The Future of Animal Agriculture in North America - Farm Foundation

Chapter 3
Consumer Demand Issues
Consumers worldwide are driving changes in animal
agriculture. Rising consumer income, changing demographics
and lifestyles, and shifting preferences due to new information
about the links between diet and health all contribute to new
demands for foods. At the same time, technological changes in
production, processing and distribution, structural change and
growth in large-scale retailing, and expansion of trade
worldwide have contributed to a rapidly changing market for
food products. Changes in demand for meat and other animal
products reflect these developments.
Population growth in North America and the rest of the world
is a major factor that drives demand for livestock and meat
products. During the next 15 years, North America’s
population is expected to grow slowly, while Europe expects a
population decline (Table 1). As the rate of natural population
growth slows, populations age. The shift in demographic profile
with the aging population leads to changes in diet preferences.
Across all regions, Asia has by far the largest population, and
China and India account for the largest share. Both Asia and
South America will have population growth during the next few
decades, and that population growth represents opportunity for
expanded markets for livestock and meat products. Although
Africa is expected to have the fastest population growth of all
regions, countries in Africa may lack the income to be a
significant market for North American meat products. Asia is
the fastest growing market in absolute terms. To put things in
perspective, a 1 percent increase in the population in Asia is 10
times more people than a 1 percent increase in North America.
Household income is also an important determinant of the
amount and types of foods purchased. As income rises, people
purchase more food, though the percentage of income spent on
food declines. This relationship is true in cross-country
comparisons, as well as for households. As income rises, there is
also a shift from grains to animal protein sources and, as
income continues to rise, to lean animal protein sources.
Thus, developing economies are important potential markets
for North American meat production. Consumers in developed
economies with higher income may shift their purchasing
decisions on the basis of quality, convenience, or specific
characteristics of the product or how the food was produced
and processed.
This chapter examines the impact of these major trends
on consumer demand for meat and other animal products in
North America. The chapter begins with an overview of current
North American and global markets for animal products. Next
is a discussion of key trends and drivers of change in demand,
including retailing, product innovation, and diet and health.
The chapter ends with a discussion of future directions, policy
options and areas needing more research.
Current Situation
Basic demographics of the number, age and income of a
country’s people are major determinants of food demand. These
slowly changing statistics can be anticipated with some degree
of accuracy based on current trends. Population growth on all
continents is expected to slow during the next 15 years (Table 1).
In North America, population growth rates are projected to
decline in Mexico, Canada and the United States. Following
rapid growth from 1950 through 1990, Mexico’s population
growth rate is 2 percent today, and it is expected to be nearly
1 percent in the period 2000 to 2010. In-migration and
increased ethnic diversity affect the general slowdown of
population growth in Canada and the United States, although
the magnitudes differ. A large proportion of Hispanic
immigrants to the United States are young in age. Their faster
rate of population growth has kept U.S. population growth
rates from declining relative to the population growth rate in
other industrialized countries, such as Canada, Japan and
Australia. Recently, the United Nations projected that the
population growth rate of the United States, though less than
1 percent annually, would surpass that of Mexico and China by
2025. In Mexico, the overriding shift has been internal, with
people moving from rural to urban areas. Today, 75 percent of
Mexico’s population lives in urban areas, and that percentage is
expected to increase. With a slowdown in population growth,
North America’s populations are getting older, with fewer
children, more adults and more elderly (Figure 1). These
changes contribute to slower growth in aggregate food demand.
Income provides consumers with the ability to purchase food
and other goods, and it is an important determinant of the level
and types of goods and services purchased. During the last 25
years, there has been a significant increase in income
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