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Broilers & Layers / Egg Production

New mediocre for the poultry market

November 18, 2014

Forecasting is always risky, but the consensus view on the performance of the global economy in 2015 appears to be that it will not be what it could be. The International Monetary Fund (IMF) has warned that the world’s economies should do all that they can to avoid the “new mediocre”.

Small improvements

The IMF expects global growth to be in the region of 3.8 percent in 2015, up slightly on 2014, so things, it could be said, are getting slightly better. But this growth is going to be patchy. Asia is expected to have another disappointing year, with China growing at relatively low levels and Japan bumping along recession.

In Europe, the countries of the Euro area are expected to continue in stagnation, while the UK is not expected to repeat the strong performance of 2014. The USA, is one of the few bright spots, but whether its growth rate will be higher or lower than 2014’s remains to be seen, while further south Brazil is not having the easiest of times.

In those economies that are experiencing growth, the feel good factor is generally not feeding through to consumers. Legions of happy shoppers are not pounding the streets, and the retail sector is undergoing significant change.

In the UK, for example, job creation has been reasonably strong, but these jobs have tended to be low-paid meaning that, on the one hand, consumers have little spare money, while on the other, the government does not have the tax revenues it was expecting, making debt harder to pay down and resulting in a continuing drag on the economy.

Other economies in growth that have been turning in budget surpluses have been choosing not to invest, so despite us living in an interconnected world, and talks of international trade agreements, there appears to be only a “mediocre” amount of international co-operation.

Continuing risk

2015 is also likely to see ongoing challenges from disease – be it human or animal – and geopolitical unrest, for example in the Middle East, Russia, and the Ukraine, although some in the poultry industry would appear to be benefitting from the resultant changed trade patterns.

It’s hard to say where all this leaves the poultry industry, although some forecasters have described the outlook as bullish, with the sector buoyed by lower input costs, and growing trade flows.

In Europe, the Member States’ veterinary authorities acted quickly to curb the incursions of highly pathogenic avian influenza but, at the time of writing, it is too early to say what the impact on production or consumption will be.

How the geopolitical situation will develop is equally anyone’s guess, but more likely than not, it will probably drag on, as nobody seems to have a taste, or the resources, for definitive action.

Greater stimulation of sluggish economies seems unlikely. While some forecasters have said that current predictions are overly pessimistic, others have warned that large parts of the global economy could spiral into deflation, and this will have a knock-on effect for other parts of the world.

So while the predictions for poultry production seem to be generally positive in 2015, the sector will be acting in an environment that, more likely than not, will be the “new mediocre”, and will have to make the best of the situation that it possibly can.

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