August 13, 2010

Inflation to boost Zambia's poultry industry

The inflationary trend for 2010 is more likely to contribute to the poultry sector's economic recovery and growth prospects, said the Poultry Association of Zambia (PAZ).

The country's inflation rate has hit single digit for the last three months and this has pleased most stakeholders in the local economy. June's inflation rate stood at 7.8% but shot up by 1% for the month of July mainly due to an increase in both non-food and food products in the CPI.

Mathew Ngosa, executive manager of PAZ, said the growth prospects for the Zambian broiler market this year were very good because of some positive factors in the economy like the single digit inflation which the country had recorded in the past months.

"Similar to last year, consumers will remain highly sensitive to price and value. However, the ongoing reduction in inflation may support consumption of broiler meat. At the moment broiler meat accounts for over 90% of the Zambian poultry meat market," Ngosa said.

He said that Zambian consumers prefer whole chicken meat and did not import whole broiler meat as the local industry has the capacity to produce and meet the domestic demand. "To some extent the country does import 'prepared (or cooked) products of broiler meat', mainly supplied by South Africa. Domestic broiler meat holds a majority share of sales in the retail sector," he added.
 

Zambia's food service sector utilises large quantities of locally produced raw bulk cuts, mainly from the four major poultry processors, Verino, Crest, Eureka and Zamchick. "There are other small processors in the market servicing areas distant from Lusaka. However, these processors are smaller and face insurmountable competition with the established processors for any impact," he said.

Ngosa further added that the total consumption of broiler meat this year was marginally up from the level reached last year. "Although competition with fish products and even with pork has remained strong, chicken and the cooked chicken products are expected to retain their competitive edge. However, given the rapid increase in frozen poultry stocks and drastic increase in broiler meat cuts, PAZ has projected upward for the domestic broiler production this year," he said.

Assuming solid retail demand for competitively priced domestic broiler meat in 2010; domestic broiler outputs are projected slightly higher than the previous year by 15% differing from last year's previous forecast. PAZ had initially projected output slightly lower than the previous year based on the assumption that domestic growers would start to adjust their production in response to considerably weakened market prices for produce in 2009, but this no longer seems to hold true.

Ngosa also added that there would be an increased number of broiler chicks placed this year according to PAZ survey conducted at the end of April, which points to higher domestic broiler output than last year.