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GLOBAL POULTRY TRENDS - Four Key Factors Impact Chicken Uptake in the Americas

20 August 2012

Global Poultry Trends 2010

Per-capita chicken meat consumption is forecast to remain more-or-less flat in Mexico and Canada and to fall in the US. National increases are expected in Brazil and Argentina, resulting mainly from population growth in the first case and in the latter, consumers switching from more expensive beef to cheaper poultry meat.

Because global stock changes of chicken are not large, production tends to equate with consumption. Again, broadly speaking, the uptake of chicken meat has exhibited steady growth over time. But the picture does vary somewhat between regions and individual countries. Growth in consumption is primarily linked to changes in the human population, real incomes, chicken prices relative to those for other meats and dietary preferences.

One key factor to increasing poultry consumption is the growth in the human population. While the global total is forecast to rise from 6.9 billion in 2010 to 8.3 billion in 2030 showing an annual growth of a shade below one per cent, the bulk (38 per cent) of the increase will arise from a 2.1 per cent annual expansion in Africa. For the Americas, it is anticipated that population will increase by just 169 million at an annual rate of 0.8 per cent a year. Consequently, America’s share of the global population will slip a little from 13.5 per cent in 2010 to 13.3 per cent in 2030.

FAO has not updated its estimates of poultry meat consumption since 2007 (Table 1). However, USDA does estimate broiler uptake for a number of countries, those in the Americas being presented in Table 2 and Figure 1 to the nearest whole number.

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In the US, the quantity of broiler meat eaten per person in 2012 will likely fall to around 42.5kg (carcass weight) compared with 44kg in 2011. Indeed, uptake has contracted by almost 4kg since 2006. However, USDA forecasts point to continued growth in the foreseeable future with consumption reaching 45.6kg in 2018.

Over the next 10 years, consumption of chicken in Brazil is forecast to expand by 2.7 per cent a year, which means that domestic uptake will increase to some 12.8 million tonnes. This year, consumption is estimated to average a record 48.3kg per person and could reach 60.3kg by 2021/22 if the aforementioned forecast growth is realised. Continuing increases in disposable income and the fact that chicken meat is still more affordable than beef or pork are the key factors for further growth in consumption, especially for low-income consumers. However, according to a USDA GAIN report, high debt-to-income ratios among Brazilian consumers may put a brake on further gains in consumption for some.

Chicken uptake in Mexico in 2012 will be similar to last year’s 31kg per person, according to USDA estimates. Dark meat and chicken leg quarters are particularly popular with less well-off consumers, with the higher-value cuts and added-value products being purchased by the middle and upper-income households.

The demand for broiler meat has been income elastic as it is the most affordable animal protein (behind eggs) for low-income households. Despite an increase of 20 per cent in domestic broiler prices early in 2012 poultry consumption was considered “stable” because of the rise in prices for competitive meats. In the last quarter of 2011, fresh chicken fetched 21.5 pesos (MXP) per kilo, compared with MXP38.6 for beef.

During this period, it was assessed that in the private sector 31 per cent of chicken sales were live birds, 24 per cent were bought by roasting establishments, 20 per cent was distributed in public markets, 15 per cent sold through chain stores, seven per cent sold as pieces/cuts and three per cent as added-value products. This year, it is anticipated that purchases of live birds will rise to 33 per cent of total broiler sales.

Earlier in 2012, following an anti-dumping investigation of US fresh, chilled and frozen leg quarters (CLG), Mexico’s Secretariat of Economy decided not to impose any provisional compensatory duties, though a final decision will not be made until later this year. Using a statistical model for the study of the impact of trade disputes, an Iowa State University report concluded that the imposition of duties could halt some 250,000 tonnes of CLQ imports and replace them with 79,000 tonnes of imported whole chicken. Domestic consumption would fall as prices rose. While this would stimulate domestic chicken production, these birds would sell at a premium when compared with imported US CLQs and consequently Mexico’s poorest, especially in the north of the country, would lose access to an inexpensive form of animal protein.

Figure 1. Annual chicken meat consumption in selected countries in the Americas (kg/person)

Between 2003 and 2011, chicken consumption per person in Argentina doubled from around 19kg to 38kg and is forecast to reach 44 or 45kg by 2017. Latterly, the key factor influencing the rise in chicken uptake has been a reduction in the supply/availability of beef resulting in significant price increases for most beef cuts. As a result, the price differential between chicken and beef has continued to improve in favour of chicken. A USDA GAIN report states that nowadays, the amount of money to purchase one kilo of beef would buy 3kg of chicken. Back in 2008, this relationship was 1kg of beef for 2kg of chicken, rising to a ratio of 1: 2.5kg in 2009.

Another factor favouring chicken in Argentina has been the government’s introduction of a policy to guarantee the supply of poultry at relatively low prices through a rebate system that partly subsidises producers feed costs. And lastly, chicken has benefitted from a growing trend among consumers for nutritious, low-fat meat, which puts poultry ahead of beef and pork. So now chicken is no longer considered as a substitute meat but as the real alternative meat. It is estimated that 35 per cent of domestic birds are consumed as portions and that this trend will grow.

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Total domestic chicken consumption in Canada has almost doubled in the past 30 years. The increase was partly the result of a population growth of almost 39 per cent from 24.5 million in 1980 to around 34 million in 2010. The other key factor has been an increase in the popularity of chicken, which is perceived to be leaner and healthier than its competitors. However, annual consumption per person has remained fairly steady since 2005, averaging around 31.4kg.

The Canadian market is considered to be mature and supplies have failed to keep pace with population growth. Hence the average uptake has slipped from a peak of 31.7kg in 2008 to an estimated 30.9kg in 2011, while the forecast for 2012 stands at 30.8kg. Price is not a major factor governing choice in this market as poultry prices, as a result of the supply management system, are consistently higher than those for beef or pork the supplies, which are not controlled.

August 2012


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