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Ukrainian Grain & Oilseed Market

Ukrainian Grain&Oilseed Market

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Argentina forecasts 2021 chicken meat production up 2% at 2.23 MMT

30.09.2020 17:45 "Agro Perspectiva" (Kyiv) — Following are selected highlights from a report issued by a U. S. Department of Agriculture attache in The Buenos Aires (Argentina), Post forecasts 2021 chicken meat production up 2% at 2.23 million metric tons (MMT). Poultry producers anticipate only slightly higher domestic and export demand. Difficult macroeconomic conditions in Argentina and tight financing conditions for facility renovation and improvement further restrict expected productivity growth. No major investments in increased capacity are planned as industry and government contacts report that the industry could produce up to 10% more chicken meat on the current production base if needed.

Replenished feed stocks from a robust corn and soybean harvest in 2020 and increased export taxes on oilseeds imposed in the past year provide competitive benefits for Argentine poultry producers. Corn, wheat, and barley currently face export taxes of 12%, with the potential to rise to 15%. Soybeans are taxed at 33%. Even before other costs, like transportation and storage, Argentine farmers receive a price that is 12%-33% percent lower than their competitors for any

grain and oilseed bound for export. In this distorted market, poultry producers can still pay a discounted price if it is marginally better than the price offered by exporters and thus lower their feed costs substantially relative to producers in countries without such distortions. Nevertheless poultry exports face a 9% export tax, and poultry industry contacts report that high labor and utility costs (principally electricity), as well as value-added taxes, continue to constrain

profitability. These factors have undercut Argentine producer’s competitiveness relative to regional competitors and moderated export growth despite currency movements that should have bolstered exports.

Broilers are produced by a sector dominated by domestic, privately-held enterprises. More than 80 percent of the country’s chicken meat production is processed in 54 federallyinspected plants. The remaining volume is produced at 39 additional plants that are monitored and restricted by provincial authorities for domestic sale only, with a small amount of on-farm and backyard production. Commercial broilers are slaughtered at 49–51 days at a carcass weight between 2.2 — 2.4 kilograms (kg).

2020

2020 production forecast is revised down to 2.195 MMT, representing a 0.87% percent increase from 2018. Industry sources report that they are ready to increase production, but since the domestic market demand is already being met, additional production without a commiserate increase in exports could lower prices. Due to COVID-19, large poultry companies have altered their operations so that plants can operate with 20 percent fewer personnel on the plant floor at any one time, while still maintaining production.

2019

2019 production is revised up to 2.176 million tons based on updated government and industry estimates.

Consumption:

Post forecasts 2021 domestic consumption of chicken meat up by 2 percent to 2.059 MMT, increasing per capita consumption to 45.8 kg. The OECD predicts that

Argentina will emerge from three years of recession in 2021 with a 3.5% growth in

GDP. In addition to a rising population, a growing economy will spur increased

demand for all food products, and chicken continues to grow in popularity, partially

because of perceived health benefits.

Despite the difficult economic situation, there has been less protein switching than

might otherwise be expected. Consumers have continued to consume large quantities of beef, albeit with some opting for cheaper cuts. Post’s annual estimated per capita protein intake in Argentina currently is 52.3 kg of beef, 45.8 kg of poultry, 14.5 kg of pork, 7 kg of aquatic products and 1.5 kg of lamb.

2020 poultry meat consumption forecast is revised down slightly to 2.04 MMT, up

0.94% from 2019. Poultry demand surged in the last week of March and during April as Argentina imposed strict lockdowns in an effort to contain the spread of COVID19. That demand subsided as consumers stocked freezers and adjusted to changing patterns of food consumption and were reassured by the continued availability of food under quarantine conditions.

Whole broilers represent 70 percent of domestic chicken meat consumption.

Industry contacts report that further processed value-added products, such as pre-cooked meals, frozen chicken meals, chicken nuggets and chicken burgers, represent market sector growth opportunities.

Agro Perspectiva

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30.09.2020

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