Poultry meat
Outlook for 2003/04 to 2006/07
Production
Latest situation and outlook
New Zealand's poultry meat production is estimated to rise by 7 percent to 153,000 tonnes dressed weight1 for the year ending September 2004. Driving this growth has been a rising per capita consumption of poultry meat and the competitive pricing of chicken products compared with other meat retail prices.
Poultry meat production is forecast to grow at 6 percent per year during the outlook period, reaching 180 000 tonnes dressed weight by 2007. Current trends suggest that demand for low-fat, white meat will continue to rise. Another factor expected to further push up the per capita consumption of poultry during the outlook is the continued competitive pricing of chicken products.
A third factor projected to increase the supply of chicken meat is the fast food contract switch in the poultry meat industry. On 30 June 2004, Restaurant Brands Ltd (supplier of chicken to New Zealand's KFC, Pizza Hut and Starbucks outlets) is switching provider. The switch is expected to increase chicken meat production in the foreseeable future as the previous provider is not expected to significantly lower production. This may lead to a temporary reduction in retail prices.
Significant changes from SONZAF 2003, and reasons for the changes
The estimate of total production for the year ending September 2004 is now expected to increase by 7 percent on the previous year, instead of 5.8 percent forecast last year. During the outlook poultry production is now estimated to grow at 6 percent per year, compared to 5 percent forecast last year. These changes were made because the supply of chicken meat is expected to further increase from 30 June 2004 when the fast food contract switches.
The New Zealand market, exports and product prices
Latest situation and outlook
The New Zealand poultry meat industry is primarily concerned with supplying the domestic market.
Consumption of poultry meat in New Zealand has grown rapidly in recent years reflecting a worldwide trend. Increasingly, New Zealanders try to keep their bodies trim and fit, power-walking, going to gyms - and watching their diets. Chicken, in particular, is low in fat and lends itself well to low-fat diets and low-calorie meals. For the year ended September 2004, each New Zealander is estimated to consume, on average, 37.7 kilograms of poultry meat, up 2.0 kilograms on the previous year. The per capita consumption of poultry meat is expected to increase by 1.9 kilograms per year throughout the outlook period and then stabilise.
The range of value-added poultry products is expected to keep expanding. More innovation by way of poultry convenience foods, is likely to bring about further increases in the per capita consumption of chicken meat in New Zealand. The oligopolistic and vertically integrated structure of the poultry industry allows it to compete strongly on price: another reason for poultry increasing its share of domestic meat consumption.
Since September 2003, the quarterly poultry retail price index has been falling. Over the outlook, the stronger NZD is expected to lower the price of imported pork and retail prices of meats competing with poultry such as beef and lamb. Poultry prices are forecast to soften slightly during the outlook to clear the expected increase in the supply of chicken meat after June 2004. However, poultry prices are not expected to deteriorate significantly during the outlook as they are currently lower than beef and lamb retail prices.
Significant changes from SONZAF 2003, and reasons for the changes
Slightly softer consumer prices for poultry meat than those published in December 2003, are now expected during the outlook to 2007. The forecast deterioration is expected to clear the supply of chicken meat when the fast food contract provider switch is completed on 30 June 2004.
Producer prices
Latest situation and outlook
For the year ended September 2004, the producer price2 for poultry meat is estimated at $1.53 per kilogram of live weight, down 2 percent on the previous year. The processors use grow-out farms for rearing chickens and the average cost of this finishing service is estimated to fall by 6 percent to 50 cents per bird for the year ending September 2004.
For the outlook from 2003/04 to 2006/07, the price to the producer is projected to recover in 2005 and remain stable at around $1.60 per kilogram of liveweight poultry meat. Additionally, the stronger value of the NZD is expected to contain the price of feed grain and weaken retail meat prices during the outlook period, limiting any increase in producer prices.
Significant changes from SONZAF 2003, and reasons for the changes
The expected increase in the production of poultry meat may lead to a temporary fall in the producer price in the second half of 2004 with the price recovering to a similar level in 2005. Following this the price is expected to grow more slowly than forecast in SONZAF 2003, also due to the provider switch.
Table 11: Poultry meat situation and outlook
| September year | Units | 2002 | 2003 | 2004e | 2005f | 2006z | 2007z |
|---|---|---|---|---|---|---|---|
| Retail price1 | $/kg | 6.46 | 6.08 | 6.00 | 5.96 | 5.96 | 5.92 |
| Producer price (derived)2 | $/kg | 1.43 | 1.57 | 1.53 | 1.6 | 1.61 | 1.62 |
| Production (dressed weight)3 | 000t | 135 | 143 | 153 | 162 | 171 | 180 |
Sources: Statistics New Zealand, Poultry Industry Association of New Zealand and MAF
1Weighted average of fresh chicken pieces and frozen whole chicken (1.35-1.5 kg).
2Live weight poultry price includes the contract fee received by growers for rearing chicken.
3Production includes chickens, roasting fowls, ducks and turkeys.
Figures may not add or reconcile due to rounding.
1 Dressed weight: the weight of a chicken with the head, feathers and viscera removed, i.e., in a state ready for packing.
2 Price for live weight poultry includes the contract fee received by growers for rearing chickens.
Contact for Enquiries
Monitoring and Evaluation
PO Box 2526
Wellington
New Zealand
