Global poultry market expects growth despite geopolitical tensions impacting trade

03 Apr 2024 --- Analysts expect the global poultry market to recover after a weak second half of 2023, but geopolitical tensions causing distribution challenges will remain an issue. Meanwhile, leading suppliers are turning to data platforms and AI systems to enhance productivity and boost transparency.

According to a new Rabobank report, global poultry market conditions are gradually recovering, with demand anticipated to improve due to better affordability driven by rising incomes and lower costs and inflation rates.

Several markets that faced oversupply and falling prices have seen local market conditions improve in the first quarter of 2024. In most cases, these improvements were driven by production cuts to rebalance supply, which was pressuring demand.

“We expect global markets to continue to improve slightly,” says Nan-Dirk Mulder, senior analyst for Animal Protein at Rabobank. “Price will still drive market demand, but less so than in 2023, due to lower consumer price inflation and higher incomes.”

This change will support some recovery in demand for value-added poultry, like processed chicken and poultry concepts and improved demand in foodservice, the bank suggests.

However, price consciousness among consumers will remain a key driver. The main challenge will be maintaining market balance with disciplined supply growth.

“From a global perspective, we expect growth of 1.5–2% for 2024, driven primarily by emerging markets in Asia, the Middle East, Africa and Latin America. Growth in Europe, the US, and Japan will be slow,” says Mulder.

Data-driven insights
Poultry farmers are increasingly embracing new digital technologies to enhance their operations. For example, dsm-firmenich is piloting a data platform with agricultural cooperative Agrifirm to drive more responsible and transparent production.

The Poultry Next platform enables improved supply chain transparency, providing an accurate picture of the complete product journey — from feed to farm to retail shelf. The partners aim to support carbon reduction targets and overcome issues related to the size and complexity of supply chains through the platform.Demand for poultry is expected to grow this year due to improved affordability.

“There are genuine opportunities for improvements in efficiency, sustainability and animal health, and these are often interrelated. Connecting Sustell to Agrifirm’s industry-leading Poultry Next is the key to unlocking the value of sustainability for Agrifirm farmers and chain partners,” says David Nickell, VP of sustainability and business solutions at dsm-firmenich, Animal Nutrition & Health.

Meanwhile, Cargill is harnessing the power of AI to improve the health of chicken flocks. In a recent interview, Florian Schattenmann, Cargill’s CTO and VP of R&D and Innovation, told us: “We have a project called Galleon that allows us to screen the DNA of the microbiome of a chicken flock — so a farmer can get samples of chicken poop from their farm, send it to us, and we run an analysis and tell them how healthy that flock is. The farmer can then adjust the feed to improve the health of the chicken flock.”

“Over time, as we get better data around different chicken farms, we can see there may be a lot of fluctuation in farm A and much more stability in farm B, so we can adjust and predict what the farmer will need. So, the model is learning by getting more data from more samples. A healthy flock will be more productive and have less mortality, and it will be better for the GHG footprint.”

Trade flow troubles
According to Rabobank, potential distribution challenges are the biggest concern for the poultry market due to geopolitical tensions in the Black Sea region, Houthi attacks in the Red Sea and drought affecting water levels in the Panama Canal. Given increasing rerouting via southern routes, these challenges could impact global trade in poultry and related inputs, with rising costs, delayed supply and constrained container availability.

Trade flows to and from Europe, Asia, the Middle East and Africa are especially vulnerable to changes, which could increase focus on regional trade, where possible, or otherwise lead to higher costs and potentially delayed supply, especially for goods primarily produced in a single region, such as feed additives, equipment, animal-health products or specific poultry products like processed poultry or whole birds for the Middle East.

“Regional trade flows in Asia, Europe, and the Middle East are expected to benefit from the situation, while traders shipping to those destinations will be negatively affected,” says Mulder.

Persistent operational challenges
The Dutch bank also highlights that feed costs have decreased by an average of 15–25% compared to 2023 levels, but Southern Hemisphere regions and countries like India and Indonesia are increasingly exposed to dry weather at critical times for their summer crops, raising local feed supply worries.

Conversely, feed supplies in Brazil and Northern Hemisphere countries and regions like the US, the EU and Russia are “good” and face declining prices. From a supply and demand perspective, global commodity prices appear to have reached their lowest point, primarily due to concerns about geopolitics, trade issues and weather — such as El Niño.Fast-food giants are reportedly still largely failing on chicken welfare standards.

Avian influenza also remains a concern. Rabobank expects the risks will shift in the coming months to the Southern Hemisphere, where more countries are turning to vaccines to protect the industry.

“Any outbreak in the southern states of Brazil — especially in a commercial flock — could have a substantial impact on global trade,” says Mulder.

Particular attention will be paid to avian influenza risks in key exporting countries like Brazil and Thailand, where outbreaks could challenge global market conditions and trade flows.

Chicken welfare concerns
The poultry market’s modest growth forecast is set against a backdrop of growing animal welfare considerations among consumers. At the end of last year, a report from World Animal Protection found European fast-food leaders largely stalling on broiler chicken welfare standards.

McDonald’s, Burger King and Starbucks were among the chains with “very poor” performance in chicken welfare management and reporting in several countries. These restaurants failed to respond to us when asked if they agree with their rating, what actions they are taking to manage broiler chicken welfare and to what extent they are prepared for The European Chicken Commitment (ECC) in 2026.

The ECC is a set of minimum requirements designed to cost-efficiently improve the welfare of chickens. While there are no penalties associated with this commitment, companies that fail to meet the requirements risk their brand reputation and financial backing, Michelle Baxter Wickham, private sector engagement manager at World Animal Protection, told us.

By Joshua Poole

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