Global trade has increasingly been challenged by ongoing avian influenza threats, rising protectionism, changing standards in import markets, as well as local supply issues in exporting countries, such as China and Brazil, making trade significantly more complex.
However, the global trade struggle for poultry isn’t likely to disappear, according to Rabobank’s senior analyst for animal protein Nan-Dirk Mulder, who maintained growth would continue to slow.
“Rabobank expects global poultry markets to change even further in the coming years,” said Mulder. “In terms of volume, global poultry trade has grown by only 9% to 12.9m tonnes since 2011, which is significantly lower than the growth in global poultry demand.”
Despite poultry’s trading downfalls, it was still regarded as an important sector and changing market conditions would require changes in company strategies to suit a new market reality, explained the analyst.
Global market growth was moving towards emerging markets, according to Rabobank. In the next five years, it expected more international companies to shift focus from being ‘exporter only’ to becoming a direct investor in the fast-growing markets. This would affect future streams and would put an emphasis on the short- to mid-term trend of moving from global trade to local production growth.
Alternative export platforms
As trade risks have risen from geopolitical tensions and spreading of disease, supply of poultry in the international markets has plummeted. This meant global companies should invest in export platforms that diversified origins, which could create more flexibility in global trade, said the analyst.
Export platforms also presented an opportunity for countries such as Russia and Ukraine, which were both well positioned to supply in the raw chicken segment, due to low input costs, and Vietnam supplying the processed chicken market where it could leverage its low-cost labour.
Processed poultry investment
Investing in the processed poultry segment was described by Rabobank as a “logical” business strategy for poultry companies. This market segment has performed well in recent years and was the only segment with significant growth in value and volume, it said, which has been demonstrated by the likes of China and the US.
“We think these fast-changing market conditions will require a refocus of any company active in global trade,” Mulder added. “Companies should rethink how they operate and whether an export focus is still adequate under these fast-changing market conditions. There is no ‘one size fits all’ solution, and much depends on the specific position of each company. One thing is for sure: markets will keep changing and only those companies that are ahead of the market will stay competitive in the longer term.”