Market Opportunities

There are sustainable long-term drivers of global demand for animal protein and the way it is supplied. Genetic improvement is critical to addressing the associated challenges:

1. Growing Demands for Animal Protein

The global population is expected to grow by over 1 billion between 2015 and 2030, with the proportion of urbanised populations increasing from 54% to 60% of the total over the same period. Urbanised populations tend to become wealthier, leading to greater appetite for animal protein.

2. Supply Constraints and Uncertainty

Volatile weather and increasing competition for scarce resources, such as water and land, can constrain animal protein production. These factors can also affect the availability of raw materials, particularly animal feed, which indirectly impacts protein production. This puts pressure on producers to be as efficient as possible.

3. More Integrated Supply Chains

Supply chains are vertically integrating, resulting in fewer participants in the chain. This increases transparency of where food comes from, giving consumers more influence over food producers, and driving demand for higher-quality animal protein and more disease-resistant animals, with less use of drugs.

4. Protein Producers Becoming Larger and Increasing Use of Technology

Producers are increasingly looking to technology to become more efficient. For example, dairy farmers are rapidly adopting embryo technology, so they can select both male and female parents and deliver a step change in the quality of their milking herds.

Producers also seek efficiency gains through scale. In porcine, large scale integrated production represents the majority of capacity in the US and Brazil, and is growing fast in China. Larger producers typically measure performance in more detail and better understand the benefits of superior genetics.

Comparing PIC’s and ABS’s Markets

Genus PIC and Genus ABS operate in markets with different dynamics. The table below summarises the key characteristics of our addressable markets.

MARKET OPPORTUNITY IN PORCINE

Pigs PopulationChanges in Pig Production by Size of Farm in ChinaOver 1.2 billion pigs are produced for slaughter globally each year in the markets in which PIC operates, of which around half are produced in China.

The majority of pigs in Asia come from small scale production facilities, which typically employ less technology. However, the drive for efficiency is causing a shift in production towards larger, more integrated production with higher use of technology. This will lead to an increased demand for higher quality genetics, growing PIC’s addressable market. PIC currently supplies over 60% of the world’s top pork producers.

 

MARKET OPPORTUNITY IN BEEF

Beef ProductionThe vast majority of beef cattle in our target markets are bred on pasture by releasing bulls for natural breeding. Less than 10% of beef animals in these markets are serviced through AI, although this offers access to elite genetics. Competing demands for land and resources are expected to increase the drive for efficiency and quality. This is expected to give rise to demand for better genetics delivered through AI, as well as new technology, including IVF and gender skew. ABS currently has around a 20% share of the addressable AI market.

 

MARKET OPPORTUNITY IN DAIRY

Pigs PopulationElite genetics are sourced internationally from donor parents and delivered through artificial insemination (‘AI’). As the use of AI increases, so does ABS’s market. There is also a large spread in milk yield between countries with similar AI levels, presenting an opportunity to increase productivity by displacing locally sourced semen with elite genetics, and through adopting technology. To compete in this market, genetics providers must be able to produce elite genetics, distribute them globally and effectively communicate their benefits. A small but growing market segment is also adopting in vitro fertilisation (‘IVF’) and gender skew technologies, to accelerate genetic improvement in their herds.

In the short term, milk prices affect farmer profitability and their demand for elite genetics. The past two years have seen falling milk prices in key markets, reducing demand for elite genetics.

 

 

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