Poultry Industry Report

Posted by | Environment, Nutrition | 0 |

This provides a very general background on the domestic poultry scene. Per kg pricing is NOT organic or free range, but may be of use for determining premiums for organic and free range vis a vis other Australasian sources.

"Strong growth in both volume and value terms is possible for New Zealand’s chicken meat industry, but it needs to focus on alternative strategies to capture new opportunities, according to a new report by agribusiness specialist Rabobank.

In the report, Catching the next wave of growth, Rabobank identifies the development of new markets, the capturing of a greater share of consumer spending and improved margins through productivity gains as three key strategies that will enable the industry to maximise volume and value growth.

According to the report, these new strategies will be required to “catch the next wave of growth” as per capita consumption of chicken meat, which has been the strongest driver of recent industry growth, is likely to moderate moving forward.

“Previous drivers of consumption growth – such as chicken’s low price point, health benefits and versatility will continue to play a role in increasing demand for chicken meat, but this impact is expected to wane,” says report author and senior animal proteins analyst, Angus Gidley-Baird.

“If New Zealand consumers’ per capita consumption of chicken meat does not continue to increase, without further expansion into new export markets, production growth is likely to be limited to population growth which is expected to be about 1.1 per cent.”

If, however, the industry can successfully adopt these new strategies, the report says analysis indicates the industry can achieve an average growth rate of 2.9 per cent over the next five years.

“This is below the growth rate of 5.9 per cent which has been achieved across the past five years, but still represents significant development and would require the industry to up production from 190,000 tonnes in 2014 to 228,000 tonnes in 2021,” Mr Gidley-Baird says.

Development of new export markets needed

The report says an increase in exports, to around 10 per cent of production, will be key to increasing volume and value in the New Zealand chicken meat industry.

“At present, the New Zealand chicken meat export market accounts for less than five per cent of total production,” Mr Gidley-Baird says.

“Encouragingly, there is plenty of scope to grow exports, particularly in South East Asian countries such as Indonesia, Thailand, Vietnam, the Philippines and Malaysia, with these countries expected to increase consumption of chicken meat by 15 per cent over the next five years.”

The fast food sector is one area of significant opportunity for New Zealand exporters with the report saying sector growth in the range of six per cent is expected within these South East Asian markets over the next five years.

“A safe, reliable and secure supply chain is critical for food service industry operators, and New Zealand, with its regulatory systems and food safety standards has strong credentials to meet these requirements,” Mr Gidley-Baird says.

Expanded product offering required

With red-meat prices high, and expected to remain so for some time, consumers will seek alternative proteins and that “products perceived to have a close equivalence to the higher-priced protein need to be provided,” the report says.

“Given this consumer mindset, the industry should look to expand its product offering by creating higher-value products, which could potentially add a further five per cent to the overall value of the industry,” Mr Gidley-Baird says.

“For example, a New Zealand consumer considering NZD 32 a kilogram too expensive for porterhouse steak, then has the option of choosing lower-priced protein options such as rump steak or pork sirloin at approximately NZD 20 per kilogram or a chicken breast at approximately NZD 12 per kilogram. Consumers looking for less expensive options don’t necessarily jump straight to the cheapest protein and by offering a higher-priced chicken option such as an organic, branded chicken breast stuffed with spinach and mushrooms you can capture the customer at a higher price point.”

Improving margins through productivity gains

The Rabobank report also identifies three opportunities to increase value growth in the industry through productivity gains: the adoption of new technology, realising economies of scale and the relocation of industry facilities to centralised operations.

Mr Gidley-Baird says new technologies could be used during several parts of the chicken meat industry supply chain to reduce costs.

“At the production level, improved monitoring could improve feed efficiency and reduce animal health inputs, while in the distribution process, sensors could be used to manage stress and bird welfare during transport,” he says.

The report says economies of scale are also likely to play a part in lowering costs per unit as could relocation to centralised operations.

“Due to population expansion and urban encroachment, we expect to see some existing operations relocate outside of population areas and upscale in size. This trend is prominent in the Australian industry and can help to reduce animal health problems – by moving to green-field sites and avoiding close human/ bird integration. On top of this, transport and logistics costs can be reduced by co-locating grain growing, milling, chicken growing and processing operations,” Mr Gidley-Baird said.

Rabobank New Zealand is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 115 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 40 countries, servicing the needs of about 8.6 million clients worldwide through a network of close to 1000 offices and branches. Rabobank New Zealand is one of the country’s leading rural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 33 branches throughout New Zealand.