Recovery from the global financial crisis of 2007 and 2008 has been slower than expected in a number of countries, linked especially to high levels of government debt. This has had a direct effect on personal incomes and, therefore, on the demand for all animal proteins.
Poultry products have resisted the downward pressure better than other food items, but the central point remains that the demand for chicken has followed the growth patterns of global, regional and national economies as measured by their gross domestic product valuation.
Chart 1, from a 2010 presentation by Dr. Paul Aho based on Food and Agriculture Organization of the United Nations and World Bank data, shows how closely the size of the world market for chicken has stayed in step with the strength or weakness of the global economy over the last 10 years.
The latest outlook publication prepared jointly by the Organisation for Economic Co-operation and Development and FAO proposed that the uptake of poultry meat will have an almost linear relationship with economic growth in the current decade. As shown in chart 2, every 1% change in global GDP is forecast to bring a response of around 1% in consumption of the meat worldwide.
A linear link
The significance of this relationship is underlined by chart 3 from the International Monetary Fund showing the GDP rises expected for individual countries to the end of 2012. The organisation has forecast an annual growth rate of about 4.5% for the world economy in both 2011 and 2012, but with advanced economies growing at only 2.5% while the emerging/developing ones achieve 6.5% growth. Chart 4 from the same source reflects the difficulties of forecasting inherent in the 4.5% world level proposed.
Other presentations by Dr. Aho have linked the level of individual incomes to the amount of chicken eaten and to the type of poultry products preferred. Chart 5 originates from his remarks to a 2010 Novus poultry roundtable meeting, in which five bands of income per person were suggested to have extremely different consequences for chicken consumption by those people.
The first quintile – with an average of $30,000 per person annually – accounts for 70% of world income, he explained. These are the people who generally prefer further-processed and value-added products. Their uptake of chicken is as high as 26 kilograms per person per year and stays relatively unaffected by normal fluctuations in incomes.
The second category, averaging $8,000 annually, has a preference for fresh and frozen chicken. The members eat around 19 kg per person. This contrasts with the 9 kg average for people in the third-quintile group of $3,500 per year, whose demand is more income-elastic. On that basis, the third quintile would be the most likely target for increased chicken sales as incomes rose.
The fourth and fifth quintiles cover people earning $1,500 and $730 per year on average, and they are associated with consumption levels of only 4 kg and 2 kg per person. Chart 6 emphasises that the amount purchased and eaten is especially susceptible to the price of the product for populations in the lower three income quintiles. But at times of financial crisis, the buying habits of many more people become price-sensitive.