MLBA11: October / November 2009

 

 

 

 

Among all major Asian meat lines, poultry singu­larly stands out for having the greatest long-term growth potential. Indeed, poultry's favourable market fundamentals are powered by a significant sup­ply side component. In an increasingly populated world, growth in livestock meat output is limited by scarce pro­duction inputs.

 

At a time of dwindling arable land and tight grain sup­plies, swine and ruminants are handicapped by inferior feed conversion ratios. Similarly, the promise of cheap, unlimited seafood was undermined by a declining fish­meal resource base.

 

With their high feed conversion ratios, minimal land requirements and fast maturation time, poultry is ideally suited for a continent that has too many people and not enough grain growing land. Hence, it is not coincidental that densely populated countries like India also have the largest increases in poultry production.

 

Moreover, Asia accounts for 60 percent of the world's population but only 35 percent of its poultry production. Even so, this figure is much higher than ten years ago, when it accounted for only 30 percent of global poultry production. Because Asia is the fastest growing part of the world economy, its poultry consumption is poised to grow faster than the global average for at least the next two decades.

 

In Japan and South Korea, per capita poultry con­sumption grows at approximately 1 percent a year. On the other hand, China's poultry per capita poultry consump­tion is rising by 2 percent a year. In other parts of Asia, consumption is growing even more rapidly. For example, from 1997 to 2007, Southeast Asia's poultry consump­tion increased at a 3.3 percent annual rate. Over that same decade, the Indian subcontinent saw its per capita poultry consumption skyrocket by 8.9 percent a year.

 

Undeniably, poultry's market resilience is equally evident in both the richer and poorer parts of Asia. In emerging markets, despite the nastiest recession in dec­ades, poultry consumption is projected to rise 6 percent in Thailand and 5 percent in Indonesia. Only in China, where a recession coincided with a crash in pork prices, has consumption fallen off markedly. Even so, China's per capita poultry consumption is expected to recover within a year and grow at a 2 percent annual rate over the next decade.

 

Even in Asia's mature, developed markets, when food price inflation bites consumer demand, poultry enjoys a special immunity. For example, Singapore's per capita meat consumption dropped a whopping 19.5 percent from 1997 to 2008, with most of the fall occurring after food prices took off in the middle of the dec­ade. While Singapo­rean consumption of all other major meat lines fell anywhere from 16 percent to 28 percent, chicken consumption fell by less than 3 percent. The reason lies in Singaporeans' sub­stitution of chicken in place of more ex­pensive meats such as seafood and pork.

 

Yet, despite Asian poultry's powerful market dynam­ics, domestic self-sufficiency cannot be taken for granted. In 2008, Asia accounted for 5 million tonnes or 50 percent of global chicken imports but only 1.5 million tonnes or 1.6 percent of exports. The region's only large exporter, Thailand, has seen bird flu keep its poultry inventories and exports unchanged from their level of six years ago. Similar, recurring flu epidemics have devastated poultry inventories and consumption everywhere from India to China.