GLOBAL POULTRY TRENDS 2012 - Chicken Output to Exceed 40MT in 2013 in the Americas

If chicken meat production maintains the expected growth this year and next, total output for the region will exceed 40 million tonnes in 2013, according to industry watcher, Terry Evans, in his latest analysis of the global poultry industry.
calendar icon 31 July 2012
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Global chicken meat production growth could well slow to around two per cent a year in the next decade, which contrasts with around four per cent in the 10 years to 2010. Nevertheless, the total is likely to approach 91 million tonnes this year and possibly 93 million tonnes in 2013. This compares with less than 59 million tonnes back in 2000 (Table 1). In broad terms, chicken meat production currently represents almost 88 per cent of poultry meat output compared with less than 86 per cent some 12 years ago.

Regarding international chicken meat data, it should be noted that the figures released by the FAO are for all chickens (i.e. table birds and culled layers) while the data published by other authorities such as the United States Department of Agriculture (USDA) and the Food and Agricultural Policy Research Institute (FAPRI) do not include estimates of the meat from culled layers.

The five major regions (Table 1) have exhibited differing rates of growth. Based on FAO figures, over the period 2000 to 2010, both Africa and Asia have recorded increases of around 4.5 per cent a year, while growth in the other regions has been below four per cent, averaging 3.9 per cent in Europe, 3.7 per cent in Oceania and 3.5 per cent in the Americas. Since 2010, all the regions have recorded slower growth rates reflecting lower profitability in the face of higher costs (principally feed), while in some countries, disease outbreaks have also played a role in this scenario.

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Since 2000, production in the Americas has escalated by a little more than three per cent a year from 27.2 million tonnes to an estimated 39.4 million tonnes this year. This has been slower than the global total of around 3.7 per cent hence this region has seen its share of world output slip three percentage points from 46.3 per cent to 43.3 per cent. For 2013, a 2.0 per cent gain would push total production above 40 million tonnes.

The year 2010 is the latest for which figures are available for all countries (Table 2) and these reveal that there were seven countries in the Americas producing at least a million tonnes of chicken meat a year and combined, they accounted for over 35 million tonnes or more than 91 per cent of the total (Tables 2 and 3). However, just two countries – the US and Brazil – were responsible for 27.7 million tonnes or 72 per cent! While production in the USA grew by some three million tonnes or 22 per cent in the decade to 2010, Brazil’s industry expanded by a massive 4.7 million tonnes or 79 per cent.

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According to USDA economists (Table 4), broiler production in the top seven producing countries in the region grew at an average 3.7 per cent a year between 2000 and 2012 from 24.5 million tonnes to an estimated 37.8 million tonnes. If the envisaged expansion of two per cent is achieved next year, output from these seven countries will climb to around 38.6 million tonnes. As the data for Peru has been taken from FAO statistics, a small proportion of the annual totals for this country will include culled layers. It looks as though broiler output in the US will approach 17 million tonnes in 2013. In Brazil, the figure should exceed 13.5 million tonnes, while in Mexico, third in the ranking table, output might hit the three million tonnes mark.

Figure 1. Leading chicken meat producers in the Americas – 2000 to 2013 (forecast)

The US is the world’s largest chicken meat producer, output (i.e. total production less condemnations) having climbed to a record near 16.7 million tonnes in 2011. However, the impact of higher costs on profit margins is expected to produce a near one per cent cut–back this year to 16.6 million tonnes.

A more optimistic view is taken of 2013 with production recovering by 1.7 per cent to 16.8 million tonnes. The actual extent of any increase will be influenced primarily by two factors, namely the degree to which processors consider that chicken demand will reflect any recovery in the US economy and also, how integrators feel about changes in the costs of production, especially feed prices. According to US economist Dr Paul Aho, there were a couple of factors that could lead to lower maize prices but recent drought conditions (up to mid–July) make that scenario unlikely. If there were to be a good maize crop this year, the proportion going for ethanol production would drop; the opposite will be true should the harvest be poor.

The dramatic rise in maize prices has boosted production worldwide. In 2000/01, maize production outside America was less than 340 million tonnes while the US produced some 250 million tonnes, giving it a 42 per cent market share. This year, production outside the US could reach 600 million tonnes compared with an early estimate of 350 million tonnes within the US, reducing its market share to 37 per cent or less.

However, should the recovery in the US economy slow down, the rate of expansion in chicken output could be curtailed somewhat. Tough economic conditions through 2011 resulted in several companies either having to close or be acquired by competitors. Dr Aho considers that as much as 80 per cent of US production could eventually come from just three or four companies. USDA long-term forecasts point to production increasing by only 1.3 per cent a year from now until 2021 when broiler output is expected to reach 19 million tonnes.

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While, as for all countries, the estimates of chicken meat production vary somewhat according to source, there can be no doubt that the industry in Brazil has recorded a rapid increase since 2000 with an annual rate of growth in the six– to seven per cent range. Currently, it is considered that the rate of increase has been halved to around three per cent, reflecting uncertainties regarding the likely growth in exports, domestic consumption and higher production costs. Chicken meat output this year is likely to amount to some 13.3 million tonnes. USDA forecasts anticipate a growth of around 2.4 per cent a year which would put the 2020 total at around 16 million tonnes. In contrast, a Brazilian Ministry of Agriculture/Brazilian Agricultural Research Corporation study expects a much more optimistic 4.2 per cent a year increase to 2021/22.

Late in 2011, the Brazilian anti-trust regulator approved the merger of Sadia and Perdigão to create Brasil Foods SA (BRF), which now supplies 35 per cent of the domestic market and accounts for nearly half of Brazil’s exports. BRF is currently building a processing plant in the United Arab Emirates capable of producing 80,000 tonnes a year of further-processed chicken products.

Continued vertical integration in Mexico is helping offset the negative impact of high grain prices, according to a USDA report and as a result, it is anticipated that production this year will show a small gain over 2011 at a shade over 2.9 million tonnes, while three million tonnes could be achieved in 2013. As well as the worst drought for 70 years, the industry is having to contend with high grain prices as well as increased competition for feed from the pork and beef sectors. The country was also been hit by a series of outbreaks of highly-pathogenic avian influenza from the end of June 2012. The initial focus of the outbreaks was in Jalisco, the country’s leading egg-producing state with the resulting cull soon running into the millions. If the infection spreads to other regions, Mexico’s chicken meat industry could suffer production and trade difficulties for some time to come.

Although a much smaller industry than in the US or Brazil, chicken production in Argentina more than doubled between 2000 and 2011, reaching close to 1.8 million tonnes with an average growth rate of 6.7 per cent. Continued expansion is anticipated, boosted by increasing consumption allied to an expanding export trade. Consequently, production in 2013 is expected to come close to two million tonnes.

Canada operates a supply-management scheme for broiler production via a quota system, the quantities being reappraised on an eight–week cycle. In the decade to 2010, output expanded at 1.6 per cent a year but since then, growth has been limited to only 0.6 per cent and in general, it is considered that future growth will primarily be linked to population increases and to a lesser extent, dietary preferences.

The two other countries with annual broiler outputs in excess of a million tonnes, according to the USDA (Table 4) – Peru and Colombia – recorded good annual growth rates of 6.5 per cent and 5.4 per cent, respectively, from 2000 to 2010. If Peru has managed to maintain that momentum, annual output will have exceeded that of Canada. However, in Colombia, production has since slowed to around one per cent per year.

August 2012

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