Counting those chickens

Angus Gidley-Baird

The poultry industry is being urged to look at increasing exports in Rabobank’s latest report.

Strong growth in volume and value terms is possible for New Zealand’s chicken meat industry but it needs to focus on alternative strategies to capture new opportunities, according to the agribusiness lender. Rabobank’s new report, Catching the next wave of growth, identifies the development of new markets, the capturing of a greater share of consumer spending and improved margins through productivity gains as three key strategies that will enable the industry to maximise volume and growth.

Per capita consumption of chicken meat, which has been the strongest driver of growth for the industry, is likely to moderate in the future, the report notes. However if the poultry industry can successfully adopt the above strategies, the bank believes the industry can achieve an average growth rate if 2.9 percent over the next five years.

“This is below the growth rate of 5.9 percent which has been achieved across the past five years, but still represents significant development and would require the industry to up production from 190,000 tonnes in 2014 to 228,000 tonnes in 2021,” says the report’s author Angus Gidley-Baird, Rabobank’s senior animal proteins analyst.

Development of new export markets is needed 

In particular, the report points to an increase in exports to around 10 percent of production as being key to increasing volume and value in the New Zealand chicken meat industry.

“At present, the New Zealand chicken meat export market accounts for less than five percent of total production,” says Gidley-Baird.

Encouragingly, there is plenty of scope to grow chicken meat exports, he says, particularly in South East Asian countries, such as Indonesia, Thailand, Vietnam, the Philippines and Malaysia, with these countries expected to increase consumption of chicken meat by 15 percent over the next five years.

The fast food sector is one area of significant opportunity for New Zealand exporters with the report saying sector growth in the range of six percent is expected within these South East Asian markets over that time frame.

“A safe reliable and secure supply chain is critical for food service industry operators and New Zealand, with its regulatory systems and food safety standards has strong credentials to meet these requirements,” says Gidley-Baird.

With red meat prices high, and expected to remain so for some time, consumers will seek alternative proteins and that “products perceived to have a close equivalence to the higher-priced protein need to be provided,” the report says.

“Given this consumer mindset, the industry should look to expand its product offering by creating higher-value products, which could potentially add a further five percent to the overall value of the industry,” he says.

“For example, a New Zealand consumer considering $32 a kg too expensive for porterhouse steak, then has the option of choosing lower-priced protein options such as rump steak or pork sirloin at approximately $20 per kg or a chicken breast at approximately $12 a kg. Consumers looking for less expensive options don’t necessarily jump straight to the cheapest protein and by offering a higher-priced chicken option such as an organic branded chicken breast stuffed with spinach and mushrooms you can capture the customer at a higher price point.”

The Rabobank report also identifies three opportunities to increase value growth in the poultry industry through productivity gains: the adoption of new technology, realising economies of scale and the relocation of industry facilities to centralised operations.

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