Animal-based products see prices dip through 2023
Food habits are changing dramatically across the world’s richest nations – and behavioural shifts are starting to have a major impact on the pricing of animal-based products. With vegans – who only eat plant-based diets – and vegetarians shun 20th century diets which placed a greater emphasis on meat-consumption than ever before, new research suggests that the price of meat and dairy have seen a steep year-on-year decline.
According to a study from Efficio, the UN Food and Agriculture Organisation’s (FAO) global food price index fell to 122.3 points in mid-2023 – its lowest level in more than two years and 23.4% below an all-time peak reached in March 2022. This was partially thanks to an 8.72% decline in the price of wheat, year-on-year, and a 16.57% fall in the price of corn. But both of these were outpaced by the declining price of dairy.
Looking ahead, Barbara Guignard, a principal at Efficio, said of the research, “While remaining elevated against pre-pandemic levels, overall, food commodity prices are forecast to remain broadly unchanged for the remainder of 2023 and into 2024. This is amid improved supply prospects and weakening global demand. However, food markets remain vulnerable to shocks. From extreme weather, geopolitical tensions, and policy changes to developments in local supply markets – all of these factors have the potential to tip the delicate supply-demand balance.”
Efficio found that dairy prices trended down by 20.63% year-on-year. Noting “lacklustre global demand, especially for spot supplies”, the researchers primarily blamed market uncertainties for the price declines – including weaker national currencies, and poor economic growth prospects. However, signs of weakening dairy demand have also spread across some markets – and with less demand, producers are less capable of charging a premium for their goods.
Aside from some consumers cutting dairy out of their diets for ethical concerns, this also seems to be a cumulative effect of high food price inflation over the past 24 months. With dairy having hit record rates in 2022, many consumers have decided to make do with less, as a means of balancing their household budgets in developed markets – while in emerging markets, those premiums have priced a portion of consumers out entirely. Price decreases could have been even steeper had it not been for market concerns about supply limitation and the risk of limited production potential due to high energy costs and extreme weather events.
Not every food saw its price decline, of course. The price of rice rose between 4% and 24%, thanks to adverse weather conditions in South Asia leading to poor harvests – even as demand continues to trend high. Meanwhile, similar outcomes from climate change saw sugar prices balloon by 34% year-on-year, even as demand for sugar grew for the third successive season.
Meat products were not subject to those trends, though. Year-on-year, meat prices declined by 5%, partially as global meat production has increased. At the same time, the same economic pressures which have diminished demand in dairy products have impacted demand for meat. In particular, the most premium form of the product has seen prices collapse from a historic high.
Ovine (meat from sheep like lamb or mutton) meat has seen pricing fall more dramatically than any other meat, having been the most expensive form at the turn of 2023. Meanwhile, bovine (beef variants) meat has also tanked, sinking to multiple troughs in 2023 that it has yet to rebound from. With UK meat consumption currently at its lowest level since the market was first monitored in 1974 (while other markets like Germany have also sunk to three-decade lows), it remains to be see whether those prices will recover.
