2022's global poultry production higher, despite headwinds

2022’s output of broiler meat is forecast to reach new highs this year, but the industry still faces numerous difficulties and uncertainties.

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Supply chain issues will continue to affect the poultry industry in 2022, although difficulties should lessen as the year progresses. (Kosal Hor | iStock.com)
Supply chain issues will continue to affect the poultry industry in 2022, although difficulties should lessen as the year progresses. (Kosal Hor | iStock.com)

Global chicken meat production is expected to grow by 2% this year, according to the latest forecasts from the U.S. Department of Agriculture (USDA), reaching a record 100.9 million tons. Expansion will be driven by strong demand as consumers seek low-cost animal protein, but relatively high feed prices will see margins continue to be squeezed.

All major producing countries are forecast to make gains, with the most significant growth taking place in Brazil, China and the U.S. None of these countries, however, will escape the issues affecting the broader global economy, and none will be immune to the ongoing challenges presented by COVID-19 which, as 2021 came to end, were far greater than most expected.

Weakening global growth

The world economy is forecast to grow by 4.9% this year, after having expanded by a lower-than-expected 5.9% in 2021, according to the International Monetary Fund (IMF). Looking to the medium term, it believes that growth will moderate to about 3.3%.

Various issues that affected 2021 will continue into 2022. The problems related to COVID-19 are still with us and, while improvements are forecast, supply chains are not expected to return to normal this year.

Survey results from economic forecaster Oxford Economics, for example, revealed that supply chain uncertainty had become of greater concern than COVID-19 developments. Surveying businesses in late October, the consultancy found that only one in five of respondents felt that the worst of supply chain issues was behind them.

COVID-19 remains an issue

In November, the World Health Organization warned that every country in Europe and central Asia was facing a real threat of COVID-19 resurgence or was already fighting it. It noted that cases were once again reaching record levels, with the more transmissible Delta variant continuing to dominate transmission across Europe and Asia.

Reliable projections, it noted, foresaw that, if these regions remained on their current trajectory, they could witness an additional 500,000 deaths by the start of February.

As November progressed, along with record daily case number, some European countries were also reporting record daily deaths. Some introduced new restrictions while others were expected to do so with well-known consequences for economies.

Price pressures

While general price pressures are expected to subside somewhat in 2022, in some markets they are expected to persist, causing significant uncertainty. Poultry producers in numerous markets have had to take on board significantly higher input costs and, in some cases, been forced to cut production. While price pressures for feed may weaken somewhat this year, other costs will remain high, with particular uncertainty around energy.

North America 

The USDA, reporting in October, forecast that U.S. poultry production would rise by 1% this year, after ending 2021 slightly higher. 2021 saw higher costs for the industry and these will continue this year although at a lower level. As in Europe and Asia, the U.S. was also seeing COVID-19 cases rising as 2021 drew to a close.

Rabobank notes that lower supplies of beef and strengthening foodservice trends should support improved demand for chicken. Integrators are expected to see marginally higher growing costs, which they should be able to offset through improved productivity and stronger exports, which could reach record levels this year.

Weaker economic trends in Mexico are expected to weigh on local demand, as well as growing supplies of pork. Returns could be lower due to higher feed costs and lower pricing.

Brazil

In 2021, Brazilian chicken meat production and exports are thought to have reached new highs and the industry is expecting another record-breaking year in 2022.

In late September, local producers’ association the Brazilian Association of Animal Protein (ABPA) forecast that broiler production would reach 14.4-14.7 million metric tons. Exports, it said, would also rise by 3.5% in comparison with last year, a more optimistic forecast than those made by some other commentators. Domestic demand for chicken meat is expected to remain strong even the face of rising prices, as more consumers opt for chicken.

European Union

Forecasts made in October suggested that output in the European Union's member states would grow slightly this year. The European Union’s
Directorate-General for Agriculture and Rural Development suggested that output would grow by 1%, however, it noted that much would depend on whether there would be a resurgence in COVID-19 cases and how European governments respond.

Subsequent to their forecasts, various European governments moved to impose restrictions on their local populations and on business opening hours.

Heading into the Northern Hemisphere’s winter, Europe recorded several avian influenza (AI) outbreaks, and these will have an impact on the industry as it moves into 2022.

Rabobank forecasts released in November suggest that production in the EU-27 plus the U.K. will expand by 1%, assuming that supply issues are resolved and that economies re-open.

China

Broiler production may slow this year due to weak demand and the upturn in pork production, which has already affected demand for broiler meat. Rising input costs will also impact producers, notes Rabobank. Production of yellow-feather birds, however, is expected to rise.

Most cities in China have closed, or announced the closure, of live bird markets, and this is leading larger producers to invest more in chilled and processed markets.

Imports will continue the downward trend seen last year but may start to rise in the second half. While imports of feet and wings should remain stable, it will be bone-in product that is the most affected.

Southeast Asia 

The industry in Southeast Asia has been hit hard by COVID. Strict containment measures at plants and border closures affected the flow of foreign workers and limited production. Output in the region declined last year for the second year in succession, particularly in Thailand and Vietnam.

For the year ahead, an expansion of 3-4% is forecast by Rabobank. As economies re-open, consumption should rise. However, the industry will continue to face high input costs. Export opportunities should improve, with the strongest growth forecast for Thailand and Vietnam.

India

The strong volume growth that emerged in India in the second half of 2021 should continue into 2022, although growth will be slower at around 5%. Feed costs will remain an issue, the government may have to allow further feed imports, and difficulties around COVID will continue. India’s transition to the formal market will also continue.

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