(Austrade/Mirage) Russia’s invasion of Ukraine and poor seasonal conditions in North America in 2022 have created spikes in world prices for grain and oilseed (See Figure 1).
However, 2 long-term factors are likely to increase global demand for grains and oilseeds over the next decade. These are:
- demand for animal feed, which is linked to rising meat consumption
- increased use of biofuels.
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Meat consumption rises with wealth
Dietary preferences are closely linked to income levels. Meat consumption tends to increase as people and countries become wealthier. (ABARES 2019)
- Yearly per capita meat consumption in China rose from 15.6 kgs in 1990 to 45.2 kgs in 2022.
- Yearly per capita meat consumption in Vietnam rose from 12.1 kgs in 1990 to 51.4 kgs in 2022.
Figure 2 shows per capita meat consumption and GDP per capita for China, India, Indonesia and Vietnam between 1990 and 2021.
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What does rising meat consumption mean for grain demand?
While some livestock animals only feed on grass, much of the world’s livestock is fed on grain.
- One kilogram of beef requires approximately 25 kgs of feed grain
- One kilogram of pork requires approximately 6.4 kgs of feed grain
- One kilogram of poultry requires approximately 3.3 kgs of feed grain (Alexander et al, 2016 )
As demand for meat increases, demand for animal feed will also increase. The grain-intensive nature of livestock production means that relatively more grain is required when people consume calories through meat, as opposed to consuming grains directly.
Growing demand for meat and grain will help support the value of Australian exports and will continue to create opportunities, particularly for feed grains, beef and lamb.
Increased use of biofuels will drive demand
Over the last three decades, biofuels have become an increasingly important source of energy (See Figure 4).
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Transportation is the largest consumer of biofuels, predominately through blending with petrol and diesel. There are two main types of biofuels:
- Ethanol, which is usually produced from grains such as corn, sugar and wheat.
- Biodiesel, which is usually produced from oilseeds such as soybean oil, palm oil and canola oil.
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Future biofuel-related demand for grains and oilseeds will depend on four factors:
- Government policies which mandate or encourage biofuel use, especially in the US, Europe, India and China.
- The price of grain and oilseeds relative to the price of other energy sources.
- Demand for petrol and diesel. In most cases, biofuels are blended with petrol and diesel. This means demand for biofuel is affected by the demand for petrol and diesel. A Widespread uptake of electric vehicles could reduce demand for biofuels.
- The economic viability of advanced biofuels that do not use staple food products.
Australia is already a major supplier of canola to the EU for use in biofuels. If implemented, the European Parliament’s plan to reduce the use of palm oil and soya in European biofuel production will support increased demand for Australian canola seeds in the coming years (ABARES 2022). READ MORE