The U.S. animal protein sector is facing persistent cost pressure, raising the need for effective risk management strategies and increased efficiency, explains Christine McCracken, Rabobank’s senior analyst-animal protein, in her latest report. However, incremental efficiency gains will be increasingly difficult as producers face a growing regulatory burden and shifting consumer expectations.
“New technologies remain critical for future growth, yet adoption remains slow given capital and workforce constraints. Technologies that not only drive efficiency, but also create added product value will be most successful,” she says.
In the short term, she believes the industry will see the highest return on investment through better understanding the linkages between animal health and nutrition, genetic improvements, predictive management tools and automation.
“To offset the added cost of technological investments in a more restrictive U.S. operating environment, the industry must continue to shift its focus from commodity production toward value creation. This strategy remains the most viable way to ensure a more resilient industry and allow for growth, but will require greater collaboration with industry stakeholders to execute successfully,” McCracken says.
An Integrated Approach
As the animal protein industry looks for new tools to drive productivity gains and improve margin structures, Rabobank says a focused effort on upgrading the worst-performing operations and eliminating industry vulnerabilities is key.
“Rather than addressing each limitation individually, the industry must make technology adoption more efficient and look for solutions that resolve multiple challenges,” she says. “These integrated solutions will represent better value to the supply chain, but may require a different way of thinking in order to be successful.”
McCracken says the focus must include not only how to improve efficiencies and connectivity, but also how to improve consistency of products along the entire supply chain.
She offers these three pieces of advice:
1. Technology is hard and there are no easy solutions.
The industry must adopt new technologies that offer improved efficiencies and use fewer resources, McCracken notes. Proper implementation of these technologies will require an investment in people and possibly structural change that could have a more lasting industry impact.
2. Collaboration is key.
To get the most from their products, the meat and poultry industries need to align not only with customers, but also suppliers to ensure freedom to operate, she says. These relationships will become even more important as the industry shifts away from its “commodity cost-driven model toward a value-driven customer focus.”
3. Efficiency and sustainability will meet.
Predictive technologies and preventative care will help create more resiliency in the meat and poultry industry. This will require investing in new tools and technologies to reduce loss and lower costs. This will help meet sustainability goals, too. Quantifying progress on these issues will help the industry prove its commitment to sustainability.
Read More:
Cut Through the Noise: Pork Leaders Share 8 Messages You Need to Hear
