €15 billion, 6.2% less than in the previous year, when the sector was close to €16 billion.

The Map data show a generalised decline in the three main categories: fresh, frozen and processed meats. The first of these is the one with the greatest fall in both volume (-9.6%) and value (-8.1%) with 1.5 Mt marketed for home consumption and 9,586 M€ invoiced. On this point, it should be noted that society tends to consume this type of product in restaurants and bars, a channel that is not included in the Ministry's data. In the same vein, the impossibility of eating outside the home during the successive confinements and restrictions due to the coronavirus led families to opt for greater purchases of fresh meat products, which irregularly raised the figures recorded in 2020. In fact, household meat consumption in that calendar year exceeded 2.3 Mt, a figure not reached since 2013, while it would be necessary to go back to 2008 to find a value higher than the €16.16 billion achieved in 2020.

The sector is to some extent catching up after the impact of the confinement caused by the pandemic, as is the pace of exports due to the recovery of domestic meat products in China. This country, badly affected by African swine fever (ASF) in previous years, boosted sales of fresh, frozen and processed Spanish pork by 118% in 2020, while one year later it was around 3%. Even so, the Asian giant continues to be Spain's leading meat export market with a 30.7% share, followed by France (12.5%) and Portugal (8.1%).

Meat companies hope to increase sales in 2022

Despite the evolution of consumption and export data, the Spanish meat sector is convinced that 2022 will be a good year. The latest thermometer of the Spanish meat industry carried out by Alimarket Publications indicates that seven out of 10 companies expect their business to increase this year, although they face many challenges.

One of these is diversification and opening up to new international markets, given that the three main export markets account for more than half the volume of foreign sales. Added to this are the changes in domestic and European consumption towards diets with a lower meat content, either as a result of the Administration or as a present and growing trend in society. Examples of the former are the Spain 2050 National Strategy and the European Commission's 'From the farm to the table' project, where references are made to reducing the intake of foods of animal origin, red meat and processed meat. On the other hand, and according to the report 'The Green Revolution' published by Lantern in 2021, 13% of the Spanish adult population opts for vegetarian, vegan and flexitarian diets, while five years ago the percentage was less than 8%.

From an operational point of view, the main concern of the Spanish livestock-meat chain is the rise in the prices of raw materials, transport and energy, according to the survey recently carried out by Alimarket. This is not to mention other difficulties that may develop unexpectedly in all or part of the Spanish meat industry. One of these could be the spread of avian influenza in our country, which in the first months of 2022 has already affected farms in eight provinces, forcing breeders to slaughter thousands of birds.

European aid will be key to the evolution of the sector.

Faced with this situation, companies are relying on innovation and technology as a lever to overcome adversity by improving production and logistics efficiency. The range of projects announced and planned by various players in the meat sector range from the digitalisation of farms to new systems for reducing environmental impact, including a commitment to renewable energies, R&D of new meat and plant-based products and even the application of artificial intelligence to ensure animal welfare.

The national livestock-meat chain is convinced of the need to invest in order to move forward, although it is true that this drive has been reinforced by the greater liquidity expected in the sector thanks to aid from the European Union. At the beginning of 2022, the Council of Ministers approved the Perte Agroalimentario, which will channel part of the Next Generation EU funds to boost this macro-industry, which includes the meat industry. It has a public investment of around €1 billion until 2023 and the Spanish government expects an initial impact on the economy of around €3 billion and up to 16,000 new jobs.

The Spanish government has also sent Brussels the Strategic Plan for the implementation of the Common Agricultural Policy (CAP) in Spain, a project endowed with more than €47 billion to promote rural development measures between 2023 and 2027. Its objectives are framed within the framework of promoting competitiveness, sustainability and food security, while strengthening the socio-economic fabric of rural areas. To this end, it envisages income support, advisory services and rural development measures in favour of innovation, improved knowledge, investment, the use of technology and digitalisation, among other aspects. The aim is to create a competitive business ecosystem that can face the challenges of the future.