The entire global animal protein market is being affected by outbreaks of African swine fever (ASF) and the fact that China will no longer produce the same amount of pork. Worldwide changes are coming.
Because of ASF, Brazil, Spain or the United States can be presented with great opportunities to export pork. Changes not only involve animal protein, but also grains. There is already news that Brazil is going to export fewer soybeans to China, so there will be more availability. The price of this feed ingredient could go down, but the delay in corn planting in the United States caused by weather is factor to watch.
Affect on Mexican poultry production
In an exclusive interview with Industria Avícola, Juan Manuel Gutiérrez, the new president of the National Poultry Producers Association (UNA, in Spanish) of Mexico, said he does not like to think the sector does well because another sector does poorly. He also hopes the swine industry in Mexico will not be affected, "because it would be very regrettable."
"It's not very encouraging, but somehow in the short term we would see an increase in poultry products demand," said Gutiérrez, and it is something that should result in profits.
It is evident that the pork supply is going down. In this case, "an immediate substitute could be chicken meat, which would generate a greater demand for our products, which — in the short term — represents an opportunity," he added.
In addition, Gutiérrez, who is also president of GM Group, the 12th largest egg producer in the country, believes that in such a situation swine industry will have to quickly work to adapt and be able to guarantee supply to certain markets. However, it is obvious that this would generate a decrease in the demand for some feedstuffs, which would reduce costs.
Perhaps this circumstance could be an incentive for the Mexican poultry industry, in the sense of achieving avian influenza-free areas and gaining the ability to export to other countries.
"When there are these situations, prices react. When prices react, companies are capitalized, and if a promising future is seen, they obviously reinvest in the same sector." These opportunities can be both at the domestic level, and in the search for export markets.
"Mexico must be prepared with the certification of avian flu-free areas and with certified processing plants." There may be disease-free areas, but if there are no certified plants recognized by the destination countries, "the task cannot be completed".
Mexico needs to generate an export mindset. However, the Jalisco businessman notes that international markets are not always the most profitable. Many times they are surplus markets. There are two types of export markets: niche markets with very specific products or surplus markets, such as the United States and Brazil. "They compete, but with products that they have left over."
In a way, many times Mexican poultry producers are not motivated because prices abroad are not so attractive due to the fact that they are surplus markets.
However, "when an export policy, a whole mentality, an export culture is generated, where certain products are consumed within the country, there is a very important growth of the industry." Currently, chicken production in Mexico is growing at a rate of 3 percent per year — above population growth — but it is necessary that it grows 5-6 percent.
This growth would imply the substitution of another 3-4 percent of the chicken imports, that today represents 13-15 percent of the national chicken consumption.
Boosting the economy
In conjunction with poultry producers, the government must generate an export policy of mutual support, because it is necessary to work together. For this, UNA is in negotiations with the Ministry of Economy to generate a mutual cooperation agenda, as well as with the Ministry of Agriculture and Rural Development. According to the UNA president, "the poultry industry is one of the best allies of the federal government.
View our continuing coverage of the African swine fever outbreak.