NASHVILLE – The US poultry industry is well positioned for 2024, as lower feed costs and positive consumption trends have improved the overall outlook for global poultry production, Christine McCracken, executive director, senior protein analyst at Rabobank, said in a presentation during the 2024 Annual Meat Conference, held in Nashville March 18-20.
The 2024 Power of Meat study found that 80% of US consumers say “meat eater” best describes how they eat, compared with respondents who identified as flexitarian (12%), vegan/vegetarian (7%) and pescatarian (1%).
And, in the United States, chicken sold the most in pounds, representing 38.3% of total pounds sold, although beef accounted for 53.6% of all fresh meat dollars, which was more than all other fresh proteins combined, according to the latest Power of Meat study.
US exports of poultry received a boost from the announcement that Colombia reopened its market to US poultry and egg product exports. Before the market was closed in August 2023 due to concerns over highly pathogenic avian influenza (HPAI) in the region, Colombia was the 10th largest market for US poultry, with exports reaching $105 million in 2022.
“Reopening this market was of critical importance to US poultry producers and to USDA,” said USDA Undersecretary for Marketing and Regulatory Programs Jenny Lester Moffitt. “Our team collaborated tirelessly with Colombian officials to demonstrate that US poultry and egg products do not pose an animal health risk and can be safely imported.”
Positive consumer attitudes toward meat and poultry in general, fewer outbreaks of HPAI and lower prices for feed have created an environment conducive to growth in sales of US poultry.
“It’s a nice change of pace after the last two years, which have been relatively difficult for the entire poultry industry for a number of reasons,” she said.
The global industry finally is getting slightly better growth in the top 20 markets for poultry excluding China. McCracken said she expects China’s poultry market to contract this year on softness in foodservice sales as the country grapples with economic challenges.
“But the top 20 markets are all expected to grow this year,” she said, “tied to this drop in feed costs and a little bit better consumer demand worldwide and again, coming out of some pretty devastating losses last year” such as the outbreaks of HPAI.
“That had a pretty devastating impact in a number of countries around the world this year,” she said. “And, and it really is a rebound through some of those challenges that we see some of this growth.”
However, McCracken noted some trends in the poultry industry that stakeholders should keep an eye on as the year progresses.
Cage-free vs productivity
For the egg industry, the cage-free movement and corporate commitments to switch to cage-free from conventional eggs could have an impact. Many egg producers are operating in the black after several financially challenging years. But the transition to cage-free egg production is expensive and those costs aren’t always offset with premiums in the market, she said.
“I think going forward, the thing to watch is this ongoing shift to cage free,” McCracken said. “You’ve got six states mandating cage free, but another four that are coming on online.
“But the reality is that this cliff is coming, and that potentially could have some impact. And there’s five more states talking about implementing cage free. We’ll see how that goes. So, a lot on the regulatory front that could impact egg supplies as we head into the coming year.”
On the broiler side, lower feed costs will be a tailwind for producers although productivity continues to be an issue.
“When the industry made some changes to address some quality issues a few years ago and at the same time moved away from antibiotics and ionophores, we took some of this productivity out of the supply,” McCracken explained. “We’re now hitting record lows for this time of year — we’re hitting 79% hatchability here this last week. And that normally, historically was running 82%, 83%. So that’s a pretty big hit in performance, and I think that’s a big part of why we’ve seen a drop in production.”
Another issue poultry producers face is the recent renegotiation of the Packers and Stockyards Act, “which essentially just reopens all those borough contracts in an effort to improve transparency” McCracken said.
Avoiding HPAI
Avian influenza is adding to the costs of doing business in the poultry industry. Recovering from an outbreak is a major constraint on producers because not every country has a support program in place in the event of an outbreak, McCracken said. Building, labor and energy costs in some parts of the world are all higher and at the same time, interest rates are putting a lot of pressure on the industry. Additionally, insurance adds to producer expenses.
“So, across-the-board costs are higher, so we’re looking for a 12% improvement this year,” she said. “And that's environment for why maybe our industry isn't growing quite as fast as you might expect. The other one is this uncertainty tied to high-path influenza. I talked about the outbreaks around the world, and we’ve been fortunate here in the US … that we haven’t had big increases in outbreaks this year so far, but it’s still early.”
But so far, the season has been good with a few outbreaks in California and broilers, and more recently, some turkeys in South Dakota and North Carolina with fairly modest losses.
“The industry has done a good job trying to set more chicks, but were just not keeping up,” McCracken said. “Hatchability continues to be an issue on a weekly basis, and I think it’s going to be a slow run to get better because these birds are harder to manage, this new breed, and it’s going to take some time to figure that out.”
McCracken expects ready-to-cook production for the year to move higher from the first quarter of 2024. But the trend will be tied to adjustments in bird weights.
“Now, things could get a little spicier here as we head through the year,” she said. “I mean, demand for chicken is still pretty good and I think it fits nicely in the consumer diet given where we are in the economy.
“But things don’t indicate that they're going to take off anytime soon. I do think we’re going have a steady seasonal increase in prices as we head into the summer months and get a little bit stronger demand.”