A comprehensive study, conducted by Cypress Research in collaboration with MEAT+POULTRY and the North American Meat Institute, has shed light on the current trends and future outlook of capital investment in the meat and poultry industries.
The 2023-24 Meat and Poultry Industries Capital Spending Trends Study aimed to understand the perspectives of industry professionals on company and industry outlooks, investment plans, and the challenges influencing these decisions.
Industry Outlook and Investment Trends
The study, which surveyed 213 industry professionals involved in capital spending decisions, revealed a predominantly positive outlook for 2024, with 88% of respondents expressing optimism about their company’s future and 76% about the industry at large.
This optimism is reflected in the investment trends, with over 40% of respondents indicating an increase in capital spending compared to 2022. The average capital expenditure in 2023 represented approximately 10.9% of annual revenues, expected to rise to 11.4% in 2024.
Investment Focus Areas
A significant portion of the budget (26%) is allocated towards equipment investment. Key areas of focus include new processing equipment, maintenance, packaging equipment, and cold storage technology.
The primary goals driving these investments are improving quality and consistency, enhancing processing capabilities, increasing production capacity, and improving food safety.
Industry Challenges
Despite the positive outlook, the industry faces several challenges. Attracting and retaining a quality workforce, managing labour costs, and coping with increased raw material costs are among the top concerns, cited by 69% and 61% of respondents, respectively.
Surprisingly, food safety and cybersecurity, while important, ranked lower in immediate concerns.
The Role of Automation
Marjorie Hellmer, president of Cypress Research, emphasised the importance of automation in addressing these challenges.
Automation not only eases labour shortages but also enhances operational efficiency and worker safety. Investments in system improvements, including system integration and automation, are high on the agenda for 69% of companies, particularly in areas like packaging.
Company Demographics
The survey represented a diverse range of companies, with 94% being processing companies, including 44% with slaughtering operations.
The respondents were primarily from senior executive-level management and operations executives. The companies varied in size, with 51% having annual sales under $100 million and 49% over $100 million.
The study highlights a sector poised for growth and adaptation, despite facing significant challenges. Investments in technology and equipment, driven by a need to improve efficiency and address labour shortages, are at the forefront of the industry’s strategy to navigate the current economic landscape.
