The outlook for the global poultry industry in Q4 2022 and early 2023 remains strong, despite challenges, according to Rabobank in its Global Poultry Quarterly Q4 2022 report.
A weaker economic climate will put pressure on spending power, leading to more price-driven consumer behavior, which will support poultry consumption as it is the cheapest protein option.
Market performance will also depend on the local economy’s dependence on energy. In general, South/Southeast Asia, the Middle East, and Africa will perform better than Europe, Northeast Asia, and North America.
This is in view of concerns surrounding high feed prices, rising energy prices in import-dependent countries, high distribution costs, rising labor costs, and avian influenza (AI) outbreaks. The bank expects feed prices to move around Q1 levels for the remainder of 2022 and early 2023, which is 10-15% below the Q2 peak.
Inflation offers limited room to lower prices. This could affect farming and processing, with rising costs, concerns about CO2 availability for gas stunning, and rising cold storage and distribution costs.
AI continues to spread, with outbreaks in the Northern Hemisphere even in summer, and in Southeast Asia and Africa. The risk of spreading and more difficult trade of breeding products suggest a tight supply situation, Rabobank said.
Keeping everything balanced
In this challenging global market context, “it will be important to keep production balanced,” Rabobank emphasized.
“The focus for the industry should be on excellence in operations. Being efficient makes the difference between good and weak performance. It is also important to offer affordable solutions to keep chicken on the menu for consumers who are trading down,” the bank explained.
Promising outlook for Southeast Asia
The outlook for Southeast Asia’s poultry industry for H2 2022 is promising, despite cost pressures and other operational challenges.
“We are optimistic. Demand is improving because economies are reopening. This is helping the industry,” Nan-Dirk Mulder, Rabobank Senior Global Specialist – Animal Protein told Asian Agribiz.
On the other hand, chicken supply is still relatively tight. While large companies continue to expand, many small and mid-sized companies are struggling with high feed costs.
“We see a lot of small-scale producers reducing supply in Vietnam, China, Indonesia, and India. And this is going to keep happening because feed prices are going to stay high alongside energy and other costs. For companies with limited access to finance, this is an ongoing problem,” he explained.
Mr Mulder said growth in Vietnam will be backed by strong GDP, reopening of the economy and tourism, and a boost in demand from foodservice. But supply is relatively tight, compared with pre-pandemic levels.
There is much investment in value chain upgrades. “I can see the competitive position of Vietnam in global markets. But the volumes compared to Thailand are still different. It is still a relatively small exporter. But the long-term potential is there,” he said.
In Thailand, meat supply is tight due to ASF in the pig industry, said Mr Mulder. Chicken and pork prices have increased significantly, on the back of heightened domestic demand and tourism.
The outlook for the Thai poultry industry remains strong. Pork supply is expected to stay tight in H2, and local demand will keep rising with increases in tourism and consumers substituting chicken for pork.
Rising production cost in South Asia
Pakistan’s poultry industry is under a heavy cloud, as it battles high taxation on raw materials, natural disasters, and rising feed raw material costs.
Big Bird Managing Director, Abdul Kareem told Asian Agribiz that the government has imposed taxes of up to 35%, for imported inputs, including GP chicks, adding considerable pressure to the sector.
“In addition, we know that world soybean prices are high now. Local corn prices are also rising. All these have pushed up feed prices significantly,” he said.
Despite these pressures, the market is optimistic as chicken consumption is not badly affected. Dr Kareem said people are still prepared to pay and demand remains stable.
In India, poultry production costs have risen sharply with rains affecting supply and quality of feed raw materials. Onkar Singh Batra, owner of Jeeval Enterprises in Mumbai told Asian Agribiz that soybean, oils, and DOC prices have shot up.
“The main issue has been the rains affecting soybeans coming into the market. The rains are not letting the crops dry and there is a shortage of quality crop,” he said.
He continued that in early October, feed costs rose from USD 0.47/kg to USD 0.50/kg within days. This pushed up production costs from USD 1/bird to USD 1.04/bird.
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