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GLOBAL POULTRY TRENDS 2012 - Europe Holds its Share of Global Chicken Market

4 September 2012, at 12:00am

Europe retains its 16 per cent share of the global chicken meat market, according to industry watcher, Terry Evans, in his latest analysis of the global poultry markets. While growth in the European Union is pegged at around half of the global average percentage-wise, expansion of the industries in Russia and Ukraine have been remarkable, supported by huge local investments.

Worldwide the growth of chicken meat production is slowing towards two per cent a year from the near four per cent achieved between 2000 and 2010. The rate of expansion has varied between regions (Table 1) such that Asia and Africa recorded annual gains of around 4.5 per cent in that decade while in the others, it was less than four per cent. As the increase in Europe was on a par with the world picture at a shade below four per cent, this region has just about managed to hold on to its global share of 16 per cent.

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However, within Europe, there has been a pronounced difference between growth within the European Union and those countries outside the Community, in particular Russia and the Ukraine. For the EU, the expansion was less than two per cent as the total output climbed from 8.2 million tonnes to 9.7 million tonnes. This contrasts starkly with a more than trebling of production in the total for the non-EU European countries of from 1.2 million tonnes to 4.1 million tonnes (Table 2). Consequently, the EU’s share of the global total has contracted from almost 14 per cent in 2000 towards 11 per cent in 2011 – based on our estimate of 9.9 million tonnes – out of a likely global figure of more than 89 million tonnes.

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For 2012, world output looks likely to approach 91 million tonnes, while possibly 93 million tonnes will be reached in 2013. In the following years to 2020, projections point to growth of around two per cent a year for both Europe and the world.

In Table 1, production from culled layers is included with the output for table or meat chicken. Looking at the various data on chicken meat output it is not always clear whether a set of figures relates to broiler production, chicken meat output (table birds plus culled layers) or even poultry meat production. In some instances, the term ‘broiler’ is used and it is uncertain if the figure includes extensively reared birds as well. Indeed, it is debatable, in this day and age, whether the term ‘broiler’ is in many instances a misnomer. Some 60 or more years ago, the term had a specific connotation related to the method of production, embodying the type of bird that was grown intensively for a period of up to eight weeks. Over time, the breeds used and the methods of production have changed so much that many producers would be upset if their birds were described as broilers. A more appropriate description to cover all production systems would be ‘table’ or ‘meat’ chickens.

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The figures presented in table 4 indicate that broiler/table chicken output in the EU rose by 1.2 million tonnes or 1.5 per cent a year between 2000 and 2010. If this rate of growth could be maintained to 2020, output will by then have climbed to around 10.6 million tonnes.

However, the latest European Commission (EC) short-term forecast for poultry meat production in the EU points to growth of just 1.0 per cent in 2012 but only 0.3 per cent in 2013, while the long-term view postulates an annual average expansion of only 0.5 per cent a year from the current level of about 12.3 million tonnes to around 12.5 million tonnes by 2020 which, after deducting the contribution from other meat poultry, would point to a table chicken output of just 10 million tonnes.

Referring to Table 2, it is clear that the expansion in Russia and the Ukraine were responsible for almost 90 per cent of the increase in output from non-EU European countries.

Russia is easily the leading chicken meat producer in Europe, accounting for close to one-fifth of the total for the region of 13.8 million tonnes in 2010. Indeed, the top five countries, all producing more than one million tonnes a year, accounted for 7.25 million tonnes or more than a half of the total for Europe, while the top 10 countries produced 11.1 million tonnes or more than 80 per cent.

While increases in production costs at a time of economic recession are likely to have applied a brake to expansion in EU member countries, there are many other challenges ahead that could dampen growth. Not only will EU producers have to face increased competition from imports – especially from Brazil and Thailand – but they will also likely witness a reduction in sales to traditional exports markets and in particular Russia. Fortunately, it looks as though chicken consumption has benefitted slightly from the recession.

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Whichever set of figures you peruse, there can be no doubting the massive increase in chicken meat output that occurred in Russia between 2000 and 2010. USDA figures predict broiler production reaching almost 2.8 million tonnes in 2012. Rosstat reported poultry meat output in 2011 at 4.3 million tonnes live weight. Using a conversion factor of 73 per cent, this was equivalent to an eviscerated weight of 3.1 million tonnes. After deducting some 400,000 tonnes for hen and turkey meat output, then table chicken production would have been around 2.7 million tonnes.

Several reports indicate that Russia’s poultry meat output could amount to 3.3 million tonnes in 2012 which, if realised, would bring chicken meat production close to a record three million tonnes. One source envisages that total poultry meat output could reach 4.5 million tonnes by 2020. But, as the rate of growth is expected to slow after 2015, this latter forecast is considered optimistic.

A number of new investments made earlier in 2012 could expand total output by more than half a million tonnes over the next couple of years. It is considered that some 90 per cent of industry growth in 2011 came from just 14 companies. The largest – Prioskoliye – contributed about 14 per cent of the total, while the largest seven provided 50 per cent. Further concentration is anticipated, such that the latter concerns could well represent 75 per cent of national output by 2015. However, Russian producers are concerned about how entry into the World Trade Organization (WTO) in August 2012 will impact on them, as it is considered that some will be unable to compete with possible increased competition from imports.


Figure 1. Leading chicken meat producing countries in Europe (million tonnes)

Rapid expansion has also taken place in the Ukraine. According to data from the Food and Agriculture Organisation (FAO), between 2005 and 2010, chicken meat output escalated by about 14 per cent a year to reach 954,000 tonnes in 2010 from 496,000 tonnes in 2005. However, USDA calculations for the same period of time indicate that broiler production expanded by almost 20 per cent a year from 289,000 tonnes to 733,000 tonnes. Despite escalating feed costs and power cuts in some areas which caused high mortalities among flocks, many observers consider that the industry will expand by between four and five per cent in 2012 to an estimated 810,000 tonnes. However, a presentation by Borys Skyba, Executive Director of Agro-Mars, claimed that broiler output had risen from 648,000 tonnes in 2007 to 940,000 tonnes in 2010. If proved correct, the Ukraine could produce more than one million tonnes of chicken meat in 2012.

Nearly two-thirds of production is accounted for by just three companies. Myronivsky Hliboproduct (MHP) based in Kiev, is responsible for more than 40 per cent of national output. Complex Agromars has a 16 per cent share and Ptahokombinat Dniprovsky, seven per cent. MHP is planning to expand into the EU either through acquisition or via co-operation agreements and is looking at possibilities in Germany, Italy, Slovenia and France.

While the rapid expansions recorded by Russia and the Ukraine are clearly evident from Figure 1, less obvious is the way in which the chicken industry in Poland has grown as exports, primarily to the EU, have escalated to represent almost 20 per cent or more of domestic production.

September 2012