Industry estimates that consumers currently spend Aus$5.6 billion per annum on chicken meat in retail outlets.
Australia’s consumption of chicken meat is expected to increase by 10 percent over the next couple of years from its current level of 43.9 kg per person and to overtake red meat consumption by 2020.
In a first of its kind report, the Australian Chicken Meat Federation has given a detailed overview of the current state of the Australian chicken meat industry. The report reveals an industry that has undergone significant expansion over recent decades and a product that has, at the same time, become comparatively cheaper and more central in the diet of the country’s consumers.
Over the five years to 2009-2010, poultry production in Australia averaged 857,000 metric tons a year. Production of chicken meat has mirrored global trends and, over the last 20 years has increased by over 160 percent. In 1963, Australian’s ate an average of 4.2 kg of chicken a year. By 2010, the per capita figure had increased tenfold. Australian’s now eat more chicken than any other meat, and the industry estimates that consumers currently spend Aus$5.6 billion per annum on chicken meat in supermarkets, fast food outlets, specialty shops and restaurants.
Concentration
Well over 95 percent of the chicken meat grown and eaten in Australia is produced by seven privately owned Australian chicken meat processing companies. The two largest, Baiada Poultry and Inghams Enterprises, supply more than 70 percent of the country’s chicken meat with the next five companies each supplying between 3-9 percent of the market. A large number of smaller companies make up the balance.
The relatively concentrated nature of the industry is balanced by its small direct customer base, ie the supermarket chains and major quick service restaurant chains, as chicken is purchased from processors by a small number of major companies with substantial market power. Despite only a limited exposure to international trade, the result is a highly competitive domestic market.
The industry has grown not only through the adoption of new technology, genetics and management practice but has also adapted its offer to consumers. In the 1960s, whole birds represented the main product sold. Since then, there been strong growth in demand for chicken cuts and fillets, such as raw breast fillets or chicken drumsticks, together with increased demand for further processed chicken products. The predominant cut now consumed in Australia is breast meat. Demand for free range chicken has also grown significantly. Five years ago, free range chicken could most accurately be described as a cottage industry. In a relatively short period of time, it has grown to account for some 15 percent of the market.
In a 2010 Australian Chicken Meat Federation survey, 90 percent of those surveyed said that they ate chicken as a main component of a meal at least once a week, with one in three eating it at least three times a week.
The retail price of chicken – assessed on the basis of the price of a whole chicken – has remained relatively flat over the long term, compared with other meats. Some 58 percent of Australians consider chicken to be the best value for money meat option. This decrease in the real price of chicken has lead to an increase in consumption, resulting in chicken becoming more central in the Australian diet. Over the last two decades, consumption has increased by 60 percent, while prices have decreased by 40 percent.
Processing
The number of chickens slaughtered in Australia has steadily increased and the percentage increase in chicken meat produced over the same period has been even greater due to the demand for particular products requiring larger birds at time of slaughter.
Some 69 percent of Australian chicken leaves the primary processing plant as either whole, filleted or in pieces and is not further processed. Some 40 percent of raw chicken meat goes to supermarkets, with wholesalers accounting for 19 percent. Sales to quick serve restaurants, the hospitality and food services industry, specialty poultry retailers, pet food manufacturers and butchers make up a further 39 percent.
Australia has witnessed a steady trend away from frozen chicken, with volumes of fresh chicken now outweighing frozen by ten to one. Consumers have also shown a growing preference for purchasing chicken in pieces, ready to cook, although the sale of fresh whole chickens remains strong.
Approximately 31 percent of chicken meat goes to further processing. Most of the products from further processing go to supermarkets, 34 percent, and quick service restaurants, 33 percent. Products from further processing also go to hospitality and food service providers, 17 percent, wholesalers, 6 percent, specialty shops, 6 percent, and butchers, <1 percent.
The percentage incase in chicken meat produced over the same period is even greater, due to market and product range changes that have fuelled demand for larger birds.
The number of people working in the industry is estimated to be approximately 40,000. In addition, a further 100,000 jobs are estimated to be directly dependent on the industry.
Trade
Australia has strict trade policies and biosecurity measures to ensure that the country and its poultry industries are protected from diseases that are not usually found in the country. Imports of chicken meat, other than from New Zealand or as canned or fully retorted products, were banned until 1998, and remain subject to stringent conditions, resulting in very limited imports of processed chicken meat and no imports of fresh chicken meat.
This means that virtually all chicken meat eaten in Australia is grown in the country. Additionally, almost all chicken meat produced in Australia is consumed locally, with only a little under 5 percent being exported.
Imports
Chicken meat cannot be freely imported into Australia due to quarantine rules to protect local commercial poultry and native birds from disease, and consumers from certain food hazards. Quarantine conditions focus on nine diseases and pathogens of concern, and any chicken meat products from regions which are not free of all these diseases needs to be cooked to various extents depending on the disease in question in accordance with the relevant import protocol.
In the 10 years to 2010, the country imported 60 metric tons of chicken meat. Imports are generally fully retorted foods, such as canned chicken meat, which has had prolonged exposure to high temperatures while in its container. Occasionally, small amounts of frozen cooked chicken meat have been imported from New Zealand when exchange rates favor such trade. No whole chickens or fresh meat are imported.
Live birds cannot be imported. Fertile eggs imported for breeding purposes are brought through quarantine facilities where they remain until after hatching under constant veterinary control until the birds are nine weeks of age, whereupon they are moved into secure breeding farms well away from any other poultry.
Exports
Very little Australian chicken meat is exported. This is in part due to high local demand, and partly due to Australia’s costs of production. Those exports that do occur go to South Africa, the Philippines, Hong Kong, Singapore and the South Pacific Islands.
Over the five years to 2009-2010, some 4 percent of total production was exported, going to some 60 countries in total. Increasingly, the bulk of chicken meat exports have been made up of frozen cuts and edible offal, reaching 95 percent in recent years, with mainly frozen and whole chicken making up the rest.
Outlook
Healthy growth in poultry meat production and consumption is forecast for the Australian chicken industry over the short- and medium-term, and this is partly due to anticipated price rises for red meat. Over the same period, prices for chicken meat are expected to be contained by productivity improvements and the anticipated easing of feed prices, allowing chicken to retain its position as the most affordable and popular meat.
The industry forecasts that chicken meat consumption will rise to 46 kg per capita by 2015-2016 and that there will be little change in the volumes of meat currently imported or exported.