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Prospects for the world poultry market.

It is not unlikely that in the year 2000, poultrymeat will be the most widely consumed type of meat.
Share of the Five Largest Companies in Production per Country
 Market share
 of five largest
 Production Companies/
 volume country
 (X 1000 tons) (1987)
Belgium 171 45
Denmark 118 80
West Germany 687 37
France 1116 39
Italy 1081 35
Netherlands 485 48
UK 1104 55
Spain 850 32
Source: Rabobank (various sources)

With worldwide production and consumption growing by around 4-5% a year, poultrymeat could well become the most widely consumed form of meat in the next century, according to a Rabobank report on The World Poultry Market.

There are however marked regional differences in other production and consumption.

Of the 170 million tons of meat currently produced each year, 40% is pork, 29% beef and 22% is poultry.

That poultry production is much less tied to land than that of beef, production can take place fairly close to the consumption areas resulting in reduced transport costs states the report.

Poultrymeat production in the EC amounted to about 6.7 million tons in 1991 some 70% of which was broilermeat. France, Great Britain, Spain and Italy are the major broiler producers in the EC. In the past five years, growth has averaged around 3% a year.

Poultrymeat production in the EC, as in many other regions, is characterised by a concentrated and integrated structure. There are a few large companies which are responsible for a major part of production. In 1987, the largest ten of these had a production capacity of almost one quarter of the annual output. Nevertheless, the level of concentration is far lower than, say, in the United States. In the EC there are still many small producers with market shares of between 2 and 3%. As yet, there is no question of companies dominating or controlling the market, except in Denmark. In the EC there are also still no companies which are represented in every country of the Community. The activities are frequently confined to a few countries. The market share of the five largest companies in each country does not exceed around 40 to 50%, as is shown in the accompanying table.

Since the reforms in Central and Eastern Europe, the report states that growth in production has virtually come to a standstill and is even declining in some countries. This is the result of the failure of central government planning coinciding with a falling domestic demand as a result of reduced purchasing power.

While it is not yet clear how production will be affected by privatisation, the report concludes that it will certainly be some years before all the current problems are solved.

The Russian Federation is by far the largest poultrymeat producer in the former Soviet Union (CSI, Baltic States and Georgia). It has a 54% share of combined production, followed by the Ukraine and Kazakhsan with 21% and 5% respectively.

The break-up of the Soviet Union has led to a decrease in poultry meat production. Formerly, production was centrally-planned but, at present, each republic is responsible for its own planning.

Production in the USA, the world's largest poultrymeat producer, more than doubled between 1970 and 1991 when it amounted to around 11 million tons. Annual growth in recent years has averaged over 6%. About 79% of output is chickenmeat and 19% turkeymeat. Integration is far advanced, compared with the other sectors of American agriculture, the 10 largest operations accounting for 53% of production.

The report also highlight the rapid developments which have occurred in Mexico and Brazil. The latter country's broiler industry is highly concentrated with some 56% of slaughterings in 1987 being performed by the five largest companies.

Despite being stimulated and subsidised by government, the broiler industry in Saudi Arabia remains only 60% self-sufficient. Excluding Iraq, the annual growth in the Middle East region is just over 3%.

Poultrymeat production in China is being "strongly stimulated by both the national and local government," says the report, the forecast for output this year rising to four million tons compared with 3.6 million in 1991.

In Thailand, output has grown by 9% a year since 1986 to this year's USDA estimate of 720,000 tons.

Poultrymeat production in Japan has virtually come to a standstill, expansion being hampered by lack of space, environmental problems and scarcity of labour and keen competition from foreign suppliers to this market.

Meat consumption has risen in parallel with production. There are however, considerable differences in the per capita consumption figures.

In the EC, poultrymeat uptake ranges between 15 and 22 kgs/person/year. In Scandinavia, poultry consumption is low, varying between 4.3 and 5.7 kgs, while in the countries of Central and Eastern Europe, the spread in consumption is from 5 to 25 kgs.

In America, poultry uptake exceeds 40 kgs/person/year and the trend is upwards.

Only 7.5% of poultrymeat production is traded internationally and this business is dominated by only a handful of countries. Among the exporters, France, the USA, the Netherlands and Brazil account for 65% of the total traded. However, China and Thailand are emerging strongly as exporters, notes the report.

On the import side of the trade balance sheet there are also only a few major participants, namely, Germany, Saudi Arabia, Japan, Hong Kong and the former Soviet Union, though a lack of hard currency has greatly moderated demand from this area.

Looking to the prospects for the world's poultry meat industries, the report concludes that, generally speaking, sales prospects are good. Poultrymeat has a favourable position in terms of price, as compared with other types of meat. The low feed costs, resulting from good feed conversion, give poultrymeat an important competitive advantage. A further increase in productivity may be expected as a result of genetic improvements and even better feed conversion.

The largest growth markets (demand) will occur in those countries where the average standard of living is still limited, but where successful economic development is to be expected, as is the case in Mexico, Brazil and South-East Asia. Sales in countries with a substantial growth in population also offer good prospects, assuming that sufficient purchasing power is available. Growth may also continue for some time yet in the western countries too, although a stronger preference will emerge for products which have been further-processed and transformed. It is not unlikely that, in the year 2000, poultrymeat will be the most widely consumed type of meat. As regards its product characteristics, poultrymeat fits in well with the wishes of (Western) consumers.

The highest growth in production is to be expected in Mexico, Brazil and South-East Asia. Production will increase to a lesser extent in the countries of the West. In the former East Bloc countries, particularly the CIS, virtually no growth in production is to be expected in the next few years, although a rise will occur here again in the longer term.

Although sales prospects are favourable on a global view, a relatively excessive growth in production may glut the market and put prices under pressure. In addition, the possibilities for sales to the Middle East depend on the level of the export subsidies and government policies in this region. Such risks particularly apply to the commodity-oriented producers. Bulk producers will have to create and utilise advantages of scale. The more brand-oriented producers will be confronted less quickly with problems such as these.

It is still difficult to predict the extent to which a possible GATT agreement will influence patterns of trade. Production in the EC will become cheaper, but this need not mean that exports to countries outside the EC will be able to increase.
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Publication:Economic Review
Date:Nov 1, 1992
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