Strong growth – in volume and value – is possible, but the Australian chicken meat industry should pursue new export markets, higher value for consumers and productivity gains, said agribusiness specialist Rabobank’s report.
“Through the adoption of these strategies, our analysis indicates that the Australian poultry industry can achieve an average annual growth rate of 3.5 per cent over the next five years,” said report author and senior animal proteins analyst Angus Gidley-Baird.
“This represents a moderation from the lofty growth rates of 5.9 per cent achieved in recent years, as the industry matures and domestic consumption stabilises, however, it would still see production lift by around 40,000 tonnes per year – equating to an additional 109 million birds by 2021.”
The report warns that unless there is an expansion into new export markets, growth in the poultry industry will be linked to population growth, which is expected to be fairly lacklustre at around 1.2 per cent per annum.
Develop new markets
An increase in exports, to around 10 per cent of production, will be key to increasing volume and value in the Australian chicken meat industry, the report said.
Gidley-Baird said currently, less than five per cent of Australian chicken is exported. However, there are significant opportunities in South-East Asia – such as Indonesia, Thailand, Vietnam, the Philippines and Malaysia – as consumption increases.
He said while it would be difficult for Australia to compete from a total cost perspective, there are opportunities to sell different cuts and therefore complement the total return per bird.
“For example, the US exports dark chicken meat and non-breast cuts into the Asian market, which is not only preferred by these markets, but complements the US domestic operations to provide a higher overall value return per bird,” he said.
Capture a larger share
Despite being the cheapest protein, the Rabobank report said “chicken is not necessarily the first preference protein for a price-conscious consumer”.
“In Australia, consumers tend to trade down rather than move straight to the cheapest protein,” Gidley-Baird says.
With this consumer mindset, Gidley Baird said, the industry should look to expand its product offering by creating higher-value products, which could potentially add a further five per cent to the overall value of the industry.
“For example, an organic, branded chicken breast steak with lemongrass and ginger marinade could capture the customer at a higher price point.”
The report also highlights the rising social pressures for welfare-friendly and sustainable products such as slower-growing birds or sustainably-sourced feedstocks, which will add additional costs but may not attract additional margins.
The Rabobank report identifies three opportunities to increase value growth in the industry through productivity gains: the adoption of new technology, realising economies of scale and relocation of industry facilities to centralised operations.
“Industry growth should not be confined to a conversation around production, but instead have a greater focus on profitability,” Gidley-Baird said.
“The implementation of new technologies such as improved monitoring to lift feed efficiency and improve air quality could lift productivity by five per cent. There are also opportunities for greater efficiency at the distribution level, with the use of sensors during transport helping to manage bird stress and welfare.”