IPC Spring meeting paints mixed picture
The International Poultry Council recently held its Spring meeting. With some 90% of the world’s industry represented, a truly global state of industry was on offer.
“It’s been a good decade for the poultry industry, and per capita chicken production is up again this year,” is one view of the poultry industry.
“Last year was relatively good for volume sales,” is another, while for some, it was “the worst year in the history of the chicken industry.”
These were amongst the views of country delegates at the Spring meeting of the International Poultry Council (IPC), which met in Rome at the end of April and beginning of May.
Despite a mixed market, the relatively young organization has notched up some successes and, as president Jim Sumner explained, the IPC is well on its way to being recognized at the industry’s global representative.
Guest speakers at the event included representatives from the Food and Agriculture Organization, the World Organisation for Animal Health (OIE) and the European Commission, and attracted delegates from across the continents.
Life goes on
And, as Mr Sumner pointed out, in the current economic climate, attendance represented a significant investment, both in terms of time and money. Additionally, at the time of the meeting, the words on everyone’s lips were swine ‘flu, with Mexican delegates fearing that they may have become stranded in Europe, with the French call for a ban on flights to and from Mexico. But the difficult climate did not halt proceedings.
Cesar de Anda, IPC secretary treasurer, detailed the “special”, situation in his home country. He noted that over the previous three days, consumption of pork had fallen by 80%, people were staying at home, schools and government departments were closed.
“Did the problem really start in Mexico,” he asked, continuing: “it doesn’t really matter, we need to be a single group to face these problems. Last week it was the pork industry, but tomorrow it could be the poultry.”
With many markets currently facing difficulties, swine fever has provided the perfect opportunity for some governments to adopt trade measures that will protect their home industries, and there was consensus among delegates that this should be discouraged. Different countries are reacting to swine ‘flu in different ways, but perhaps one of the most extreme reactions has been in Egypt.
Dr Mohamed el-Shafei explained that the Egyptian government had decided to cull all pigs in the country. Pig rearing is a minority activity, the total herd numbering only some 300,000, and the government has established a compensation scheme. Its actions are thought to have been driven by the ongoing difficulties in the country with avian influenza.
The Mexican and Egyptian poultry representatives, however, were not the only ones to report a far from ideal situation in their home markets. President and CEO of the Canadian Poultry and Egg Processors Council Robin Horel, reported that for chicken processors, 2008 had been a disaster and that for turkey there had been a similar story.
As far as domestic sales were concerned, he noted that chicken volumes were flat to declining; sales of breast meat were down while legs were up. Prices for whole birds were slightly lower, while those for shell eggs were up a little. With unemployment in Canada approaching 10%, once prosperous provinces were now seen as “have nots’.
Worst year in history
But perhaps the most downbeat country report came from the USA. According the National Chicken Council’s Mike Welch, during 2008 “the US enjoyed the worst year in the history of the chicken industry”. The national economy was soft, he continued, and patronage at food service down, although fast food was up a bit.
“The US consumer is buying down,” he lamented.
The US broiler industry has been unable to make profits from the fourth quarter of 2007 through to the first of 2009. Amongst those factors negatively effecting the industry have been higher feed costs due to increased demand for corn for ethanol production, competition from pork and the ending of agreements with Russia. The latter, he noted, was expected to have implications way beyond US producers.
But it was not all doom and gloom at the IPC. The grouping not only provides a route for communication but also for action, and the joint action of Brazil and the USA in fighting dumping allegations lodged by Ukraine is an example of how the IPC has brought countries together. Alongside recognition of the need for countries to work together more closely, members also agreed that any initiatives embarked upon should be completed to a “first class” standard.
And there was other positive news too. Brazil, for example, expects exports to grow by 3-5% this year. Neighboring Colombia is also expected to make its presence increasingly felt in international markets.
Jorge Bedoya, executive president of Colombian association Fenavi, noted that, since 1980, chicken production has been one of the fastest growing sectors of the country’s economy. In 1998, per capita consumption stood at 12.5 kg and, by last year, this had risen to 23.3 kg. For 2009, the figure is expected to edge slightly higher still to 23.7 kg.
Traditionally, Colombia has not been an exporting country for poultry meat and eggs. However, last year it sold US$60 million worth of eggs to Venezuela and also made efforts to sell paws to China. Additionally, the country is trying to enter the Middle East and Japanese markets.
While production costs have risen for Colombian producers, and the legislative burden increased, overseas trade opportunities are growing and there is still the opportunity to raise home consumption. In order to help grow the home market, the industry has run a series of entertaining and highly successful commercials under the slogan “Let’s eat chicken!”
While 2008 may not have been great for profits in South Africa, volume sales stayed strong. Kevin Lovell, CEO of the Southern African Poultry Association, noted that the effects of the first wave of the financial crisis had not been greatly felt in South Africa, but added that secondary effects could lead to recession.
While there may be a dip this year, the last three years have seen consistent growth of 6-7%, he explained, adding that the industry hoped to return to a similar level by early next year. The South African population and economy are growing and living standards are rising. However, there are still a lot of poor in the country, and this has resulted in the poultry industry being the largest constituent of the agricultural sector.
Importantly, the long term outlook for the poultry industry is good. Eric Joiner, vice chairman of AJC International, pointed out that the sector would experience dramatic growth over the next 10 years, with more people eating more poultry.
Market access has been amongst the key success factors for the poultry industry globally, and continued coordination between IPC members would be critical, he noted. Although the short term outlook was for reduced demand, over the next 10 years there would be an increase in consumption equivalent to another Brazil. The next decade will be a great growth period.