POUTRY AND EGG PRODUCTION IN SOUTH AMERICA – … · POUTRY AND EGG PRODUCTION IN SOUTH AMERICA...

POUTRY AND EGG PRODUCTION IN SOUTH AMERICA – CONSUMER BEHAVIOR, TRENDS

AND PERSPECTIVES

Ariel Antonio MendesProduction and Techinical Scientific Director of UBABEF

Buenos Aires, October 18th 2011

EUROPEAN POULTRY CLUB CONFERENCE

WORLD MEAT PRODUCTION (Million tons)

2008 2009 2010Beef 58,522 57,431 56,763Pork 98,042 100,473 101,507Chicken 71,476 71,961 75,216TOTAL 228,040 229,865 233,486Source: UBABEF and USDA

MAIN CHICKEN MEAT PRODUCERS (Million tons)

2005 2006 2007 2008 2009 2010

USA 15.870 15.930 16.226 16.561 15.935 16.348China 10.200 10.350 11.291 11.840 12.100 12.550Brazil 8.950 9.335 10.305 10.940 10.980 12.230EU-27 8.169 7.740 8.320 8.594 8.756 8.920México 2.498 2.592 2.683 2.853 2.781 2.809Índia 1.900 2.000 2.240 2.490 2.550 2.650

Russia 900 1.180 1.350 1.550 1.790 2.000Argentina 1.030 1.200 1.320 1.430 1.500 1.650

Iran 1.237 1.327 1.423 1.450 1.525 1.600South Africa 1.015 1.113 1.159 1.240 1.250 1.290

Japan 1.166 1.258 1.250 1.255 1.282 1.280Others 9.916 10.451 10.884 11.273 11.512 11.889TOTAL 62.851 64.476 68.451 71.476 71.961 75.216

Source: UBABEF and USDA

BRAZIL, CHINA AND USA PRODUCE 54% OF THE WORLD PRODUCTION

USA (15.980 mil tons)CHINA (12.100 mil tons)BRAZIL (10.960 mil tons)

54% of world production=

CHICKEN MEAT PRODUCTION IN LATIN AMERICA (Million Tons)

Chicken Meat Production (1000 tons)

Country 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Argentina 870 870 640 750 910 1.030 1.200 1.320 1.430 1.500 1.600

Brazil 5.977 6.736 7.517 7.843 8.494 8.950 9.335 10.305 10.940 10.980 12.230

Chile 378 408 379 389 446 457 517 480 503 528 536

Colombia 606 606 649 678 709 763 850 925 1.011 1.025 1.040

México 1.936 2.067 2.157 2.290 2.389 2.498 2.592 2.683 2.853 2.781 2.809

Venezuela 693 877 893 676 686 739 707 740 695 680 650

CHICKEN MEAT PRODUCTION IN LATIN AMERICA (1000 Tons)

Source: USDA and UBABEF

CHICKEN MEAT CONSUMPTION IN LATIN AMERICA (kg/percapta/year)

Sources: FAO,CIA

MAJOR CHICKEN MEAT EXPORTERS (Million tons)

2005 2006 2007 2008 2009 2010

Brazil 2.845 2.717 3.286 3.645 3.634 3.819USA 2.360 2.361 2.678 3.157 3.093 2.935

EU-27 696 689 635 742 783 840Thailand 240 261 296 383 379 410

China 332 322 358 285 291 380Argentina 92 94 125 164 178 250Canada 102 110 139 152 147 150

Chile 60 64 39 63 87 70Kuwait 97 38 60 70 70 70

Australia 18 16 25 27 30 30Arab Emirates 20 10 30 30 30 30

Others 73 85 74 98 133 151TOTAL 6.935 6.767 7.745 8.816 8.855 9.135

Source: UBABEF and USDA

BRAZIL AND USA REPRESENT 77% OF THE WORLD EXPORTS

BRAZIL (3.634 mil tons)USA (2.997 mil tons)

77% of the world exports

=

Sources: UBABEF and USDA

MAJOR LATIN AMERICA CHICKEN EXPORTERS

Broiler meat exportation (1 000 ton)

País 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Argentina 11 13 23 39 66 92 94 125 164 178 214Brasil 916 1.266 1.625 1.961 2.470 2.846 2.718 3.287 3.646 3.635 3.820Chile 14 22 14 22 46 60 64 39 63 87 79Colombia 0 0 0 0 0 0 0 0 4 2 5Mexico 2 2 1 2 2 1 1 2 5 9 14Venezuela 0 0 2 0 0 1 0 0 0 0 0

Fonte: USDA e UBABEF

EXPORTING COUNTRIES

Brazil and USA have a consolidated global market thanksto quality and production cost;

Argentina and Chile stand out as new players, butproduction is still small;

European countries lost competitiveness owing to highproduction costs and lack of grain, but the increases inproduction costs in Brazil are creating opportunities toFrance and Turkey as exporting countries;

Asian countries like Thailand, have serious sanitaryproblems.

EXPORTING COUNTRIES

Little demand for processed products with high addedvalue;

Sanitary and high quality requirements, that require farminvestments, slaughter plants, quality programs andcertifications;

Some countries are also going beyond the requirements;

• Iraq – SGS Certification and Bureau Veritas;

• Lebanon;

• South Africa - Salmonella and residue;

MAJOR CHICKEN MEAT IMPORTERS (Million tons)

2008 2009 2010 Variation 2009/10

Japan 737 645 745 15,50%EU-27 712 719 680 -5,42%

Saudi Arabia 510 604 630 4,30%Mexico 433 492 525 6,71%Russia 1.159 913 475 -47,97%

Iraq 211 368 330 -10,33%China 399 401 326 -18,70%

United Arab Emirates 289 297 305 2,69%Hong Kong 236 253 280 10,67%Venezuela 352 181 275 51,93%

South Africa 191 206 225 9,22%Others 2.560 2.545 2.806 10,26%TOTAL 7.789 7.624 7.602 -0,29%

Source: USDA

CHICKEN MEAT IMPORTS IN LATIN AMERICA

Chicken Meat Imports (1000 tons)

Country 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Argentina 42 24 1 8 1 3 3 5 4 5 9Brazil 0 0 0 0 0 0 0 0 0 0 0Chile 0 0 0 2 9 13 19 42 26 38 67Colombia 11 10 3 0 1 2 9 26 30 29 36México 219 235 254 329 316 364 419 380 433 492 549Venezuela 2 3 2 16 69 104 124 163 352 181 237

Source: USDA and UBABEF

IMPORTING COUNTRIES

China, Europe, Japan, Russia, Middle East, Venezuelaand Mexico are traditional importers, owing to theirproduction deficit;

Eastern Europe, Africa and some Asian countries areincreasing imports thanks to economic growth and increasein economic policies;

Specific situations of China (trade dispute with theUnited States) and Russia (the use of chlorine andsuspended imports from Brazil) have changed the marketfrom those countries, shifting, in part, the USA and openingup possibilities for other suppliers, like Argentina and Chile.

IMPORTED PRODUCTS IN DIFFERENT MARKETS

European Union - high food safety and health demand,license requirements, quotas, deboned breast;

South Africa - same EU requirements, dumping againstBrazil, leg quarter, chicken neck, MDM;

Angola, Congo, Liberia, Benin - low health requirementswhole chicken, chicken neck;

Venezuela - whole chicken;

Chile - whole chicken;

Mexico and Central America - leg quarter and MDMprovided by the USA;

IMPORTED PRODUCTS IN DIFFERENT MARKETS

China - feet, paws, wings, joint and middle joint wings,gizzards, do not buy whole chicken and chicken breasts;

Japan, Korea and Singapore - more sophisticatedmarkets, import labor intensive products.

Malaysia - wings and demands for Halal slaughter;

Vietnam – wings, large population (85 million);

Russia - leg quarters, wings, gizzards, hearts and MDM;

Middle East – griller (Halal slaughter);

SUMMARY 1…

Little demand for processed products with high addedvalue;

Sanitary and high quality requirements, that require farminvestments, slaughter plants, quality programs;

New private regulation imposed by costumers and fastfood chains that require high investments to suit certificationprograms;

10 MOST IMPORTANT EGG PRODUCERS: 70% OF TOTAL PRODUCTION

Source: FAO. IEC, IBGE

LATIN AMERICA = 11% OF THE WORLD EGG PRODUCTION


LATIN AMERICA EGG PRODUCTION


LATIN AMERICA EGG PRODUCTION (1000 Tons)

EGG PRODUCTION GROWTH – 2000 to 2009

LATIN AMERICA PER CAPITA EGG CONSUMPTION (eggs/year)


BRAZILIAN EGG PRODUCTION (Billion eggs)

28.851.931.851 eggs (28.8 billion)80.144.255 boxes (360 eggs)

149 eggs/percapita

Source: UBABEF

BRAZILIAN EGG EXPORTS BY PRODUCT (2010)

In shell92%

Processed8%

In shell91%

Processed9%

2009 2010

Source: UBABEF

BRAZILIAN EGG EXPORT IN SHELL (2010)

Angola51%

United Arab Emirates41%

Dem. Rep. Congo3%

Oman2%

Qatar1%

Others2%

Source: UBABEF

BRAZILIAN EGG EXPORT PROCESSED (2010)

Source: UBABEF

Japan53%

Venezuela12%

United Arab Emirates11%

Cuba9%

Saudi Arabia7%

Uruguay4%

Others4%

SUMMARY 2...

China represents more than 30% of the world production;

10 countries represent 70% of the world production;

Latin America represents 11% of the world production;

Mexico e Brazil represent more than 60% of the LatinAmerica production;

Mexico has the higher consumption in the world (354eggs);

Argentina, Colombia, Panama and Paraguay haveincreased their production more than 80 % on the past 10years;

OPPORTUNITIES FOR

LATIN AMERICA

LATIN AMERICA COMPETITIVE ADVANTAGES

Some countries are large grain producers - Argentina,

Brazil and Paraguay;

Others import grain but have a good production structure

- Colombia, Peru and some countries in Central America;

Large internal market - Brazil and Mexico;

Abundant and qualified hand-labor;

Modern industry and dynamic entrepreneurs;

Animal health - Brazil, Argentina, Chile, Uruguay,

Panamá;

Low production costs (still, but until when?);


Arable land (availability of millions of hectares) - 31 machines harvesting and 12 planting at same time

LATIN AMERICA COMPETITIVE ADVANTAGES – ARABLE LAND AVAILABILITY

050.000100.000150.000200.000250.000300.000350.000400.000450.000

Pasture and unused land

Agriculture

Source: FAO


Some countries like Brazil and Argentina are morecompetitive than USA in the international market becausethey have:• Strict sanitary control;• Institutional marketing program in key markets andopening of new markets•Flexibility and ability to meet their customers demands:

Griller for Middle EastDeboned breast for EUDeboned leg quarter for JapanWhole carcass for VenezuelaWings, feet and paws for China

Middle East*2008 2009 2010

Brazil 889,368 1,135,148 1,147,656

USA 214,383 232,659 209,670

EU27 150,211 160,011 165,113

Total (Brazil + USA + EU27)

1,186,701 1,468,958 1,468,189

* Includes the following selected countries: Saudi Arabia, UAE, Kuwait, Iran, Iraq and Yemen

Source: USDA, Eurostat, Secex, USDA (PSD online).

MAJOR EXPORTERS FOR MIDDLE EAST (Tons)

ARGENTINA

Production cost: 0,80 - 0,90 US$/kgFeed cost: 205 – 220 US$/tonLabor: 700 – 800 US$Consumption: 33 kg and improvingExports to the EU, China and other marketsCorn and Soybean High sanitary statusMajor producers: Granja Tres Arroyos

RacicLas Camelias

BRAZIL

Production cost: 0,90 – 1,00 US$/kgFeed cost: 265 – 280 US$/tonLabor: 800 – 900 US$Consumption: 45 kg and improvingExports to the EU, Japan, Middle East, China andother 155 countriesCorn and Soybean Major producers: BRF

Seara/MarfrigDoux FrangosulDiplomata

CHICKEN PRODUCTION IN BRAZIL IN 2010

SOUTH = 55,23%

SOUTHEAST = 22,99%

CENTRAL WEST = 11,47%

NORTHEAST = 8,65%

NORTH = 1,65%

TOTAL BIRDS = 5.987 Billion12.230 million tons of broiler meat45 kg / inhabitant / year

BRAZILIAN CHICKEN MEAT PRODUCTION GROWTH

Fonte: UBABEF

Source: SECEX

BRAZILIAN CHICKEN MEAT EXPORTS BY PRODUCTS (2010)

Source: SECEX

BRAZILIAN CHICKEN MEAT EXPORTSMAIN DESTINATIONS BY REGION (2010)

Source: SECEX

BRAZILIAN CHICKEN MEAT EXPORTS

COLOMBIA

Production cost: 1,35 – 1,55 US$/kgFeed cost: 500 – 550 US$/tonLabor: 700 – 800 US$Poultry meat consumption: 25 kgImports Corn and Soybean meal Sanitary problems (Newcastle Desease) Improving the integrated production system Major producers: Avidesa Mac Pollo

Operadora Avícola (Friko, GrupoPimpollo and Superpollo Paisa)InveragroDistraves Ltda

PERU

Production cost: 1,05 – 1,10 US$/kgFeed cost: 350 – 360 US$/tonLabor: 290 – 310 US$Poultry meat consumption 11 kgImports Corn and Soybean meal from USA andArgentina80% live birdsMajor producers: San Fernado

RedondosRicopolloAvincaEl Rocio

CHILE MAJOR CHICKEN PRODUCERS

AGROSUPER

ARISTIA

DON POLLO

FONDO SANTA ROSA

MEXICO MAJOR CHICKEN PRODUCERS

BACHOCO S.A.

GRUPPILGRIM’S PRIDE DE MÉXICO

TYSON DE MÉXICO

GRUPO PECUARIO SAN ANTONIO

AVIGRUPO

LATIN AMERICA

CHALLENGES

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

Demand reduction of some traditional importers:

• Some Arabian countries and Russia have self-sufficiencyprograms that will lead to a decrease in imports in thecoming years;

• Economic crisis aggravation in Europe may affectEuropean countries imports.


Increasing competitiveness in the international market;

• Acquisition of overseas companies;

• Formation of "joint ventures";

• Building factories abroad.


Expand and open new markets:

• Consolidate India and China;

• Open Mexico and USA;

• Open African countries - Gabon, Nigeria, Senegal, Kenya,

Ivory Coast, Niger, Algeria, Tanzania;

• Open Asian countries - Pakistan, Bangladesh, Malaysia,

Sri Lanka, Taiwan;

• Open the market in countries of South America -

Colombia, Bolivia.


Maintaining competitiveness:

• Difficulties with the exchange (Brazil), which led newplayers to enter the international market (France andTurkey);

• Increasing production costs owing to increase in feedprices;

• Increase in production costs due to regulatory issues -prohibition of growth promoters and requirements forslaughterhouses adequacy;


Deal with the importers demands:

• Importing countries want full protection;•Barriers and pressures from markets and customers;• The influence of NGOs and consumers are increasinglygreater;• Customer requirements on top of negotiated sanitaryagreements between countries – Example: GMO free, noanimal ingredients, no antibiotics;•Sanitary and high quality requirements, that require farminvestments, slaughter plants, quality programs andcertifications.

Certifications:

•Halal slaughter – Cibal Halal Company

• Integra Audit – broiler breeder and broiler farms (TESCO)

• FACS - Approval of Food Factory (TESCO)

• UFAS - Universal Feed Assurance Scheme – Feed mill. Inaddition to GMP and HACCP controls, it requires the transportand storage of raw materials;

• Mc Donald - Focus on animal welfare


Certifications:

•Swiss Law

• *ALO FREE – Agricultural Labelling Ordinance

• ISO 14001 – Ambiental (ABS Quality Evaluations)

•* Broiler Breeder farms , hatchery, feed mill, processing plants;

• GLOBALGAP - Europe Retailer Produce Working Group

Good Agricultural Practices

•* Broiler breeder farms, hatchery, feed mill and broiler farms.



Increase consumption and diversify the products:

• Chicken meat consumption is already high leveled in some

Latin America countries, but there is still room for growth

because the population profile is changing:

- Rise in income and urbanization;

- Increase in the number of people working outside the

home and living alone;

- Enlargement of elderly population;


Increase production of value-added products

In the past: Feed + day old chicks + slaughter = wholechicken

Cost - feed - economy range

Today and future: Feed + day old chicks + (slaughter +cutting and deboning + processing) = Cuts, further process,

food service

The client determines the type of product,volume and the quality standard


Improve relationships with retailers:

• In some countries, retail is not committed to the poultry

industry and consumers;

• The emergence of own brand in supermarket chains,

regarding poultry products, should be here soon (???).


Increase production without compromising profitability and well-being of workers

• Hand-labor - more expensive and difficult;

• Scaling up production without compromising occupationalhealth;

• Improve self-control systems in order to reducegovernment presence in the supervision at the processingplant;

• Implement quality programs in small and mediumprocessing plants;

Implemnt industry self-control programs:

•GMP - Good Production Practices – Broiler farms

• GMP - Good Manufacturing Practices – Processing plants

• SOP - Standard Operating Program

• HACCP - Hazard Analysis and Critical Control Points

• Traceability Program

Pathogen Reduction Program

Residues Program

Animal Welfare Program


Other adjustments – feed mill

• Feed without growth promoters

• GMO control

• Microbiological laboratory and food for self-control

• ISO 17025 Laboratory

• Traceability

• Risk analysis



Implementation of National Poultry Program for Sanitary Control in same countries of the region:

• Supervision and control at borders; •Increasing the biosecurity of farms;-Strengthening of veterinary care/attention;•Implementation of Early detection systems: rapid responseto health events;-Monitoring and certification of flocks;


Implementation of programs to improve food safety in same countries of the region (Government + Industries):

• National Poultry Program for Sanitary Control - Control of the origin of animals and animal health; •National Program for control of residues and contaminants •Pathogen Reduction Program – Monitoring and control of Salmonella sp. in chicken, turkey and egg layers;•Industries self-control programs: (GMP, SSOP, HACCP, etc).


Training officials and private veterinary services:

• Adequate health legislation in accordance with the OIEand Codex Alimentarius rules;

• Determination of Standards, based on risk analysis;

• In the medium term, safe products for trade won't dependon the country's health situation (compartimentalization);


Training professionals who work in poultry:

• Risk analysis, assessment and management;

• National and international health legislation;

• Environmental and labor legislation;

• Food Safety;

• HACCP and other quality programs;



• Risk impact of rapid spread emerging diseases such asAvian Influenza and Newcastle Disease;

• Epidemiology and drafting contingency plans;

• Importance of notifiable diseases for rapid dissemination;

• Methods for safe and efficient emergency sacrifice, but thatmeet the animal welfare requirements;



• Pest management and disease vectors control;

• Responsible and appropriate use of medicines as well ascontrol of residues, according to what the OIE and Codexhave;

• Molecular techniques and interpretation of laboratoryanalysis results;

• Risks of mishandling high economic impact virus diseases;

EGG LAYER PRODUCTION AND EXPORT CHALLENGES

Increasing the production scale;

Adapt egg farms and plants;

Implement quality programs;

Adapt to new animal wellfare requirements

Could we export to EU without enriched egg layercages???

EGG LAYER PRODUCTION AND EXPORT CHALLENGES

Tradicional cages...

SUMMARY 3….

Quality, price and flexibility are the basic…Now, thepassword is:

• Traceability• Certification• Food safety• Animal welfare• Sustainability

Source: OCDE/FAO – Agricultural Outlook 2010-2019.

World consumption estimate (million tons)

2010 2030 %Chicken 74 120 62%

Meat 56 74 32%Pork 101 120 17%

Turkey 5 10 100%Eggs 68 88 29%Total 304 412 35%

THE WORLD WILL NEED MORE FEED IN THE NEXT YEARS

CONSUMER BEHAVIOR IN THE COMING YEARS

The world per capita poultry meat consumption is still low;

The migration from rural to the urban zones will intensify inthe coming years in developing countries;

The growth on the developing countries will increase thedemand for low cost proteins;

Increase in per capita income, in developing countries, willraise meat consumption;

The elderly population, that eat more protein, fruits andvegetables rather than carbohydrates, will increase;

The growth of the muslim countries will benefit the chickenmeat;

Europe0%

Middle East15%

North America4%

South America6%

África25% Ásia

50%

Source: ONU

EXPECTATIONS OF WORLD POPULATION IN 2050PERCENTAGE GROWTH

139198

1519

780

483

-200

0

200

400

600

800

1000

1200

1400

1600

North Am. South Am. Ásia África Europe Middle East

-11

POPULATION GROWTH TO 2050 (Millions of Inhabitants)

Source: ONU

SUMMARY 4…

82% of the increase in the protein consumption from 2009until 2018 will happen in the developing countries and only 18%in the developed countries.

Source: OCDE/FAO – Agricultural outlook 2009-2018

CONCLUSIONS

As chicken’s life cycle is shorter than other species, it ispossible to quickly increase poultry meat production;

Poultry meat is healthy and does not suffer from religiousrestrictions;

Chicken and hens are more efficient and consume lesswater than cattle and pigs;

There should be a significant increase in consumption in

China and India;

There will be an increasing trend in the consumption of

higher added value products within coming years;

Poultry meat production will continue to increase in Latin

America to serve its growing population, as well as the rising

world demand;

CONCLUSIONS

CONCLUSIONS

The inclusion of other countries in the international

market, along with Brazil, Argentina and Chile, depend on

the solution of sanitary problems and the quality

improvement;

For others, the production of grain and with good sanitary

status the inclusion in the foreign market is only a matter

of time, as it is the case of Paraguay and Uruguay;

Others, although dependent on grain imports, have good

growth potential to export, as it is the case of Peru and

Colombia.

POUTRY AND EGG PRODUCTION IN SOUTH AMERICA – … · POUTRY AND EGG PRODUCTION IN SOUTH AMERICA...

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