September 18, 2006

 

Saudi poultry production slow due to Brazilian imports

 

 

Saudi Arabian broiler meat production is forecast to increase two percent over 2006 to reach more than half a million tonnes, according to a USDA GAIN report released last week.

 

Although the country's total broiler meat imports in 2006 is expected to fall 10 percent to 434,000 tonnes due to decreased consumption earlier in the year caused by bird flu it still makes up close to half of the country's imports.

 

The country has so far remained free of bird flu in poultry but bird flu cases has occurred in several of its neighbours, such as Kuwait.  

 

The Ministry of agriculture indicated that the country's total broiler meat production reached 537,000 tonnes in 2005.  Based on this, the USDA has forecasted broiler meat production to reach 559,000 tonnes in 2007 due to the increase in newly licensed farms.

 

Local production is not expected to increase significantly because of stiff competition from imports. Besides tariffs, the government has implemented a range of subsidies to help local poultry producers fight off the competiton.

 

Local production costs range from US$1,090 to US$1,380 a tonne compared to a C&F price for imported Brazilian broiler meat as low as US$800 a tonne.

 

The government's policies compensate by encouraging the establishment of new poultry farms and the expansion of existing ones to attain self-sufficiency.

 

Interest free loans are given to new viable poultry farms while subsidies were given since the late 1970s for purchase of poultry equipment. Poultry farms, particularly larger units, benefit from these and have managed to acquire the latest broiler production and management technologies. The government also subsidises imported US corn and soybean meal, which in turn encourages importers to buy US corn.

 

Brazil has been the leading frozen broiler meat supplier to the Kingdom, followed by  France.  Argentina and South Africa were a distant third and fourth.

 

Last year, broiler meat imports rose 12 percent to 484,202 tonnes, compared to 2004, with Brazil accounting for almost 80 percent of imports.  Brazil is likely to dominate the Saudi poultry import market due to its price competitiveness and reputation. 

 

Saudi Arabia's Brazilian poultry imports declined 19 percent compared to the same period a year earlier during the first four months of the year. In 2007, imports are expected to bounce back due to reduced consumer fears.

 

Price increases in poultry are expected in December due to increased Saudi demand when more than 2 million pilgrims make their way to Mecca. Price increase seen in poultry imports in recent months is mainly due to Egypt relaxing conditions and tariffs for imports in recent months as bird flu tightened supplies in the country.

 

Other factors, such as higher Brazilian production costs, increased demand for Brazilian chicken in other markets, stronger Brazilian Real and static poultry production in Brazil also accounted for the price increase.

 

Local producers are urging the government to increase the 20 percent tariffs on Brazilian and French chickens. Faced with stiff competition from imported poultry and low prices, Saudi broiler producers have turned to exports to nearby Arab countries.

 

Per capita consumption of poultry is estimated at 37.4 kg in 2005. Broiler meat consumption is projected to continue growing due to its competitive pricing and a growing preference for chicken meat by increasingly diet conscious consumers.