Explanatory Note: This article is an observation and evaluation by Dan Manternach, Doane’s Agricultural Report editor and publisher. He is an economist who has been watching the per capita income and global protein production of nations around the world for more than 12 years. He wrote an article several years ago and recently completed this update about the “protein gap.”
Per capita income in Asia has been growing at double-digit rates for years and the first thing third world folks look to improve is their diet. Take a look at Fig. 1 and you’ll see India and China alone account for more than a third of this planet’s people. Both countries are running enormous balance of trade surpluses. China’s hard currency reserves alone have grown to more than $1.3 trillion. I spent this week gathering fresh data on consumption of protein meals, vegetable oil, meat, poultry, dairy products and fish for any country with more than 100 million people in it. There were 12. The same 12 as three years ago; and in the same order. And among them, these 12 alone still account for just over two-thirds of the global population. The only difference is that we’ve added another 118 million people to the planet in just the past three years; just slightly more than the entire population of Mexico!
There’s still a big “protein gap” in Indian and Chinese diets when we add up total lbs. per person per year consumed per year for meat, fish, poultry, milk and dairy products. In India, where they have nearly four times the population of the U.S., their per capita protein consumption is only one-fifth that of the average American or European! In China, with 4.3 times the U.S. population, their average protein consumption is less than 40 percent that in this country. (Three years ago, China’s population was 4.4 times that of the U.S.; their population growth rate is slowing, ever-so-slightly, compared to our own.)
Take a look at “average” protein consumption from all sources among these top 12 countries (in green tint). India’s per capita consumption is still only one-third the average; even though it’s risen 21 percent over the past three years. China’s consumption is still only two-thirds the global average, even though they’ve increased it by 7 percent over the past three years. They still have a lot of demand growth between them just to get up to average. And again, we’re talking one third of the world’s population!
Vegetables oils and protein meal figure directly in the “protein gap” because demand for protein feed supplements is directly linked to demand for more meat, poultry, dairy products and fish in the diet. Yes, fish! Aquaculture is already huge and growing. Globally, humans consume more than 111 million metric tons of fish and seafood, up 11 percent in three years, and over a third of it comes from aquaculture (fish farms) where high protein feedstuffs make up the fish food! China alone accounts for about 31 percent of the planet’s fish consumption; yet that’s down from a 40 percent share three years ago.
As diets shift away from rice and wheat to include more meat (thanks to rising incomes), protein meal consumption per capita will have to rise to produce that meat. Globally it’s up 5 percent, per capita, in the past three years. But in China, per capita protein meal consumption has soared nearly 36 percent higher than it was just three years ago! And yet notice in Fig. 3 that again, Indian and Chinese protein meal consumption per capita still falls far below that of the U.S. or Europe. In fact, we’re talking U.S. and European consumption more than double that of the average Chinese; more than ten times that of the average Indian. (It’s noteworthy, however, that when we did this report three years ago, U.S. and European consumption per capita was triple that in China and twelve times that in India.) And notice how far behind another Asian country is — Indonesia. They’re only slightly ahead of India in meal consumption and they’ve got 245 million people, up 3 percent from three years ago and still the fifth biggest market in the world.
Just for perspective, if Indonesia alone brought their protein meal consumption up to the 12-country average, it would require another half a billion bushels of soybeans to do it in soybean meal equivalent. That increase alone would be about 15 percent of the entire 2010 U.S. soybean crop. And if China brought theirs up to the 12-country average, it would require over half the 2010 soybean crop! And if India did it, it would take more than the entire 2010 U.S. soybean crop. So among those three countries alone, it would STILL take nearly double the entire U.S. soybean crop last year just to get their per capita meal consumption up to the 12-country average.
It’s a similar story for potential vegetable oil demand. As the demand for meat, fish, poultry and other fried food grows in the developing world, so does the demand for something to fry it in — vegetable oil! Globally, per capita veg oil consumption is up 8.3 percent from three years ago. In China, it’s up 11.6 percent in that same time period. And yet take a look at Fig. 4. Notice how in the U.S. and the European Union’s 27 countries, per capita vegetable oil consumption still runs almost double the 12-country average of 51.8j lbs. per person. That’s because per capita consumption of veg oil has risen in the U.S. and Europe, too; up 9.3 percent and 8.2 percent respectively in the past three years.
Chinese consumption has risen to near the global average, but still about 8 lbs. per person short. In India, they’re just over halfway to the 12-country average. And Bangladesh is even further behind. You don’t hear much about Bangladesh, but their incomes are rising rapidly, too — and they’ve got 160 million people – nearly half the size of the U.S. population and more than Russia, Japan or Mexico! Key point: If you were wondering what would happen to all the extra soybean oil that would come from all those extra soybeans mentioned in the preceding item, wonder no more. There’s enough potential demand among India, China and Bangladesh alone to utilize every drop if all they do is get their per capita consumption up to the 12-country average. And remember, that average isn’t a pie-in-the-sky goal. It’s only about half the average consumption per person in the U.S. and Europe!
Some meat export potential is there, too. The study so far makes the assumption that the developing world will expand their own meat, poultry, dairy and fish production to bridge the “protein gap.” But for some, with scarce farmland to grow capital intensive crops like corn and soybeans, it may make more sense to focus on their comparative advantage (cheap labor) to continue expanding their manufacturing sector and labor intensive crops like fruits and vegetables and import more meat, poultry and dairy products.
We’ve already seen that in China. That country has four times the U.S. population but only about one third as much arable farmland as we do. Not only that, they face future water shortages as well. What they have in abundance is cheap labor and they’ve already begun to shift agricultural focus to labor-intensive fruits, vegetables and horticulture.
Four years ago their government even announced they were abandoning their longheld policy of seeking self-sufficiency in grain production, content to buy more grain abroad with the huge balance of trade surplus they’ve amassed selling manufactured goods all over the world. Other developing countries with the same problem (abundant labor but short on farmland) are following that model. So, we broke down that “protein gap” into its three big meat components, beef, pork and poultry.
Pork consumption “gap” is the smallest of the three. In fact, you’ll see in Fig. 5 that per capita consumption of pork in China exceeds that of the U.S.! It’s the primary meat source in China and the folks get restless if there are shortages and high prices. The best potential for expanded pork exports lies in Japan, where it’s still a little below the 12-country average and well accepted. Brazil and Mexico also lag the average, but both of those countries are much more likely to expand their own pork production than to import pork from the U.S. They have both land AND cheap labor to do it. (India and Indonesian don’t even show up on the graph, of course, because both Hindus and Muslims shun pork.)
The beef consumption “gap” is huge in India and China. Not a lot of potential in India, of course, since the expression “sacred cow” came from there. Notice it isn’t the EU-27, but Brazil that comes closest to matching the U.S. in per capita consumption. In fact, beef consumption per capita in the EU-27 is a little below the 12-country average. With high grain prices and land too valuable to graze cows, there’s export potential there, but not nearly as much as in Japan, China, Korea and other rapidly developing Asian economies.
Poultry exports have the biggest potential by far for helping countries like India, China and Indonesia bridge their “protein gap.” Poultry are the most efficient users of grain and have no known religious restrictions on consumption. Again the U.S. and Brazil, and even Mexico are far ahead of the 12-country average in per capita consumption.
Poultry also have the advantage in that they can be produced very efficiently in highly concentrated buildings, requiring very little land (except to spread the manure on!).