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‘18 months of price pressure’ for poultrymeat markets

Chicken on a slaughterline

HALF A MILLION tonnes of poultrymeat is in freezer storage across Europe, prompting predictions that there will be price pressure on markets until the Autumn of 2021.

With coronavirus closing the foodservice sector, supply chains have been severely disrupted.

In the UK market, 20% of poultry consumption is “out-of-home”, and half of that is imported, according to Philip Wilkinson, an executive director at 2 Sisters and president-elect of Avec.

He told a session at Alltech’s One virtual conference that some of the remaining 10% of domestic production had been diverted into retail, where demand had jumped.

See also: The cost and returns of slower-growing broilers

But doing so was not straightforward, he explained, as companies serving the out-of-home market are set up to produce birds to different weights, process cuts differently and do not necessarily have the right certification or packaging readily available.

As a result, stores across Europe were full of poultrymeat that was destined for foodservice outlets.

Some 500,000t is now in freezers, 200,000t of which was in Poland alone, Mr Wilkinson said.

Volumes

The result would be a prolonged market impact, he suggested. “At some stage, when we come out of lockdown, it’s going to take some time for that volume to filter out through the market.

“I think it will be September or October 2021 before those stocks come through, so this is going to be an 18-month issue, not an 18-week issue.

“When everything is unlocked, it will not be the same as it was, there will be a lag factor.”

Advantage

One advantage that the poultry sector has, when compared with dairy or pork, is that companies can place fewer chicks and reduce total supply in just eight-to-nine weeks, he added.

“We’re in a fortunate position where we can take remedial action. That action costs companies serious amounts of money – but we are able to react,” he said.

Mr Wilkinson also said that he expected that, in the medium term, the poultrymeat sector would consolidate further because of coronavirus.