POUTRY AND EGG PRODUCTION IN SOUTH AMERICA CONSUMER BEHAVIOR, - - PowerPoint PPT Presentation

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

Ariel Antonio Mendes

Production and Techinical Scientific Director of UBABEF

Buenos Aires, October 18th 2011

EUROPEAN POULTRY CLUB CONFERENCE

WORLD MEAT PRODUCTION (Million tons)

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

Source: 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 16.348 China 10.200 10.350 11.291 11.840 12.100 12.550 Brazil 8.950 9.335 10.305 10.940 10.980 12.230 EU-27 8.169 7.740 8.320 8.594 8.756 8.920 México 2.498 2.592 2.683 2.853 2.781 2.809 Índia 1.900 2.000 2.240 2.490 2.550 2.650 Russia 900 1.180 1.350 1.550 1.790 2.000 Argentina 1.030 1.200 1.320 1.430 1.500 1.650 Iran 1.237 1.327 1.423 1.450 1.525 1.600 South Africa 1.015 1.113 1.159 1.240 1.250 1.290 Japan 1.166 1.258 1.250 1.255 1.282 1.280 Others 9.916 10.451 10.884 11.273 11.512 11.889 TOTAL 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 3.819 USA 2.360 2.361 2.678 3.157 3.093 2.935 EU-27 696 689 635 742 783 840 Thailand 240 261 296 383 379 410 China 332 322 358 285 291 380 Argentina 92 94 125 164 178 250 Canada 102 110 139 152 147 150 Chile 60 64 39 63 87 70 Kuwait 97 38 60 70 70 70 Australia 18 16 25 27 30 30 Arab Emirates 20 10 30 30 30 30 Others 73 85 74 98 133 151 TOTAL 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 2010 Argentina 11 13 23 39 66 92 94 125 164 178 214 Brasil 916 1.266 1.625 1.961 2.470 2.846 2.718 3.287 3.646 3.635 3.820 Chile 14 22 14 22 46 60 64 39 63 87 79 Colombia 4 2 5 Mexico 2 2 1 2 2 1 1 2 5 9 14 Venezuela 2 1

Fonte: USDA e UBABEF

EXPORTING COUNTRIES

Brazil and USA have a consolidated global market thanks to quality and production cost; Argentina and Chile stand out as new players, but production is still small; European countries lost competitiveness owing to high production costs and lack of grain, but the increases in production costs in Brazil are creating opportunities to France and Turkey as exporting countries; Asian countries like Thailand, have serious sanitary problems.

EXPORTING COUNTRIES

Little demand for processed products with high added value; Sanitary and high quality requirements, that require farm investments, slaughter plants, quality programs and certifications; 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 2010 Argentina 42 24 1 8 1 3 3 5 4 5 9 Brazil Chile 2 9 13 19 42 26 38 67 Colombia 11 10 3 1 2 9 26 30 29 36 México 219 235 254 329 316 364 419 380 433 492 549 Venezuela 2 3 2 16 69 104 124 163 352 181 237

Source: USDA and UBABEF

IMPORTING COUNTRIES

China, Europe, Japan, Russia, Middle East, Venezuela and Mexico are traditional importers,

• wing

to their production deficit; Eastern Europe, Africa and some Asian countries are increasing imports thanks to economic growth and increase in economic policies; Specific situations of China (trade dispute with the United States) and Russia (the use

• f

chlorine and suspended imports from Brazil) have changed the market from those countries, shifting, in part, the USA and opening up 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 against Brazil, leg quarter, chicken neck, MDM; Angola, Congo, Liberia, Benin - low health requirements whole chicken, chicken neck; Venezuela - whole chicken; Chile - whole chicken; Mexico and Central America - leg quarter and MDM provided 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

sophisticated markets, 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 added value; Sanitary and high quality requirements, that require farm investments, slaughter plants, quality programs; New private regulation imposed by costumers and fast food chains that require high investments to suit certification programs;

10 MOST IMPORTANT EGG PRODUCERS: 70% OF TOTAL PRODUCTION Source: FAO. IEC, IBGE

LATIN AMERICA = 11% OF THE WORLD EGG PRODUCTION Source: FAO. IEC, IBGE

LATIN AMERICA EGG PRODUCTION Source: FAO. IEC, IBGE

LATIN AMERICA EGG PRODUCTION (1000 Tons)

EGG PRODUCTION GROWTH – 2000 to 2009

LATIN AMERICA PER CAPITA EGG CONSUMPTION (eggs/year) Source: FAO. IEC, IBGE

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 shell 92% Processed 8%

In shell 91% Processed 9%

2009 2010 Source: UBABEF

BRAZILIAN EGG EXPORT IN SHELL (2010)

Angola 51% United Arab Emirates 41%

• Dem. Rep.

Congo 3% Oman 2% Qatar 1% Others 2%

Source: UBABEF

BRAZILIAN EGG EXPORT PROCESSED (2010)

Source: UBABEF

Japan 53% Venezuela 12% United Arab Emirates 11% Cuba 9% Saudi Arabia 7% Uruguay 4% Others 4%

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 Latin America production; Mexico has the higher consumption in the world (354 eggs); Argentina, Colombia, Panama and Paraguay have increased their production more than 80 % on the past 10 years;

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?);

LATIN AMERICA COMPETITIVE ADVANTAGES

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

LATIN AMERICA COMPETITIVE ADVANTAGES – ARABLE LAND AVAILABILITY 50.000 100.000 150.000 200.000 250.000 300.000 350.000 400.000 450.000 Pasture and unused land Agriculture Source: FAO

LATIN AMERICA COMPETITIVE ADVANTAGES

Some countries like Brazil and Argentina are more competitive than USA in the international market because they have:

• Strict sanitary control;
• Institutional

marketing program in key markets and

• pening of new markets
• Flexibility and ability to meet their customers demands:

Griller for Middle East Deboned breast for EU Deboned leg quarter for Japan Whole carcass for Venezuela Wings, 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$/kg Feed cost: 205 – 220 US$/ton Labor: 700 – 800 US$ Consumption: 33 kg and improving Exports to the EU, China and other markets Corn and Soybean High sanitary status Major producers: Granja Tres Arroyos Racic Las Camelias

BRAZIL

Production cost: 0,90 – 1,00 US$/kg Feed cost: 265 – 280 US$/ton Labor: 800 – 900 US$ Consumption: 45 kg and improving Exports to the EU, Japan, Middle East, China and

• ther 155 countries

Corn and Soybean Major producers: BRF Seara/Marfrig Doux Frangosul Diplomata

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 Billion 12.230 million tons of broiler meat 45 kg / inhabitant / year

BRAZILIAN CHICKEN MEAT PRODUCTION GROWTH

Fonte: UBABEF

Source: SECEX

BRAZILIAN CHICKEN MEAT EXPORTS BY PRODUCTS (2010)

Source: SECEX

BRAZILIAN CHICKEN MEAT EXPORTS MAIN DESTINATIONS BY REGION (2010)

Source: SECEX

BRAZILIAN CHICKEN MEAT EXPORTS

COLOMBIA

Production cost: 1,35 – 1,55 US$/kg Feed cost: 500 – 550 US$/ton Labor: 700 – 800 US$ Poultry meat consumption: 25 kg Imports Corn and Soybean meal Sanitary problems (Newcastle Desease) Improving the integrated production system Major producers: Avidesa Mac Pollo Operadora Avícola (Friko, Grupo Pimpollo and Superpollo Paisa) Inveragro Distraves Ltda

PERU

Production cost: 1,05 – 1,10 US$/kg Feed cost: 350 – 360 US$/ton Labor: 290 – 310 US$ Poultry meat consumption 11 kg Imports Corn and Soybean meal from USA and Argentina 80% live birds Major producers: San Fernado Redondos Ricopollo Avinca El 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-sufficiency

programs that will lead to a decrease in imports in the coming years;

• Economic

crisis aggravation in Europe may affect European countries imports.

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

Increasing competitiveness in the international market;

• Acquisition of overseas companies;
• Formation of "joint ventures";
• Building factories abroad.

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

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.

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

Maintaining competitiveness:

• Difficulties with the exchange (Brazil), which led new

players to enter the international market (France and Turkey);

• Increasing production costs owing to increase in feed

prices;

• Increase in production costs due to regulatory issues -

prohibition of growth promoters and requirements for slaughterhouses adequacy;

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

Deal with the importers demands:

• Importing countries want full protection;
• Barriers and pressures from markets and customers;
• The influence of NGOs and consumers are increasingly

greater;

• Customer requirements on top of negotiated sanitary

agreements between countries – Example: GMO free, no animal ingredients, no antibiotics;

• Sanitary and high quality requirements, that require farm

investments, slaughter plants, quality programs and certifications.

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. In

addition to GMP and HACCP controls, it requires the transport and storage of raw materials;

• Mc Donald - Focus on animal welfare

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

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.

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

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;

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

Increase production of value-added products In the past: Feed + day old chicks + slaughter = whole chicken 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

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

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 (???).

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

Increase production without compromising profitability and well-being of workers

• Hand-labor - more expensive and difficult;
• Scaling up production without compromising occupational

health;

• Improve

self-control systems in

• rder

to reduce government presence in the supervision at the processing plant;

• Implement

quality programs in small and medium processing 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

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

Other adjustments – feed mill

• Feed without growth promoters
• GMO control
• Microbiological laboratory and food for self-control
• ISO 17025 Laboratory
• Traceability
• Risk analysis

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

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 response

to health events;

• Monitoring and certification of flocks;

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

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).

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

Training officials and private veterinary services:

• Adequate health legislation in accordance with the OIE

and Codex Alimentarius rules;

• Determination of Standards, based on risk analysis;
• In the medium term, safe products for trade won't depend
• n the country's health situation (compartimentalization);

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

Training officials and private veterinary services:

• Adequate health legislation in accordance with the OIE

and Codex Alimentarius rules;

• Determination of Standards, based on risk analysis;
• In the medium term, safe products for trade won't depend
• n the country's health situation (compartimentalization);

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

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;

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

Training professionals who work in poultry:

• Risk impact of rapid spread emerging diseases such as

Avian Influenza and Newcastle Disease;

• Epidemiology and drafting contingency plans;
• Importance of notifiable diseases for rapid dissemination;
• Methods for safe and efficient emergency sacrifice, but that

meet the animal welfare requirements;

CHICKEN MEAT PRODUCTION AND EXPORT CHALLENGES

Training professionals who work in poultry:

• Pest management and disease vectors control;
• Responsible and appropriate use of medicines as well as

control of residues, according to what the OIE and Codex have;

• Molecular

techniques and interpretation

• f

laboratory analysis 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 layer cages???

EGG LAYER PRODUCTION AND EXPORT CHALLENGES Tradicional cages...

SUMMARY 3….

Quality, price and flexibility are the basic…Now, the password 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 in the coming years in developing countries; The growth on the developing countries will increase the demand for low cost proteins; Increase in per capita income, in developing countries, will raise meat consumption; The elderly population, that eat more protein, fruits and vegetables rather than carbohydrates, will increase; The growth of the muslim countries will benefit the chicken meat;

Europe 0% Middle East 15% North America 4% South America 6% África 25% Ásia 50%

Source: ONU

EXPECTATIONS OF WORLD POPULATION IN 2050 PERCENTAGE GROWTH

139 198 1519 780 483

• 200

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 2009 until 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 is possible to quickly increase poultry meat production; Poultry meat is healthy and does not suffer from religious restrictions; Chicken and hens are more efficient and consume less water 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

• f

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

• f 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.