The outlook for Asia’s poultry and egg producers is positive. Rising income levels, greater urbanization, better disease control and the greater use of new technologies, are all contributing to favorable long-term market conditions.
While Asia’s changing circumstance may be creating numerous opportunities, there are still several challenges for the industries to overcome, ranging from price instability to new welfare and sustainability pressures, and ongoing disease issues.
The influences affecting chicken and egg production in the region came under the spotlight earlier this year at WATT Global Media’s seminar Global Poultry Trends -their impact on the Southeast Asian broiler meat and egg markets. Held as part of trade show VIV Asia, which took place in Bangkok, Thailand, in March, the seminar saw two industry experts share their insight into how the region’s industries are developing.
What’s ahead for broiler production?
Pelayo Casanovas, vice president EMEA & APAC at genetics company Cobb-Vantress noted that the Asian broiler industry can look forward to growing demand but must be prepared to confront issues such as labor shortages, disease and changing governmental and consumer attitudes.
Where growth is concerned, he noted that poultry meat consumption in Asia is low compared to other regions, suggesting that there is room for the region to catch up as consumers become more affluent and urbanized.
The broiler industry will move to processing larger birds. Compared to other regions, birds processed in Asia are small. Forty percent of birds processed in Asia Pacific are under 2 kgs. In Indonesia, for example, the world’s fifth largest poultry producer, 80% of birds are processed at under 2 kg.
The shift to processing bigger birds has started. In China, for example, there has been a move from 2.5 kg to 3 kg, while in India significant volumes have moved from 2 kgs to 2.5 kgs.
While the change may still be in the middle ground, as Casanovas explained, the trend towards bigger birds will continue as incomes rise, disease is better controlled and producers look to exploit the efficiencies of bigger birds.
Another significant change in the region is the gradual move away from selling live birds, which still stands at approximately 40%. The decline in live bird sales, however, does not appear to be greatly benefitting sales of whole birds, rather, it is boosting sales of meat on the bone and further processed products.
Much of Asia puts a similar value on white and dark meat, but in China, Japan and Korea, there is a strong dark meat preference, and this is reflected in price. Deboned thigh meat in Japan, for example, is worth twice that of breast meat. Efforts have been made in China to use more breast meat in products, however, local preference remains strongly for dark meat.
Need to modernize
It is not simply at consumer level where significant differences exist. The degree of development within the industry varies across the region and this continues to have consequences, for example in maintaining good prices through matching supply to demand. The extent of integration is a significant contributor to this.
Casanovas explained that where the industry is well integrated – from breeders through to processing – supply and demand is better managed due to a higher market overview.
Where this is not the case, there may be many small famers that want to place their birds no matter what, to ensure their livelihoods. They may be unaware of the bigger picture or may be slow to react to market changes.
Asia is home to markets such as Thailand, which is highly integrated and where achieving price stability is relative easy, but also to countries such as Bangladesh and Vietnam, where lack of integration results in highly variable prices.
Trade to continue growing
Thailand has become a significant exporter truly tailoring its production to the needs of its customers, particularly those in Europe and Japan, and not simply sending excess product overseas.
Japan and China are the region’s largest meat importers, each importing close to 1 million metric tons annually. Japan has long been a major meat importer, importing over half the meat it consumes, while China continues to suffer a meat deficit, largely due to African swine fever. Even when, however, the disease is brought under control, China’s meat imports are expected to continue rising.
The Philippines has also become a significant importer, recently boosting imports as a way of controlling inflation.
Welfare and disease
Casanovas noted the industry needs to continue striving to improve welfare, but this needs to be balanced against impact on the environment, sustainability and practicality. While some of the welfare schemes promoted by non-governmental organizations have positive aspects, other recommendations can prove hard for the industry, and he expressed his concern that some more recent, extreme proposals, if implemented, could result in considerable burdens for the industry and require much greater use of resources.
While these proposals are currently coming out of Europe and the U.S., the global reach of many companies means that their impact would, nevertheless be felt in Asia.
Where avian influenza is concerned, there will have to be change – the disease is not going away. While there are increasing calls for vaccination, countries such as China and Indonesia that have traditionally vaccinated, have still failed to control the disease.
Egg sector buoyant
The Asian egg sector, like the broiler industry, has registered numerous successes over recent years, but it too is not without challenges.
Dr. Vincent Guyonnet, managing director of FFI Consulting, pointed out that, while the Asian egg sector had recorded a decade of growth, it is now facing working with high feed costs and retailer pressure to keep prices down.
Like the broiler sector, the global egg sector is facing pressure to alter its approach to welfare, with practices such as beak trimming and male chick culling increasingly questioned, and the local industry must be prepared as demands build in Asia.
Yet, despite these pressures, Guyonnet argued, perhaps one of the greatest challenges faced by the sector was the need to adapt the way in which it communicates. Today’s consumers are different to previous generations, and the sector must be able to speak their language.
Turning to the region’s leading egg producers, Guyonnet noted that the latest data for China, which became the world’s largest egg producer in the mid-1980s, reveals that the country produced 29.3 million MT of eggs in 2021. The same year, India, with output of 6.7 million MT, overtook the U.S. to become the world’s second largest egg producer. These two countries keep company with Indonesia, Japan and Turkey in a top ten ranking of the world’s largest egg producers based on Food and Agriculture Organization data.
Asian countries have been moving up the ranks of the world’s largest egg producers and they continue to lead growth in global egg production, Guyonnet noted.
In 2001-2006, the region contributed over 61% to growth in global egg output. In 2017-2021, this figure rose to over 74%.
Looking specifically at Southeast Asia, Guyonnet noted that the region is home to 675 million people, or 8.6% of the global population. By 2030, however, this will rise to 720 million and should be positive for demand.
Southeast Asia’s egg production in 2017-2021 grew by 4.6% – below the global average. However, over the period, Myanmar recorded a significant decline, and stripping this contraction out results in an increase of 11.2% for the remaining countries, above the global average.
Where consumption is concerned, Asia, with 191 eggs per capita, is ahead of the world average but falls behind the Americas and Europe.
There are countries in the region where consumption is particularly high. Take, for example, Malaysia. Malaysia consumes 349 eggs per person, making it second in the world only to Mexico, while Japan’s per capita egg consumption stands at 337.
There are also countries where egg consumption is particularly low.
Taking the example of the Philippines, with per capita annual consumption of only 98 eggs, Guyonnet calculated how many more hens would be needed if that country were to increase its per capita egg consumption to the level currently seen in the U.K., 199 eggs per person per annum. To achieve this, the country would need an additional 31 million hens. For the Philippines to reach the U.S.’s 285 eggs, it would need an additional 57 million birds. There is certainly room for growth, Guyonnet noted.
How to drive consumption
How might this increase be achieved? Guyonnet is a firm believer that rather than competing against each other to gain market share, producers should work together to promote consumption, pooling resources, for example, to invest in advertising campaigns.
More eggs are sold in bulk in Asia than are sold branded, and this is another way to engage with consumers. This change, however, is already happening.
Guyonnet recounted that, for years, over 95% of eggs sold in China were sold in bulk. However, in 2019, larger producers established the Wonderful Egg Alliance to promote more branding, emphasizing, for example, quality. Egg cartons, Guyonnet noted, are a fantastic way to create market segments, aligning with what interests consumers.
A further way for the Asian industry to promote consumption is through egg processing – this will be the new frontier. Only approximately 7.5% of global egg production is currently processed, but processing can be as simple as boiling an egg.
Asia to drive 40% of world poultry consumption growth
