Asia’s poultry producers must adapt to changing demands

The rapid changes taking place in the Asian poultry market mean producers must adapt if they are to survive and benefit.

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Gabriella Sambosa of Japfa International said that, by 2030, 9 out of 10 of the world’s middle class will be in Asia. (Courtesy Ceva)
Gabriella Sambosa of Japfa International said that, by 2030, 9 out of 10 of the world’s middle class will be in Asia. (Courtesy Ceva)

Asian demand for animal protein is widely expected to continue rising in the coming decades, yet behind this positive outlook is a market that is undergoing more complex changes.

On one hand, producers will have to become more efficient as international suppliers create greater competition, power increasingly switches to consumers and margins are squeezed. On the other hand, producers will need to evolve marketing strategies to respond to changing demographics, shifting demand patterns and purchasing preferences.

Speaking at the Innovation Summit, organized by Ceva Animal Health in Bangkok in March, Gabriella Sambosa, Japfa International’s strategic business unit deputy head, examined how opportunities and challenges for livestock producers in the region are changing.

She said the outlook for poultry production is positive, with poultry meat being consumed throughout the region.  Looking to demographics, she said that, by 2030, the majority of the world’s population will be middle class, and that 9 out of 10 of this new middle class would be in Asia.

Young consumers to dominate

Sambosa also highlighted the rising importance of millennials, noting that Asia is home to vastly more millennials than Europe and the U.S. Worldwide, millenials’ spending power will overtake that of Generation X by 2020. In Asia, however, this has already happened.

Despite China’s former one child policy, the country has 400 million millennials, more than five times the figure in the U.S., while there are estimates that, by 2020, India’s 410 million millennials will be spending US$430 billion annually.

Asia’s millennials are reaching the “most important age range for economic activity,” when households are formed, babies are born and money is spent on going out as well as on settling down.

While this new segment may represent a potentially positive group in terms of consumption, it also presents difficulties, including in attitudes to work.

Fifty percent of millennials say they would rather have no job than a job that they hate and, for agriculture, which has long had difficulties in attracting employees, this is a particular problem.

Asian educational systems are not always what they could be and so, with a limited skilled labor pool, the poultry and other animal protein sectors may well increasingly lose out to other sectors able to pay higher salaries.

A willing and skilled workforce is not the only difficulty that may hamper the sector’s ability to respond to rising demand. Poor transport infrastructure, for example, may not only make workers’ journeys to work more difficult, but also can hinder getting product to market.

Creating appeal

To help to address some of these problems, Sambosa said that, where marketing is concerned, producers need to make their product appealing to younger Asian consumers, for example through proactively promoting company and brand values, and that the positive contributions to society that a company makes must be highlighted to all stakeholders.

Companies need to identify and invest in consumer “mindsets,” focusing on the most significant, and investing in marketing that engages with social circles, while brand strategies need to address concerns such as food safety, health and quality.

Growth and intelligence

The changing nature of the Asian market was echoed by Nan-Dirk Mulder, senior analyst with Rabobank.

He said online sales in Asia are growing at a much stronger rate than might be imagined. Online sales and home delivery in India, for example are rising by 45 percent per year, while in China annual growth is approximately 40 percent.

As those changes are happening on the demand side, changes are also occurring on the supply side, with farms increasingly employing robotics, artificial intelligence, novel additives and smart farming methods.

Worldwide, he continued, demand for animal protein will grow by 35 percent over the next two decades. Ninety percent of this growth will be in emerging markets and 60 percent will be in Asia alone.

Where investors are concerned, there is increasing interest outside of China. Beyond China, growth in the poultry meat and egg sectors is forecast to be higher in terms of volume and value, facilitated by fast-expanding, modern distribution systems.

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Rabobank’s Nan-Dirk Mulder said annual online sales are growing by at least 40% in China and India, and that 60% of forecast growth in animal protein demand over the next 20 years will occur in Asia. (Courtesy Ceva)

Raising efficiency on the farm

While investments in marketing and distribution may help product to reach consumers, further change is needed from the very start of the production process.

To help to ensure that rising demand is met sustainably, producers will have to become more efficient, and address significant disease challenges and sub-clinical or hidden disease, which may open the door to more serious problems.

Christophe Cazaban, Ceva Animal Health’s global veterinary services manager, said that, for many producers, margins are already tight, and given that societal pressures on meat producers are expected to continue growing, they will become even tighter. This will mean that -- more than ever -- every single cent will count.

Where disease control is concerned, biosecurity remains essential, but it is still necessary to vaccinate to protect birds, and vaccination directly protects bird health and responds to welfare demands.

The trend toward hatchery vaccination and use of new technology vaccines are also expected to grow.

There are now thought to be 1,600 hatcheries around the world. In a survey of 1,370 of them, 15% were found to be using spray vaccination, 55% subcutaneous vaccination and 31% in ovo vaccination. However, looking at the world’s six largest hatcheries, 52% of vaccination was in ovo, 45% subcutaneous and the remainder spray.

New technology vaccines offer a variety of benefits including safely protecting vaccinated birds, reducing the viral load on farm, and allowing deep control and homogeneity of immunization and, consequently, in addition to health concerns, also help to eliminate some welfare concerns.

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Vaccination can guard against significant and sub-clinical disease challenges, and improves bird welfare, said Christophe Cazaban of Ceva Animal Health. (Courtesy Ceva)

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