January 13, 2021
China bails out 2020's world poultry trade but serious challenges remain
During 2020's steep COVID-19 recession, chicken output kept growing and Chinese demand prevented a steep fall in exports. –But exporters must now contend with an anticipated 800,000 drop fall in Chinese imports over five years.
By Eric J. Brooks
An eFeedLink HotT opic
After a disappointing decade pockmarked by bird flu outbreaks, 2020's human pandemic dented chicken meat's growth and trade, even as the latter undergoes a profound shift followed by an impending reversal.
COVID-19 induced drops in Indian (-8%, -0.35mt) and EU (-1.6%, -0.2mt) output were aggressively counterbalanced by ASF-driven 8% expansion in Chinese (+1.1mt) Chinese and Vietnamese (+0.1mt) production. After growing at a below-trend 2.6% annually in during the 2010s, world poultry output will expand only 1.5%, from 2019's USDA estimated 99.32 million tonnes to 100.83 million tonnes in 2020.
Going forward, we expect an accelerating Asian economic recovery to be partly counterbalanced by a new wave of US and European COVID-19 lockdowns. That will depress Q1 growth and limit 2021's world poultry meat expansion to a below-trend 2.1%, to 102.93 million tonnes.
Sometime before the mid-2020s, broiler meat output should grow above its long-term 3%+ annual rate but for now, trade uncertainty will hold the industry back from operating near full capacity.
Trade-wise, after expanding 3.4% annually over the previous decade, COVID-19's impact on international transport logistics reduced growth in world broiler meat exports to just 2% or 234,000 tonnes, from 2019's 11.951 million tonnes to 12.185 million tonnes in 2020 – but this nominal increase hides a worse overall performance and disparities in the trade performance of various exporters.
Total exports to China and Hong Kong increased by a whopping 48.2% or 0.42 million tonnes, from 2019's 0.87 million tonnes to 1.29 million tonnes this year. On the other hand, total chicken exports to all other nations fell by 186,000 tonnes.
Consequently, access to China's market was the dividing line between success and failure: America, Thailand, and Brazil all had easy access to China's market and enjoyed a strong 2020 trade performance.
Poland and Spain did not have sufficient China market access to offset falling poultry demand in COVID-19 afflicted European and African nations.
But while China giveth, it also taketh away: With its hog herds aggressively recovering from ASF, Chinese consumers are already shifting consumption from poultry to back to pork, their traditional favorite meat line.
From 17.5% growth (to 13.75mt) in 2019 and 8% growth (to 14.85mt) in 2020, 2021 Chinese broiler meat output growth is decelerating to 3% and will total 15.30 million tonnes, versus consumption growth of 2.3% (to 15.82 million tonnes).
Preferring to remain self-sufficient in protein, Beijing policymakers will allow 3%+ annual chicken meat output growth and 2%+ consumption growth displace imports back to their previous, near 0.5 million tonnes level. This means that by 2025, exporters must find a new home for 800,000 tonnes of chicken imports now destined for China.
The good news is that this is not impossible – provided COVID-19 passes and several key economies recover. Based on USDA statistics, American chicken consumption increased by an average of 350,000 tonnes annually from 2015 through 2019 inclusive, before COVID-19 struck. Before its decade long recession, Brazilian chicken consumption increased by 410,000 tonnes annually from 2001 through 2011 inclusive.
If after COVID-19 is brought under control, US and Brazilian chicken consumption just need to grow at two-thirds their previous rate for two consecutive years to "absorb" an 800,000 tonne drop in Chinese chicken imports over the next five years.
Even so, the world poultry trade sees nothing ahead but challenges. EU exporters face a flat market, poultry disease outbreaks, and rising EU environmental costs. America's impressive export growth depends on extending its Phase 1 trade deal with China and the recovery of Mexico's COVID-19 impacted economy.
Even when aggressive trade gains are made, it frequently entails painful adaptations, such as Thailand's substitution of high-value cooked chicken with lower profit margin frozen poultry meat and chicken feet in order to satisfy Chinese customers. Avian influenza and China's stagnant per capita chicken consumption made the 2010s a difficult decade for the world poultry sector. If anything, the 2020s have opened up with even greater challenges.
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