August 18, 2020

 

Chicken production in China rapidly expanding

 

Chicken producers in China are rolling out rapid expansion plans to boost production and reduce dependence on imports, even though demand has declined due to COVID-19, Reuters reported.

 

The United States Department of Agriculture (USDA) said China, the second biggest poultry producer globally, is projected to produce 14.85 million tonnes of chicken meat this year. Last year, China produced 13.75 million tonnes of chicken meat.

 

Chinese traders said the push for expansion has improved demand for corn and soybeans used for livestock feed, while poultry prices have lowered.

 

Increased domestic production could result in lower frozen chicken imports. This comes as safety concerns of foreign meat imports have taken the spotlight, after authorities from Shenzhen, China reported COVID-19 coronavirus traces in a shipment of frozen chicken wings from Brazil.

 

Pan Chenjun, Rabobanksenior analyst said chicken prices are very low not because of poor demand but due to adequate supply.

 

9.3 billion chickens have been slaughtered in China in 2019. 4.4 billion of these were white-feathered broilers, used in fast food chains as these are plump, cheap meat.

 

To meet China's goal for increased food production integrations, major industry leaders such as Liaoning Wellhope Agri-Tech, Yum China KFC-supplier Fujian Sunner Development and Charoen Pokphand (CP) from Thailand have readied expansion plans. 

 

Liaoning Wellhope Agri-Tech boosted chicken production last year by 36%, with a comparable growth for the first half of 2020 according to company fillings.

 

Walter Benz, president and managing director of China at German-based Big Dutchman Group, a poultry equipment supplier said they are in the midst of developing new housing for 1 billion more chickens.

 

The housing plans include a Shandong Xiantan100 million-bird farm and slaughter project to be completed end-2021, as well as another WH Group-owned Henan Shuanghui Investment and Development 100 million bird project to finish by June 2022.

 

To finance a plan to double production from 101 million birds, Shandong Fengxiang Co had raised funds in public share offering in July.

 

However, China's rapid poultry production expansion could be hampered by a declining demand for poultry because of COVID-19.

 

School canteens, which serve chicken meat as it is cheaper compared to pork, has been closed for a big part of 2020. Other worker canteens and fast food chains have reported lower demand even after they've reopened their doors.

 

In its earnings report, Wellhope said chicken slaughter was only up 4% in the first half a year, with 8 percentage points down compared to its initial pre-pandemic projections.

 

Qiu Jiahui, Wellhope deputy president said chicken supplies are plenty, which does not bode well for the meat's demand and prices. Prices could fall further once extra capacity for the meat is in place.

 

Additionally, China's swine production has improved better than projected.

 

Qiu said Wellhope will there is a shift in consumption habits, with young urban consumers who value health and convenience preferring chicken meat.

 

Pan Chenjun, Rabobanksenior analyst said increased pork prices could result in consumers choosing chicken too.

 

Major poultry producers are looking to cut production costs. Walter Benz, president and managing director of China at Big Dutchman Group said unused cages are returned to maximise space, lower cost of labour and reduce risk of disease.

 

-      Reuters