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Overview of This Week's Poultry Industry News

16 February 2012, at 11:11pm

ANALYSIS – While Brazil has vowed to fight South African allegations of dumping poultry meat, one of the country's leading companies, Brasil Foods, is to integrate fuly its subsidiary, Sadia, into the parent and it has announced a joint venture to increase its access to the Chinese market, writes senior editor, Jackie Linden. Also in the news is the forecast for 2012 US broiler output to be three per cent lower than last year – although with an upturn in the last quarter – as well as the repercussions of a major drought in Mexico and a clue to the success of the pathogen, <em>Mycoplasma gallisepticum</em>.

While South African poultry industry is urging the authorities to protect it against the alleged dumping of Brazilian chicken, the competition watchdog is wrapping up investigations into anti–competitive conduct by some of its members.

Earlier this week, the International Trade Administration Commission asked for additional provisional duty payments from Brazilian poultry producers to protect the local industry – although its findings into claims of dumping had not been finalised.

In the meantime, the Brazilian chicken industry has responded by saying it will take the fight to the World Trade Organization (WTO).

From an overall meat demand perspective, the world market is a major driver and a key reason why the US has been trading at extended price levels the past few years, according to Rich Nelson, Allendale director of research, at the Allendale Ag Leaders Outlook Conference recently.

In 2011, the IMF lowered the GDP numbers a little bit but the US is expected to see average growth – in the one– to two– per cent range for 2012, he said.

Noting USDA numbers, Mr Nelson said chicken output will be down four per cent this year.

He explained: “The chicken industry has done a poor job of planning expansion and contraction the past four years. Right now, their shareholders are incredibly angry. They started expanding right in the face of the 2011 grain price rally; they didn’t have their grain hedged. They also expanded in front of the 2008 grain price rally. This recent mistake has kind of crippled the chicken industry for 2012.”

The trend was confirmed in USDA's latest Livestock, Dairy and Poultry Outlook. Broiler meat production in 2011 was up from the previous year. The outlook for 2012 is for decreases in production during the first three quarters, with rising production in the fourth quarter.

The estimate for 2012 broiler meat production was reduced from the previous month, down three per cent from the previous year. Most of the reduction is the result of lower expectations for broiler weights.

Significant losses are expected this year for grain and livestock production in Mexico. Two–thirds of the country’s states are currently facing the worst drought in 70 years. This weather pattern, also known as La Niña, has adversely affected grain producers and exporters.

A top Brazilian company has been in the news this week. Brasil Foods (BRF) has announced it will bring its poultry meat subsidiary, Sadia AS, into the parent company by the end of this year. It is also establishing a joint venture with Dah Chong Hong Limited of China. BRF's stated aims are to gain access to the Chinese distribution market, engage in local processing, develop the Sadia brand in China, and reach retail and food service channels in continental China, Hong Kong and Macau.

A new study of a devastating bird disease that spread from poultry to house finches in the mid-1990s reveals that the pathogen, Mycoplasma gallisepticum, evolves at an exceptionally fast rate.