A new report from Rabobank's global Food & Agribusiness Research and Advisory department examines the challenges faced by the U.S. chicken industry and the implications for necessary change in the industry going forward.
According to "This is not your grandfather's chicken industry — Thoughts from a banker's perspective," written by Rabobank's senior poultry sector experts, the U.S. chicken industry is encountering permanent rather than cyclical changes which will require significant changes in how the industry operates in the future. Those challenges include:
- Excess supply in the industry, which has been made difficult to remedy given recent court rulings which inhibit companies' ability to eliminate capacity or even reduce production
- Increasing government regulation which makes it difficult to achieve competitive cost management and efficiency
- Rapid globalization of the industry, requiring U.S. companies to develop new export products for new export markets
- Maturation of the U.S. domestic market
- Structurally higher and more volatile feed input costs
"Rabobank believes the industry will adjust eventually, but those who will survive and thrive in the future will be those who recognize that the operating environment has changed forever, and alter the way they run their business," according to the report.