GLOBAL POULTRY TRENDS 2013: Russia and Ukraine Lead Europe’s Growth

Europe contributes around 16 per cent of total global chicken meat output, reports industry analyst, Terry Evans. The growth in output over the last decade or so has been slow in the European Union but significant increases in production have been achieved in Russia and Ukraine.
calendar icon 30 September 2013
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Growth in world poultry meat production has slowed in recent years from around 4.5 per cent in 2010 to an estimated 1.8 per cent in 2013 when it is expected to amount to around 106.4 million tonnes, as expansion continues in both developing and developed economies. Population growth, improving real incomes and the continued competitive pricing of chicken have been the key factors in the expansion of the poultry meat sector.

Chicken meat accounts from some 88 per cent of global poultry meat output. For 2011 - the most recent year for data for all countries from the Food and Agriculture Organisation (FAO) - chicken meat production (table birds plus culled layers and estimates of backyard output) amounted to 90 million tonnes out of a poultry meat total of 102.3 million tonnes.

This year, indigenous chicken meat output should exceed 93 million tonnes while, according to the United States Department of Agriculture (USDA), estimates of broiler production will amount to some 84.6 million tonnes (Table 1).

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For 2014, it is possible that global indigenous chicken meat output will come close to 95 million tonnes (Table 1 and Figure 1). The FAO definition of indigenous production is the quantity of meat from slaughterings of home-grown birds plus the meat equivalent from such birds exported live.

Figure 1. Chicken meat production in Europe compared to global output (million tonnes)

During the period 2000 to 2011, chicken meat production in Europe expanded by a little over four per cent a year from 9.3 million tonnes to 14.6 million tonnes, which was marginally faster than the world total. As a result, Europe increased its share of the global total from 15.9 to 16.2 per cent.

However, for the European Union member countries where output has climbed by 2.1 million tonnes from 8.1 million tonnes to 10.2 million tonnes, the increase rate of two per cent a year was only half the Europe figure. European production outside the Community rose by 3.2 million tonnes from around 1.2 million tonnes to nearly 4.4 million tonnes, or a massive 13 per cent a year.

Some 2.8 million tonnes (88 per cent) of this gain occurred in just two countries - Russia and Ukraine. Russia was easily the main volume contributor to the increase with production escalating by some 13 per cent a year from 752,000 tonnes to almost 2.9 million tonnes. Although, in tonnage terms, the increase in Ukraine was nowhere near as dramatic, the actual rate of gain at 15 per cent a year exceeded that achieved by Russia (Table 2).

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In 2011 just six European countries had annual chicken meat outputs of more than one million tonnes (Table 3), their combined production of 8.7 million tonnes representing nearly 60 per cent of the regional total.

Chicken meat production in the EU in the period 2000 to 2011 showed slow growth at two per cent a year from 8.1 million tonnes to 10.2 million tonnes. The USDA’s combined broiler meat data for the Union point to an even slower growth rate of 1.4 per cent a year, with output estimates climbing from just under eight million tonnes in 2000 to 9.3 million tonnes in 2011.

For 2013, the forecast is 9.6 million tonnes (Table 4) as, according to a USDA GAIN Report, anticipated declines in France and the UK will more than offset anticipated higher production in the Benelux, Germany and Poland. Indeed, production in France in 2011 was less than in 2000. That the European Commission has halted export subsidies on poultry meat will impact on France’s growth potential as the subsidy was exclusively used by two French companies that sell frozen whole birds, primarily to the Middle East.

Regarding the FAO chicken meat production data, the UK with 1.37 million tonnes in 2011 was the largest producer in the EU, closely followed by five countries - France, Spain, Poland, Germany and the Netherlands; these six account for two-thirds of the Community total. When comparing with 2000, clearly the most rapid growth has taken place in Poland, Germany and the Netherlands.

European Commission forecasts on poultry meat output to 2022 suggest that future growth will be extremely slow, with 2022 output at nearly 13 million tonnes, which is only some four per cent above the 2011 level of 12.4 million tonnes. In July this year, Croatia became the 28th member of the EU. However, this country’s impact on Community chicken meat production is negligible.

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Russia is clearly the leading chicken producer in Europe. For 2011, the FAO’s estimate of output came close to 2.9 million tonnes (Table 2), while the USDA’s estimate for broiler production in that year stands at 2.6 million tonnes. Both sets of figures point to an annual growth of around 12 per cent. However, USDA economists consider that the rate of expansion slowed to less than 10 per cent in 2012, and again to a little over four per cent this year when broiler output is expected to reach 2.95 million tonnes (Table 4 and Figure 2).

This could point to a chicken meat figure of around 3.3 million tonnes, representing around 20 per cent of Europe’s total compared with only eight per cent back in 2000. However, a recent USDA GAIN Report considers that Russia’s broiler output in 2013 will exceed earlier expectations and could reach 3.05 million tonnes, rising to 3.3 million tonnes in 2014.

Russia’s latest Poultry Programme envisages that poultry meat production will reach four million tonnes by 2015. Only some nine per cent of this is expected to come from private farms. Broiler output from agricultural poultry establishments is forecast to reach 3.35 million tonnes while turkeys are anticipated to contribute around 168,000 tonnes and spent hens, 108,000 tonnes. Expansion is being encouraged via subsidies from the Ministry of Agriculture from August 2013, coupled with lower feed prices.

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As its broiler industry has expanded, chicken meat production in Ukraine has escalated from just 190,000 tonnes in 2000 to 880,000 tonnes in 2011. The industry commenced significant expansion in the early 2000s and in the following years, producers concentrated on optimising existing facilities and reducing risk through vertical integration.

According to a USDA report, owning feed mills, which is common for large production enterprises, quickly expanded into the acquisition of land, machinery, distribution centres, logistics and even retail chains. In 2013, broiler production, forecast at more than 900,000 tonnes, will for the first time, exceed domestic consumption (Table 4). If correct, then chicken meat output will currently exceed one million tonnes.

Future expansion will be closely linked to any growth in exports which, in turn, will greatly depend on an expansion of trade with the EU, this market having been opened up for Ukraine late in 2012. In 2013, it is envisaged that sales to the Community could amount to 55,000 tonnes, while some observers consider that the Ukraine has the potential to sell as much as 200,000 tonnes to European countries.

Figure 2. Chicken meat production in leading European broiler-producing countries ('000 tonnes)

October 2013

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