How COVID-19 Will Reshape Global Poultry Sector For Good
Tuesday, 23 February 2021
According to a new Rabobank report, authored by senior animal protein analyst Nan-Dirk Mulder, the volatility experienced during 2020 is likely to continue for quite some time, and in the coming years is likely to translate into greater consolidation between companies, more internationalisation, and “accelerated capital investments” within individual poultry businesses.
The impact on the global poultry industry of COVID-19 can be split into three stages, according to the report.
The first stage, during 2020, was the main phase of disruption. There was significant disruption in markets, trade, and supply chains, with bigger differences in performance between companies than ever seen before. On average there was downward pressure on poultry companies’ margins.
The second stage, which will play out during 2021 is the road to recovery, which is likely to be rocky. “Ups and downs of the pandemic in the first half of the year will lead to ongoing impacts on channels, with peaking retail and online demand and low foodservice demand, especially during lockdowns,” says Mulder. Conditions will start to gradually recover when COVID-19 becomes a bit more controlled in the second half of 2021 and into 2022, as vaccinations become more widely used. This will all happen with a background of high and volatile feed costs, further complicating the picture for individual businesses.
This will be a big challenge for any producer, as it is difficult to fine-tune production to constantly changing market conditions. According to Mulder, consolidation between poultry businesses around the world is expected to gradually accelerate this year. Countries expected to be most affected are those where the poultry sector is currently unconsolidated, including Poland, the Netherlands, Brazil, Thailand and Russia.
Stage three, dubbed “the aftermath” will begin in 2022, and Mulder predicts a bullish picture. There will be strong, ongoing demand for poultry around the world, despite the gradual recovery of pork markets in Asian countries currently affected by African Swine Fever and growth in demand for alternative proteins.
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