27 February 2015 | Online since 2003



26 November 2012|Finance,News,Poultry

High feed prices continue to affect poultry margins


The global poultry industry continues to face the challenge of high feed costs, which is putting margins under pressure in many parts of the world, according to Rabobank's latest quarterly poultry report.

Profitability swings are an ongoing problem for the industry, which saw similarly sharp increases in feed costs in 2008 and 2010. In developed countries in particular, the industry lacks adequate power to pass on feed cost increases.

Key factors driving this adverse situation are oversupply, government restrictions regarding plant closures, fragmented industries, inflexible supply chains and pricing models in the value chain.

Commenting on the outlook for the poultry industry, Rabobank analyst Nan-Dirk Mulder said: "The first quarter of 2013 is likely to be challenging as higher feed input costs move through the flocks."

"Beyond that, returns will depend on industry discipline in keeping production sufficiently moderated to get prices higher and offset increasing costs. Weak global performance is urging industry players to rationalise supply base, and non-strategic vehicles are being divested."

"The most challenged poultry industries are currently in the US, the EU, Thailand and South Africa, though companies in Russia and Brazil are performing relatively well."

"The US has only recently started making supply cuts, and this is also the case for the EU. South Africa is currently flooded with broiler import volumes from the EU, with sharply falling local prices."

"Thai production expansion in the last two years has been too fast to be in balance with current market demand. This has resulted in large oversupply in the domestic Thai market and declining revenues in concert with increased feed costs," Mulder added.

The EU is an example of a region that has seen a structural reduction in margins.

Recent levels have fallen from historic averages of 6%-7% to 4%-5% and even temporarily lower during some of the spikes in compound feed prices that have been seen this year.

In the US, we've even seen negative EBITDA margins in the industry in times of high feed prices but current margins are slightly higher, although below its historic level. Supply reductions have paid off here, but not yet enough.

Recent industry activity; the sale of a Perdue processing plant to Wayne Farms in the US, a merger between Avarama, and BR Frango and JBS' acquisition of Agroveneto in Brazil.

Download



Comments


No comments posted yet. Be the first to post a comment

To post comment without approval login or register

Display name

Please enter your name

Email (optional)
Comment

Please enter your comment

Post Comment

Your comment submitted successfully.Please wait for admin approval.

Some error on your process.Please try one more time.



Jobs


11 February 2015
Admin Apprentice to MSk Services
You can come to us for apprenticeship training in a wide range of occupations including– Agriculture, Apparel, Arboriculture,...

18 February 2015
Field Sales Executive
Tasks on office days include cold calling (100 + dials) new prospects to fill your dairy, putting on new orders from the prev...

25 February 2015
HGV1 Drivers
An understanding of farm work, as well as experience transporting livestock, would be an advantage. This role is responsible ...

19 February 2015
Telesales Supervisor
Passion for food and dairy. “Medina Dairy - a successful and progressive, family-run, business. Medina Dairy operates across ...

26 February 2015
Farm Shop Supervisor
You will be tasked with managing a team and supporting with the smooth running of a farm shop. Rurally located, the farm has ...




Top stories you may have missed
2 February 2015 | Arable
Is EU membership damaging UK farming?

Is EU membership damaging UK farming?

Membership of the EU is damaging the British farming industry, according to...


29 January 2015 | Machinery and Equipment
Drones 'rapidly changing' agriculture

Drones 'rapidly changing' agriculture

BASIS has launched an accreditation for pilots of Unmanned Aerial Systems (...


23 January 2015 | Arable
UK wheat yields have potential to double

UK wheat yields have potential to double

UK wheat yields have theoretical potential to more than double over the nex...


23 January 2015 | Machinery and Equipment
Crowds flock to LAMMA 2015

Crowds flock to LAMMA 2015

Britain’s farmers flocked to Peterborough for the first day of LAMMA’15 to ...


22 January 2015 | Cattle
Don't blame supermarkets for milk crisis...

Don't blame supermarkets for milk crisis...

The crisis in the dairy industry is not the fault of supermarkets, accordin...


16 January 2015 | CLA
Families affected by HS2 face 'major wor...

Families affected by HS2 face 'major wor...

Transport Minister Baroness Kramer visited three rural businesses in Cheshi...


16 January 2015 | Machinery and Equipment
John Deere unveil new 6R tractor range

John Deere unveil new 6R tractor range

Spearheading the John Deere range of mid-size tractors from Mannheim, the n...


14 January 2015 | Animal Health
Monthly TB checks more effective than ba...

Monthly TB checks more effective than ba...

Regular testing for bovine TB could significantly reduce the number of infe...


12 January 2015 | News
Government regulations hampering UK agri...

Government regulations hampering UK agri...

Single-issue policy-making threatens to hamper, not help, the progress of U...


8 January 2015 | Cattle
2015: The year ahead for the beef market

2015: The year ahead for the beef market

2014 has been a “rocky old year” for the beef industry but better prices ar...