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High Feed Costs Likely to Impact Canadian Producers

24 August 2012, at 1:23pm

CANADA - With supply management, poultry farmers recover their cost of production from processing plants. In this way, farmers are sheltered from the impact of record high feed costs. The same cannot be said about poultry processors. Their ability to pass on high input costs to downstream customers is limited.

At the same time, a shortage of red meat triggered by high feed costs represents an opportunity for poultry meat as alternative source of proteins. The result of these two opposing factors will dictate poultry production in 2013. For next year, Post forecasts a very modest increase of 0.5 per cent in broiler meat production, up to 1,045,000 metric tons (MT).

For 2012, Post revised upwards to 1,040,000 MT the initial forecast of 1,035,000 MT, as the industry increased production especially in the second part of the year to meet a more solid demand. As such, 2012 broiler meat production is estimated to be 1.3 per cent higher than in 2011.

Canadian imports of chicken are regulated under a tariff rate quota (TRQ) which is a function of the previous year's production level. The global quota for 2013 is projected at 78,000 MT. In 2012 the TRQ level is 77,000 MT.

In recent years, Canadian poultry companies have increasingly utilized International Trade Canada’s Import to Re-Export Program (IREP). Through IREP Canadian chicken processors import chicken under tariff free supplementary import permits for use in processing, provided they re-export the associated processed product. As a result, total chicken imports are about double the TRQ volume, as attributed to IREP imports.

Moving into 2013, Canada’s turkey market will remain flat, with production forecast to stay at 165,000 metric tons, basically the same level as in 2012. This development is expected after a better than anticipated year in 2012, when turkey production is now estimated at 165,000 MT, up 3.4 per cent from the previous year.

Post forecasts per capita turkey consumption at 4.46 kg (eviscerated weight) in 2013, a very modest increase from the estimated level of 4.45kg in 2012.

Further Reading

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