Overview of This Week’s Poultry News

ANALYSIS – This week has brought improving prospects for the poultry industry – in the Americas, at least, writes senior editor, Jackie Linden. Several of the large companies have reported better results and others are investing but patience may be required: a new report forecasts improving prices later this year in the US as supplies tighten and expansion is predicted from 2013. In the EU, foodborne disease from Salmonella continued to fall in 2010 while Campylobacter cases are up again. New outbreaks of H5N1 bird flu have been reported in poultry in Nepal and Viet Nam.
calendar icon 8 March 2012
clock icon 5 minute read

Following a long period of volatile commodity prices, financial restraints, tight money markets in the banking sector and a consumer reluctance to spend, the green shoots of recovery for the meat processing sector could be gradually emerging.

A recent Fitch Ratings’ quarterly update on the US protein industry did not paint a particularly rosy picture showing pressure was still on the processors. Processing margins are compressing because wholesale pricing is not always keeping pace with changes in livestock costs.

However, companies outside the US, and perhaps not surprisingly, in the BRIC countries of Brazil, Russia, India and China, have announced new investments.

For example, Brasil Foods S.A. (BRF) of Brazil recently established a joint venture with Dah Chong Hong in China aimed at gaining access to the Chinese distribution market, engaging in local processing, developing the Sadia brand in China, and reaching retail and food service channels in continental China, Hong Kong and Macau.

These positive and optimistic trends can also be seen in the latest results from some of the leading meat and poultry processing companies. For example, Tyson Foods reported a rise in first quarter sales of 9.4 per cent compared to last year up to $8.3 billion and Sanderson Farms reported net sales for the first quarter of 2012 at $517.8 million compared with $427.7 million for the same period a year ago.

In Brazil, meat processing giant, JBS, posted consolidated net revenue of 15,567.8 million real (BRR) in the third quarter of the year, 10.6 per cent higher than in the third quarter of 2010. In its quarterly report, Marfrig posted record net revenues of BRR5.52 billion in the third quarter of 2011, and a 180 per cent increase in operating cash flow from the previous quarter.

The prospect of better times ahead for the US poultry industry in 2013 and 2014 was highlighted in a new report from the Food and Agricultural Policy Research Institute (FAPRI).

Despite struggling for the past three years due to increasing costs of production, the industry could see expansion from 2013 onwards, it says.

The chicken industry is struggling, as output prices have failed to keep up with recent feed cost increases. Production is expected to decline in 2012 for the second time in four years. Prior to 2009, the industry had not seen contraction in any year since 1973.

However, high beef and pork prices due to overall meat supply tightness will allow poultry producers to profitably expand in 2013 and 2014.

In 2011, the spread between wholesale turkey and chicken prices was at its widest level since 1985. Despite production growth in the last two years, the nine per cent contraction in 2009 turkey production has kept supplies relatively tight compared to chicken, according to the FAPRI report.

Chicken prices strengthen in 2012 and 2013 as the 2012 production decline and tight overall domestic meat supplies force consumers to pay more.

Unlike the beef and pork industries, chicken export growth has weakened considerably in recent years. FAPRI says that many nations are striving to control food inflation and reduce their dependence on meat imports by developing their own chicken industries. The US chicken industry will be increasingly dependent upon domestic demand growth if it is to continue to expand in the next decade.

Still in the US, Agriculture Secretary Tom Vilsack made it clear in his speech to a standing-room-only crowd of US farmers and ranchers at Commodity Classic last week that the most important item on the US agriculture agenda is passing the Farm Bill and getting it done soon.

US Trade Representative, Ron Kirk, has said that the US will initiate dispute settlement proceedings against India before the World Trade Organization (WTO) to challenge its longstanding prohibition on the import of US poultry.

Salmonella cases in humans in the EU fell by almost nine per cent in 2010, marking a decrease for the sixth consecutive year, according to the European Food Safety Authority (EFSA) and the European Centre for Disease Prevention and Control (ECDC) annual report on zoonoses and food–borne outbreaks in the EU for 2010.

And finally, turning to bird flu news, reports of new outbreaks in poultry have come from Viet Nam and Nepal. There has been an unofficial report of another human victim of H5N1 flu in Indonesia, and WHO reports new cases in Bangladesh and Viet Nam in the last week.

© 2000 - 2024 - Global Ag Media. All Rights Reserved | No part of this site may be reproduced without permission.