❱❱Editor’sComment BY GARY THORNTON
Nimble poultry to gain share
oultry is the nimblest animal
protein, and having adjusted
more quickly than beef and pork
to the slow-growth economy
and biofuels era grain prices, it is now
positioned to eat into the market share
of beef and pork.
The next 12 months is poultry’s
opportunity to capture market share
due to the diversion of corn to ethanol
production. Both industries have suffered
signi;cant economic losses in the past
two years as production costs exceeded
revenues, and beef and pork production
remains below 2006-07 levels.
Using 2006-07 as the baseline, Hurt
projects that the domestic per capita
availability of red meats and turkey
P
With the animal proteins sector
in economic disarray, the U.S.
poultry industry is positioned to profitably take
market share from beef and pork.
won’t be able to return to producing 220
pounds per capita of
meat and poultry.
The supply can be increased to 210 or 212
or 214 pounds but not
much more in the biofuels era,” he said.
from red meat competitors – especially
beef – before those competitors swing
to pro;tability and increase production,
says Christopher Hurt, professor of agricultural economics, Purdue University.
Opportunity for chicken
“This is a long-term opportunity for
the chicken industry,” Dr. Hurt said in
a presentation at the Chicken Marketing
Seminar. “The chicken industry is in
position to quickly increase production
and make money while the beef supply
remains down.”
“Per capita supplies of animal pro-
teins are going to be down for the next
two years,” he said.
will be down in 2010 – beef - 2.4%, pork
- 4.8% and turkey - 2.0%. Chicken availability, on the other hand, is expected
to be up 6.8%.
There’s no sign that the beef supply
is going to begin to rise in the next year,
and any increases in the pork supply
won’t begin to reach the market until
the fourth quarter of 2011.
Biofuels policy to change diets
worldwide
While the corn/feed price scenario of
2008 may not be repeated in the immediate future, U.S. policies favoring the use
of corn for biofuel production over food
production continue to shape the economic
landscape for animal proteins.
“U.S. biofuels policy is going to
change the composition of diets in the
U. S. and around the world. We will have
to look back later to know for sure, but
we may be out of the 40-year period of
overall increasing per capita consumption of animal proteins in the U.S.,”
Hurt said.
Per capita availability of meat
and poultry
Poultry’s opportunity comes as the
pork and beef industries continue to reel
from the aftershocks of the recession in
2008-09 and the run-up in feed prices
Corn prices limit profitable
meat production
Hurt said corn prices will determine
the limits to pro;table production. He
predicts that corn prices will range
between $3.50 and $4.00 a bushel on
average over the next several years.
“If corn prices stay under $4 a bushel,
there could be a modest expansion of
red meats on a pro;table basis. But if
red meat supply expands more than 2%
to 3% over the next several years, that
would put pro;tability in jeopardy.
“The animal proteins industries
Mature U.S. market saddled
with biofuels
The U.S. market for animal proteins is
a mature market and is not going to show
much growth in the future – especially
given corn/feed prices in the biofuels era,
Hurt concluded. What’s more, U.S. meat
and poultry producers face a challenging
array of regulatory issues.
“The U.S. animal proteins industries
have made most of their adjustments to
the big economic shocks of 2008-09.
Now, while there’s a big domestic market, the future growth is in exports,” he
said. ■
