What "peak meat" tells us about forecasting

Have we reached “peak meat”? The UN Food and Agriculture Organisation reckons that global meat production – which correlates strongly (unsurprisingly) with consumption – fell in 2019. What with the coronavirus outbreak, it looks as though production will fall this year too. Apparently we eat more meat when we dine out at restaurants, something that up until this month at least, most of us have been cutting back on and, partly as a result, that means meat consumption per head is set to fall to its lowest level in nine years. Could this be the start of something bigger?

The truth is I have no idea. On the one hand, veganism is definitely having a moment (according to Bloomberg, for example, a survey by the German agriculture ministry in May found that just 26% of respondents ate meat or sausage daily, compared to 34% in 2015). And a drop in global meat production for two years in a row is “unprecedented”, notes Nathaniel Bullard, again of Bloomberg.

On the other hand, it’s fair to say that this year is very unusual indeed in terms of its impact on both consumer behaviour and our income security, and that last year was pretty unusual too for meat production. African swine fever took its toll on China’s pig population, driving up pork prices, for example.

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What interests me more about this story is that it’s a great illustration both of how flawed our forecasting ability is, and just how swiftly conventional wisdom changes. Just last May, a headline in The Economist proclaimed that “global meat-eating is on the rise, bringing surprising benefits”. The conventional wisdom at that point was that rising wealth and a growing global population would inevitably boost meat consumption. And yet today, less than 18 months later, we’re told by Bloomberg that one of the reasons we might have hit “peak meat” is that the global population is also growing more slowly than we’d expected – another big shift from what was once the conventional wisdom.

What’s the lesson for investors? Take declarations of hugely consequential societal change with a big pinch of salt. I probably don’t need to remind you that we’re hearing an awful lot of that right now, with confident predictions that Covid-19 will change the world forever. Not only will it stop us from eating meat, but we’re also going to work from home permanently (or have our jobs offshored to places where home-workers are cheaper and more skilled); never venture to the shops again when we can huddle inside, waiting for the Amazon van; and never, ever travel abroad again.

I’m not sure we buy any of that (listen to the latest MoneyWeek podcast to find out why Merryn and I are not convinced that the staycation trend will last). But even if you disagree, one way to defend against the peskily unpredictable nature of the future is to maintain a diversified portfolio. Which brings me to gold. As well as being key to a diversified portfolio, gold also appears to still be in a bull market despite a nasty correction this week. Dominic has some ideas on how to take advantage of that in this week's cover story.

And if you do think we’ve hit peak meat? The best bet might be to invest not in vegan burgers but in a poultry farm – chicken is apparently winning market share from beef in a big way. Good news for cows – not so much for hens.