Eastern European poultry output exceeds world average
Keep a close watch on those countries that are expanding dramatically.
While what constitutes eastern Europe is open for debate, this article has taken the geographical definition provided by the Food and Agriculture Organisation (FAO) in Rome as its basis. According to the FAO, eastern Europe comprises the ten countries presented in the accompanying tables.
Regarding the human population, this region of the world is atypical in that it is anticipated that, in the foreseeable future, the aggregate population numbers will continue to contract rather than expand.
Thus, from having come close to 310 million back in the mid-1990s the ten-country human population has declined to around 300m in 2005, while the projected figure for 2025 points to a continued fall to below 270m. The contraction is evident in all ten countries.
Overall growth in poultry production
Fortunately for the poultry industry in this region, this cutback is not evident in the combined output of chickenmeat and eggs, as these have exhibited good growth since 2000. Indeed, while the rise in egg production has been well in line with the world trend, expanding by 3% per year, the chickenmeat sector has raced ahead with an average annual increase of 8.5% compared with the world average of less than 4%.
Between 2000 and 2006, the total laying flock expanded by around 100 million birds to about 390 million, while the number of chickens table birds plus culled layers slaughtered increased by some 825 million to about 2.7 billion.
While all statistics need to be treated with caution, the growth in both the egg and chickenmeat sectors demands that attention be paid to these industry developments.
However, growth has not occurred in all countries in the region. In some instances, for example, chickenmeat output in Bulgaria and Hungary in 2006 fell well short of the 2000 levels. Similarly, in the egg sector, the Czech Republic, Hungary and Moldova have seen their industries contract.
Clearly, the leading producing nation in the region is the Russian Federation, which accounts for around 48% of the human population and a similar percentage of the region's egg output although only 38% of chickenmeat production.
Broiler production in Russia is estimated to have expanded by 15% in 2007 to about 1.35 million tonnes (mt), while this year is expected to witness a further 11% increase bringing output to around 1.5mt. As elsewhere, the growth of the biofuel market has boosted prices for grain and oilseed products. Increasing feed and other costs have impacted adversely on producers' incomes, which could put a brake on current and future investments in the poultry sector.
Russia is a major poultrymeat importer with total annual purchases well in excess of one million tonnes. However, while purchases of chickenmeat (mainly parts) are fairly stable at around 1.2mt, imports of turkeymeat, which had reached 144,000t in 2002, are now expected to fall to around 45,000t per year as a result of tougher import measures. Hence, annual total turkeymeat consumption in the country, which had been in the region of 150,000t, is likely to contract despite an anticipated increase in domestic production to around 30,000t.
Poultrymeat consumption in Russia is projected to grow by around 5% this year. According to a USDA Gain report, the Russian veterinary service plans to expand the list of countries, the imports from which will be subjected to electronic verification. This is a system designed to detect counterfeit veterinary certificates and to support efforts to reduce the level of smuggling of illegal livestock products into the country.
Russia has some 425 commercial layer farms currently producing around 38 billion eggs a year, while the forecast of 47 billion (approximately 2.8mt) for 2010 points to a full recovery from the previous peak in 1990. Prior to 1990, there was no commercial egg products industry in Russia. Today, it accounts for some 10% of total production. Although domestic dried egg only accounts for around 33% of total usage, the general view is that the egg-processing sector will grow in importance as increasing quantities of the end products are utilised by both the food and non-food industries in Russia.
The second largest country in the region in terms of the human population is the Ukraine. Ukrainian gains in chickenmeat and egg production have been quite amazing.
Chickenmeat output is estimated to have exceeded 520,000t in 2006 and the forecast for broiler production for 2007 stands at around 540,000t. This sector is expected to continue growing despite the rise in energy and feed costs, although the rate of expansion is unlikely to match that of recent years. According to USDA reports, the four largest producers, who currently cater for some 80-85% of this market, are building new hatcheries along with accompanying production and processing facilities. Indeed, the largest company, Khleboproduct, announced in mid-2007 its intention of building a new facility in central Ukraine, for a total of around 130 million chickens, yielding an output of some 160,000 tonnes a year. It is also reported that it plans to build a similar facility in 2009/2010. With its own grain production and ready-to-eat frozen food plant, this operation is already vertically integrated to a high degree.
The industry had to face up to an outbreak of avian influenza in southern Ukraine in 2006 but as it managed to convince consumers that only backyard products and wild waterfowl could endanger humans, the impact on poultrymeat consumption was negligible. An initial drop in demand at the time of the outbreak was reversed quite quickly.
Although farmers have looked into producing ducks, geese and turkeys, consumers have not yet shown much interest in these items as they are unwilling to pay the higher prices for these meats. Nevertheless, poultry consumption is forecast to increase this year in both the domestic chilled retail and the frozen poultry for further-processing segments. This has been fuelled by income growth and an increase in red meat prices. Disposable incomes have increased by as much as 28% in 2006, leading to higher poultry consumption, especially in low-income households. Also, Ukrainians are gradually switching to poultry products from pork and beef.
While imports have grown in recent years reaching a 'high' of 276,000t in 2004 they fell back sharply to 130,000t in 2005, following the closure of the 'free economic zones'. According to a USDA Gain report, this trade 'remains a sensitive political issue and is impacted by political debates and negotiations between commercial companies and the government, rather than a function of supply and demand.'
As is indicated by the data in the accompanying tables, egg production has, as in the poultrymeat sector, expanded rapidly since 2000, with output mounting to 820,000t in 2006.
While the egg products sector is in its infancy, it is believed that this aspect of the business is entering a period of dynamic growth.
With around 38 million people, Poland has the third largest population of these eastern European countries. It is, however, the second largest chickenmeat producer, primarily because it is by far and away the biggest chickenmeat exporter. Sales amount to around 100,000 tonnes per year, representing 10% of domestic production and around half the total exports for the region as a whole.
Output here exceeds that in the Ukraine because Polish people eat more chickenmeat. The annual average stands at around 17kg per person, compared with 15.6kg in the Ukraine.
Egg production in Poland this year is projected to expand by a moderate 2% to around 560,000t, of which some 15% will be exported. Unlike the Russian Federation and the Ukraine, Poland is a member of the European Union (EU) and its poultry industries are looking to benefit from new investment policies financed from EU subsidies.
For the egg sector, future expansion is anticipated primarily as a result of further growth in the exports of both shell eggs and egg products.
It appears that outbreaks of avian influenza (AI) had a drastic impact on chickenmeat production in Romania in 2006, output falling by almost 16% to 266,000t. The first confirmation of AI in the country was in October 2005 when it was concluded that this first wave of this disease was the result of migratory birds. However, a second wave, which lasted from May to July 2006 and covered about half of the country, is considered to have been the result of uncontrolled movements of sick birds and their products.
In contrast to the previous four countries, the short-term prospects for Hungary's poultry industry are less promising. At a time when the industry has been wrestling with sharp cost increases for inputs, consumer purchasing power has decreased. Of a population of fewer than 10 million, some three million are considered to be poor with an average monthly income of less than 250. Inflation is running at 7-8%. As a result, it is estimated that possibly one-third of Hungarian poultry producers went out of business last year.
The poultry industry in the Czech Republic also seems to be going through difficult times with no indications of growth in either eggs or chickenmeat. Indeed, the egg sector appears to have contracted by half since 2000.
While no such drastic cutback is evident in the poultrymeat sector, output in 2006 at 216,000t was nearly 5% lower than in the previous year, although the reduction in chickenmeat appears to have been less pronounced. Poultrymeat accounts for some 32% of total meat production.
In 2007, the industry suffered badly from the impact of highly pathogenic avian influenza. This was coupled with cheap imports from southern Europe where producers exported surplus product that arose as a consequence of lower demand in their own countries because of consumer concern about AI.
The combined impact of the cost of domestic veterinary measures and the low-priced imports resulted in many Czech poultry producers incurring substantial losses. One leading company with a reported 15% of the market closed its processing plant towards the end of 2007.
Other countries in the region
In Belarus, both the chickenmeat and egg sectors appear to be thriving with production on the increase. Chickenmeat output in particular has almost doubled since 2000, while egg production, despite exhibiting slow growth, was at a record high level in 2006.
Currently chickenmeat production in Bulgaria is well down on the early 2000s although this decline is not evident in the egg sector.
There are few signs of growth in Slovakia where the rising cost of inputs is causing problems for domestic producers in both sectors of the poultry industry.
Moldova's chickenmeat industry, although small, has doubled in size since 2000, while the egg sector appears to have contracted somewhat.