Growth in U.S. broiler exports is expected to continue during 2013 to 2022, but more slowly than the last two decades, according to “Assessing the Growth of U.S. Broiler and Poultry Meat Exports,” a report from USDA’s Economic Research Service (ERS). Exports expanded by 30 percent during the 1990s and gained another 38 percent during the 2000s, the report noted.
Exports tripled in the 1990s largely because of shipments to Russia. With feed costs rising worldwide, the efficiency of broilers, relative to cattle and hogs, at converting feed grains (chiefly corn and soybean meal) into meat protein is a key factor driving the expansion of broiler production. Also, fewer widespread religious restrictions exist on poultry consumption than on consumption of other meats, offering many potential markets for broiler meat, the report said.
Factors that will affect the pace of growth in both U.S. domestic production and exports are the strength of the domestic economy and world economic growth; the continued concentration of population growth in urban centers; and the value of the U.S. dollar relative to currencies in importing countries. More broiler meat, particularly broiler parts, to new importing countries, are likely with much of the expansion occurring in price-sensitive developing country markets. The United States and Brazil, both with a combination of adequate land to produce feed, large internal markets, and strong processing sectors, are expected to remain the major broiler producers and exporters. However, Brazil, with its cost advantage, is projected to account for a rising share of the world market, the analysts stated.
Economic growth in a number of importing countries is expected to rise, increasing the demand for broiler meat. Broiler exports are expected to expand over the next several years as global demand for inexpensive proteins rises, especially from developing countries where rising incomes are stimulating increased meat consumption. Another factor expected to increase the demand for broiler products is the U.S. dollar’s relative weakness.
U.S. poultry exporters actively sought new markets or expanded shipments to existing markets in Africa and the former Soviet Union (other than Russia) to replace shipments that had gone to its two previously largest markets– Russia and China. The Russian market is likely to decline as long as the Russian government continues to protect its domestic poultry industry by restricting imports. Exports to China have been temporarily limited by anti-dumping duties, but rising incomes and increasing production costs mean that China’s robust demand for certain cuts of broiler meat is not likely to be satisfied solely by domestic supplies, and exports to the China and Hong Kong region may exceed expectations. U.S. exports may be aided by the relative weakness of the dollar, but the United States will likely face strong competition from other exporters, particularly Brazil.
From 1997 through 2012, the relative importance of some export destinations has changed considerably. Seven of the top foreign markets for U.S. broilers, on average during 1997-2012, were Mexico, Russia, Angola, Canada, Cuba, Hong Kong, and China. While sales of U.S. broilers to most of these larger markets rose during this period, U.S. exports to some countries fell. For example, Russia was the leading destination for U.S. broiler exports for most of the past decade, but exports to Russia dropped sharply after 2008. In 2012, 17 percent of U.S. broiler meat exports went to Mexico, while almost 8 percent were shipped to Russia, 5.5 percent to Angola, 5.2 percent to Canada, and less than 5 percent to each of the remaining major markets.
Several countries that were once minor destinations for U.S. broiler exports have grown in importance as trade partners. For example, exports to Angola rose to 181,900 metric tons in 2012 from 3,000 in 1997. In 2002, Cuba became a major broiler market. From 2002 to 2012, the U.S broiler exports to Cuba increased from 52,300 tons to 150,900 tons.
Economic growth in foreign countries, particularly middle- and lower-income countries with rising demand for animal proteins, has been an important driver of global consumer demand for broiler meat. Increases in meat consumption are associated with population growth, changes in per capita income, urbanization, and other demographic factors. Among the major export markets for U.S. broilers, Angola and China have had sizable growth in broiler meat imports, fueled, at least in part, by strong growth in gross domestic product (GDP). Of the major broiler-meat export markets, Angola and Mexico have had the highest percent of population growth, which (along with strong-to-moderate growth in GDP) boosted their demand for broiler products. As incomes in many of these countries grew, many consumers increased the amount of meat in their diets. For these consumers, chicken meat was usually less expensive than most cuts of beef or pork.
In many countries, growth in income facilitated higher broiler meat imports and per capita disappearance. Income growth accompanied population growth in most emerging markets for U.S. broiler meat exports. Russia is an exception, with negative population growth since 1997, but rising per capita incomes have contributed to stronger Russian demand for broiler meat. Russian domestic investment, trade policies, and the 2009 economic crisis, however, have contributed to volatility in U.S. broiler meat exports to Russia.
In emerging markets like China and Angola, more people have migrated from rural to urban areas. Higher urban populations and rising poultry consumption at restaurants prompted a higher demand for more processed broilers, which, in turn, spurred import growth. For example, in China, a much higher share of chicken in urban areas is consumed in the form of chicken parts rather than whole chickens.
In addition to changes in foreign income and population, consumer preferences for various broiler parts have been evolving over time. The U.S. broiler exports category known as “other parts,” which includes the breast, backbone, and neck, accounted for 51 percent of the quantity of U.S. broiler meat exports in 1997. Broiler leg quarters were the second largest cut exported, accounting for 27 percent of the total. Broiler feet consisted of 6 percent of the total broiler meat exported, while legs accounted for only 4 percent.
Between 1997 and 2012, the composition of U.S. broiler meat exports changed substantially, becoming more complementary to U.S. domestic preferences. Leg quarters in 2012 accounted for 50 percent of total U.S. broiler meat exports, compared with only 27 percent in 1997. In 2012, fresh and other parts placed second, while broiler feet moved up to third place from the shares recorded in 1997. Over 16 years, the amount of fresh parts exported grew by 225 percent.
The change in the composition of U.S. broiler meat exports reflects the different preferences of consumers in foreign markets. Canada has a high per capita income, and its consumers strongly prefer breast meat, similar to Americans. In contrast, Mexico and Angola do not strongly prefer breast meat and import mostly leg-quarters, which is an attractive alternative to buying a whole bird for many consumers. From 1997 to 2012, the share of wings exported remained the same, while leg-quarter exports rose, partly because overseas consumers were willing to outbid Americans for that product.
A number of major importing countries have tried somewhat successfully to limit their imports of U.S. broilers by imposing certain requirements concerning animal diseases, processing methods, and animal welfare that may surpass the recommendations of the international organizations that set standards for animal health and food safety.
Animal Diseases. Since exports account for up to 20 percent of total U.S. broiler meat production, the ability to export is critical to the industry, especially for dark meat. Two of the more notable diseases affecting global poultry trade are Newcastle’s disease and the various strains of avian influenza (AI), especially highly pathogenic AI (HPAI). In some situations, importing countries responded to poultry diseases in exporting countries by limiting or banning imports. Therfore, international animal health standards recognize the importance of protecting poultry from the introduction of diseases and pathogens and have science-based standards that support safe trade. The Food and Agriculture Organization (FAO) of the United Nations has indicated that the global impact of AI could shift as much as 10 percent of consumer preferences away from poultry toward other meats.
Processing Issues. Processing standards and pathogens levels are another set of food safety issues that can result in restrictions on poultry trade. While a number of processing standards exist throughout the world, the United States supports Codex Alimentarius and its mandate to protect consumer health; ensure fair practices in the food trade; and observe the rules and procedures Codex has established in carrying out this work. Whereas, conflicting standards between exporting and importing countries may result in unnecessary trade restrictions. Codex standards, which are based on science, serve as an unbiased reference point.
One example of a dispute is the lack of poultry trade between the United States and the European Union. The two parties have not been able to agree on a system that would meet the processing standards in place in each area. USDA’s inspection program emphasizes the wholesomeness of the end product with the use of various pathogen-reduction treatments and the use of hazard analysis and critical control points (HACCP) to achieve a preferred end product. In contrast, the European Union’s inspection program, like that of many other countries, takes a more prescriptive approach and mandates a specific set of steps when slaughtering and processing poultry. Also, several areas or countries have specific methods that must be used when broilers are slaughtered and processed. Meeting these conditions are requirements for shipments to areas or countries where such standards are enforced.
Animal Welfare. Countries vary in their standards regulating the conditions under which birds must be grown, transported, and slaughtered. Animal welfare-related issues are expected to become an increasingly important concern of some trading partners in the coming years, and this could have some future trade-related ramifications for U.S. poultry and poultry product exports.
Product Cost. Because worldwide broiler meat exports are dominated by two low-cost producing countries, the United States and Brazil, broiler producers in some importing countries are not price competitive with major exporters. The cost of producing a broiler differs from country to country, depending on the price of feed, labor, birds, technology, and production facilities as well as the ability of producers to achieve economies of scale. For broiler production, feed is the largest single production cost. One reason that the United States and Brazil are major producers and exporters is their position as large feed grain producers, which allows their broiler industries access to feed at prices and quantities unavailable to many producers in importing countries.
The full report is available here.
