Toto have been singing about it since 1982, but should livestock producers be paying more attention to Africa in the future, instead of India?
The Australian livestock sector is perfectly located to take advantage of the growing population of middle class wealth expected to stem from Asia in the coming years. Indeed, there are more mouths to feed in the regions to our north west than there are in the rest of the world – Figure 1. Over 50% of the current world population reside in the shaded circle.
Figure 1. Nearby mouths to feed
Population growth and economic prosperity can often go hand in hand. While there is often a reduction in birth rates per capita as a nation becomes wealthier there is also a clear link between an increasing appetite for calories, and in particular animal proteins, as wealth levels expand.
Correlation analysis between calories consumed at different incomes levels for a variety of nations undertaken by Ohio State University in 2011 demonstrated that there is a moderately strong positive correlation with an r2 score of 0.56 (with a score of zero being not correlated at all and 1 being perfectly correlated).
However, the interdependence between animal proteins and wealth level is much higher with an r2 score of 0.7, it is also interesting to note that the increases in consumption are much higher in magnitude at the lower income ranges, as identified by the steepness of the gradient on the line of best fit (red curve) in the regression charts displayed on Figure 2.
Clearly, at the moment China is the dominant force in the nearby region with respect to demand for animal protein products from Australia. Looking to the future, there is some suggestion that India will be the next big thing.
Figure 2. Calorie/animal protein intake by wealth – Source, Department of Agricultural, Environmental and Development Economics, Ohio State University
Animal proteins, get it India!
However, there are some factors that may put a dampener on India being the next big wave in animal protein demand, despite the forecast growth in both population and gross domestic product (GDP).
A recent story published in the Economist outlined a few key reasons why India may not be China’s heir apparent, such as:
- the lack of a sizeable middle class and the widening gap in equality making it difficult for India’s poor to lift themselves out of an impoverished situation
- an underproductive, mainly male workforce, reinforced by poor state system educational outcomes that tend to focus on the creation of manual labourers
- high levels of bureaucracy and corruption make efficient business processes, innovation and industry expansion difficult
“India has done a good job at getting those earning below $2 a day (at purchasing-power parity) to $3, but it has not matched other countries’ records in getting those on $3 a day to earning $5, those at $5 a day to $10, and so on” – The Economist, January 2018
Furthermore, with respect to animal protein consumption, India is no China. The ideal of vegetarianism is a part of most, but not all, Hindu sects. Given that vegetarians are thought to make up 20%-30% of all Hindus and the Hindu population make up around 80% of the total population there are a fair proportion of Indian residents that do not consume any animal proteins other than dairy.
Figure 3. Animal Product Consumed per person per annum (in lbs) 2011 – Source, Ohio State University.
In addition, of those Indians that do eat meat product, the levels of consumption are significantly below the non-vegetarian appetite seen in other countries. Indeed, a 2009 Food and Agricultural Organisation (FAO) report on meat consumption measured in pounds/ per person/ per year highlighted the fact that out of 171 countries listed, India was ranked in 166th position.
Figure 4. Meat Consumption 2009, Source - FAO
Bless the rains down in Africa
Perhaps African nations can provide an alternative/additional outlet for our animal protein supplies in the coming decades. While it is true that some of the hurdles faced by India with regard to expansion in animal protein consumption growth also face many African nations, such as a lack of a sizeable middle class, inequality and poor corporate/national governance, there are some geographic, economic and population factors that are worthy of consideration.
GDP growth between the 4% to 8% range is anticipated for a number of African nations in the coming year with the continent’s aggregate growth expected to rise to 3.2% in 2018 and 3.5% in 2019, reflecting a recovery in the largest economies.
Over the longer term, two main factors are likely to support African growth rates. Firstly, the continent has a young population with a growing labour force – a key strength in an ageing world. Secondly, the move towards urbanisation across much of Africa will assist productivity as urban centres are more productive the rural zones.
Figure 5. Global GDP forecasts, Source – The Economist
Furthermore, the sheer geographic size of Africa is often overlooked. Africa is much larger than it appears on most maps due to the fact that “a sphere cannot be represented on a flat plane without distortion, which means all map projections distort in one way or another. Some projections show areas accurately but distort distances or scales, for example; others preserve the shapes of countries but misrepresent their areas.” – The Economist
Figure 6. The True Size of Africa, Source – The Economist
However, the most impressive statistical measurement that I have seen in recent times that best reflects the potential of African meat protein demand in future decades comes from the contribution of Twitter participant @simongerman600 which highlights the projected growth in African population as we head toward the end of the century.
Figure 7. Population Growth to 2100, Source @simongerman600
Keep your eye on Africa, and make sure to bless the rains down there as they’ll need a bit to grow enough food…