Demand in rapidly growing developing countries will drive world meat production to expand over the next decade, led by poultry meat production growing at a rate of about 2 percent per year. Nearly 104 million metric tons of poultry meat will be produced in 2012 after surpassing the 100-million-metric-ton mark for the first time in history in 2011. Of this total, global broiler production will account for nearly 82 million metric tons, according to a recent U.S. Department of Agriculture World Agricultural Supply and Demand Estimates report.
High input costs drive up poultry meat prices
Prices in the poultry meat market are expected to remain high, due to high input costs, specifically high prices for feed grains and energy. Prices for all meats are currently at their highest levels in the past 15 to 20 years. In fact, in April, the Food and Agriculture Organization of the United Nations’ meat price index rose to the highest level of 182 points, surpassing the record set in November 2011 when the index reached 181. Poultry meat prices are projected to remain close to current levels, according to FAO, so long as energy and feed costs remain high. However, as the industry adapts to higher costs, poultry producers should see their profitability increase. Increasing on-farm productivity will also be important for gains over the next decade. For example, the number of birds is projected to increase over the next decade to 24.3 billion head, but an increase in efficiency on farms means less feed per bird will be required.
The expansion in meat production over the next 10 years will be largely due to production growth in developing countries, while growth slows in many developed countries. Between 2009-11 and 2021, developing countries will account for 77 percent of the growth in global meat production, compared to 23 percent from developed countries. Developing countries are expected to increase their share of global poultry meat production to 63 percent by 2021 thanks to increases in productivity on farms and increasing returns to scale with larger farms.
More specifically, the Asian countries of China, India, Japan, Korea and Turkey will drive poultry meat production growth over the next decade, although growth will be limited by the resurgence of avian influenza outbreaks.
The Office of Agricultural Affairs in Beijing lowered previous forecasts for Chinese broiler meat production in 2012, now projecting the country of China will produce 13.7 million metric tons of broiler meat in 2012, due to lower slaughter weights. Lower pork prices and higher poultry meat prices in that country are shifting consumer demand from poultry to pork as consumers substitute their meat preferences. Data provided by Nan-Dirk Mulder of Rabobank show changes in broiler production in China over the past decade. Increasing vertical integration and modernization in China means more broilers will be produced on commercial farms over the coming decade than in the past and will account for the majority (40 percent) of production by 2020. In comparison, the vast majority (70 percent) of broilers were produced on farms with less than 2,000 birds just a decade ago in China. Furthermore, India’s production of broiler meat is projected to increase from 2.9 million metric tons in 2011 to a record 3.2 million metric tons in 2012; an expanding middle class will also fuel demand in this country, and thus, greater production, also driven by vertical integration.
Production growth in Latin America slows
Overall, world poultry meat production growth will slow from an average of 2.2 percent per year the previous decade to 1.8 percent per year over the next decade, largely because of slower growth in Latin America, according to FAO. Rabobank estimates that Brazil, one of the world’s largest broiler-producing countries, will see broiler production growth slow to just 3 percent in 2012, while Argentina’s broiler production grows at 4.5 percent in 2012. USDA data show Brazil’s production forecast was revised lower to approximately 13.3 million metric tons of poultry meat in 2012, and Argentina’s production will increase only slightly from about 1.8 million metric tons in 2011 to 1.9 million metric tons. Likewise in Mexico, broiler production growth will have slowed to just 0.9 percent in 2012, Rabobank estimates, bringing total broiler meat production in Mexico close to 2.93 million metric tons in 2012.
In the U.S., falling chick placements will lead broiler meat production growth to decline in 2012 by 1.8 percent. USDA forecasts the U.S., the top producer, will have an output of nearly 16.4 million metric tons of broiler meat in 2012, with growth slowed by high feed costs. This is the equivalent of approximately 38,040 million pounds of broiler meat produced in 2012, declining to nearly 37,100 million pounds of broiler meat in 2013. Additionally, the U.S. will produce 5,775 million pounds of turkey meat in 2012.
High feed costs and a contracting number of animal heads are also affecting the European Union’s meat production sector, which is expected to decline overall by 0.4 percent in 2012 and 1 percent in 2013. Poultry meat, in contrast, remains the only meat in the EU for which production is expected to increase in 2012 and 2013. The European Commission forecasts an expansion in EU poultry meat production by about 1 percent in 2012 and 0.3 percent in 2013, in spite of new animal welfare rules. This fourth-largest producing region is expected to produce 9.6 million metric tons of broiler meat in 2012.
Africa’s poultry meat production growth in 2012 has also been limited by the effects of high feed costs and rising imports in such countries as Ghana, Angola, Benin and the Congo.
Russia’s poultry meat production growth, which grew at an average of 14 percent annually over the last decade, according to FAO, is projected to slow to an average of about 2 percent a year over the coming decade to 2021. Russia’s government will spend more than $9 billion on domestic agriculture in 2013, including poultry production. Since 2006, the country has either added or modernized more than 400 poultry facilities. By 2020, Russia’s production of poultry meat is expected to stand at 4.5 million metric tons, making the country almost self-sufficient.