Pork faces restricted demand   
Softer consumption trends in early 2023 have left the global pork industry confronted with a weaker consumer market, according to the Q2 Rabobank pork report.

Despite some signs that the peak of the inflationary climate has passed, the lagged impact on consumption and demand for protein products is likely to be felt throughout 2023.

During this restricted growth environment, pork remains well positioned said Rabobank, as demand for the protein is historically less income-sensitive than more expensive proteins like beef and premium seafood.

“Nevertheless, we see persistently high retail prices limiting consumption of all proteins. Consumers continue to conserve capital by shifting everyday purchases to lower-value protein options, switching channels and moving to smaller pack sizes,” says Christine McCracken, senior analyst, animal protein, at Rabobank.

Feed stocks and swine fever: Low global feed stocks are one of the factors contributing to higher prices as availability remains limited.

A reduced harvest in Argentina is expected to partially offset Brazil’s record 2023 soybean and safrinha corn crops, leaving the market to focus on import needs, Black Sea grain and the successful planting of a new crop in the Northern Hemisphere, said the report. “Rabobank expects the small global cushion in grain and oilseed stocks to drive additional feed cost volatility in 2023,” added McCracken.

African swine fever outbreaks in China, South Korea, the Philippines and Europe led to proactive farmer culling in late 2022 and continue to affect the rate of restocking this year.

“Losses appear contained and remain regional, however, which should limit market impact. Currently, global pork supplies appear sufficient, though a sizable shortfall in China due to disease would disrupt the global industry and drive a sharp upward correction in pork prices,” said the report.

Agribusiness

Citi adds agribusiness to ESG-risk list
Citi Group has added agribusiness to a list of “sensitive sectors” that includes coal mining, oil and gas, military equipment and firearms “in response to emerging risks”.

The financial group’s 2022 environmental, social and governance report says the change was made last year. Clients or transactions from the sector could now trigger an environmental and social risk management policy review.

Beef and soy in the spotlight: Citi’s new ‘Agribusiness Sector Approach’ includes “new requirements for the soy sector (including producers, processors and traders) and beef sector (including cattle ranchers, slaughterhouses and processing facilities) in sensitive ecoregions.”

The new measures are the product of “several years” of research and monitoring of risks associated with the agribusiness sector, which includes “deforestation, decreased climate resilience, biodiversity loss and risks to the rights of Indigenous Peoples.”

Agribusiness accounted for 56 of the 608 transactions or potential transactions Citi’s ESRM team was engaged on in 2022.

LatAm is highly sensitive: Latin America is identified as a specific focus of the updates, which include an expansion of existing policies governing clients in the palm oil and forestry industries to the soy and beef supply chains.

Relevant agribusiness clients are evaluated against standards provided by independent certification organizations including the Roundtable on Sustainable Soy, the Forest Stewardship Council and the beef industry’s Accountability Framework.

“These external certifications and standards require that companies have processes that ensure free, prior and informed consent for indigenous communities, among other environmental and social principals and criteria,” Citi wrote.

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