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GLOBAL POULTRY TRENDS – Chicken Wins in Europe on Price and Versatility

23 November 2011, at 12:00am

Poultry meat consumption is expected to rise steadily to 2020, with average consumption reaching 24.5kg, which is six per cent more than in 2009, writes Terry Evans, while uptake in the rest of Europe has expanded more rapidly and will continue to do so.

No country actually measures chicken or poultry meat consumption directly the published data being theoretical derived from estimates of the likely available supplies and of the human population. Hence, too much attention should not be paid to the absolute levels recorded or to differences between countries. More important are the trends which emerge from the data over time. In most instances, chicken has a price advantage over its competitors while also being more versatile in terms of the variety of product forms and how these can be handled. These advantages are particularly important in developing countries where those on the lowest incomes are trying to get onto the protein ladder.

According to the Food and Agriculture Organisation (FAO), relatively high retail prices are expected to keep total meat consumption per person in 2011 unchanged from 2010 at 41.9kg. But, while the uptake in the developed countries is expected to show no change at 78.4kg per person, a small increase is anticipated in the developing nations from 31.8kg to 32.0kg as a result of steady economic growth.

Figures published by the (FAO) only reflect the trend in poultry meat uptake and sadly the data has not been revised since 2007 (table 1). However, it is worth noting that the differences in the short term tend to be small. Also, the data may need to be adjusted downwards in those few countries where significant quantities of turkey meat are eaten.

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While global meat consumption in the EU was negatively impacted by the economic recession, the demand for poultry meat was less affected than that for other meats. Nevertheless, in 2010, sales of the cheaper cuts increased to the detriment of the more expensive items – a trend which is expected to continue in 2011. Research has revealed that while middle-income consumers switched from beef or pork to poultry, those on lower incomes reduced their protein purchases switching to carbohydrate items. EU poultry consumption is expected to rise steadily to 2020 due largely to its low cost and convenience when compared to other meats, with average consumption reaching 24.5kg exceeding the 2009 level by six per cent.

In general terms, while average poultry meat consumption in the EU has changed by only small amounts, uptake in the rest of Europe has expanded more rapidly and will continue to do so.

Both the USDA and America's Food and Agricultural Policy Research Institute (FAPRI) publish estimates of broiler consumption per person for a number of countries. While there are differences between the two sets of figures regarding the absolute levels of uptake, it is the trend that is important. Thus, for 2010 the USDA estimates that broiler consumption in the EU was 17.8kg per person; the corresponding figure for Russia being 21.0kg. The FAPRI 2010 estimates for these were much closer at 17.5kg and 17.7kg per person per year. Both series of figures point to continued growth in poultry consumption and, in the case of FAPRI, the data is projected to the year 2025, by which time average uptake in the EU is expected to have risen to 18.7kg, while in Russia, per-capita consumption is expected to have risen to 23.8kg.

The Organisation for Economic Cooperation and Development (OECD), in conjunction with the FAO, has produce forecasts of total poultry meat consumption (as distinct from on a per-person basis) to 2020. These indicate that uptake in OECD countries will rise from nearly 39 million tonnes in 2011 to almost 45 million tonnes in 2020, while for the non-OECD countries the projections are from 61.2 million tonnes to nearly 77.7 million tonnes, respectively.

In Russia, it is envisaged that domestic production of broilers will continue to expand and more than offset an anticipated reduction in imports as a result of the cuts in the tariff rate quota (TRQ). Indeed, total domestic consumption in 2012 is forecast to rise by seven per cent to a record high of almost 3.1 million tonnes, which, according to the FAO's estimate for the human population of 142.7 million, would represent an average uptake per person in the region of 21.7kg compared with around 20.4kg in the two previous years.

In the report on trade in Europe, we commented on how an American economist, Dr Paul Aho, believes that Russia should be looking to expand its involvement in the chicken trade, both imports and exports, rather than aiming to achieve self-sufficiency. This has important ramifications for chicken consumption in Russia. By reducing imports of US leg quarters in 2010, he argued that the price of domestic leg quarters increased but there was only little movement in the prices for the more expensive cuts which were purchased by an expanding middle-class who could afford these relatively small increases. The end result was that chicken consumption in Russia declined as low-income consumers could no longer afford to eat chicken. Given the opportunity for the poorer sections of the community to have access to relatively cheap imported chicken not only boosts the quantity of chicken meat eaten per person in the country but more importantly, it gets a section of the population used to eating chicken, making them more likely to pay higher prices for the more expensive domestic cuts when their incomes improve.

While whole birds dominate the Russian market, consumer demand for processed poultry is growing. This is encouraging domestic producers and processors to install further-processing lines.

In some countries in Europe, such as the Ukraine, the contraction in disposable incomes had a limited impact on poultry uptake as this was still the cheapest protein available. However, prices have had a major impact on consumption patterns among the poorest in society as all imported poultry has been processed into relatively cheap bologna sausages and other processed products. Consumption will continue to rise as the incomes of the lowest paid improve while, at the same time, the price gap between poultry and it competitors widens.

Between 2010 and 2015, the human population of Europe is not expected to expand as the gains likely to occur in EU countries will be offset by contractions in some of the non-EU nations and most particularly in Russia, for which a large reduction of some 2.4 million people is forecast.

November 2011