Trends & Prospects in the Broiler Industry - Joven …

1 1 Trends & Prospects IN THE Broiler INDUSTRYJOVEN P. DYSenior Vice PresidentBounty Agro Ventures, BROILER2 QUANTIFYING Broiler INPUTSQUANTIFYING Broiler INPUTSS ource: G. Butland, New million GP -US$ 200 -250 million350 million PS -US$ 850 -950 million 100 Million MT live bird >US$ 60 billion200 million MT feed -> US$ 40 billion130 million MT corn/wheat US$ 15 18 billion45 million ton SBM US$ 9 12 billionAnimal health products US$ 2 billion> 8 billion kms. transport for feed and birds aloneWORLD ANIMAL PROTEIN CONSUMPTION IN 2005020406080100120 Million MT2005103816364 PorkPoultryBeefEggsSource: FAOSTATA lthough there are no official figures yet for 2006, preliminaryUSDA estimates show almost very small increase in CAPITA CONSUMPTION OF MEAT IN SELECTED COUNTRIES, : USDA FAS, Livestock and Poultry, October, 2006 (f)2005 WORLD S TOP S TOP CONSUMERSP oultry Production & Consumption (in Million MT)Source.

2 USDA FAS, Livestock and Poultry, October, 2006 49595101 Canada685620755EU-256,470902803502,4542, 50020066,7376,791 Total, World11084 Argentina280240 Thailand365331 China2,5082,360US2,5502,739 Brazil20072005 WORLD S TOP EXPORTERS645600522EU 25470434480 Saudi5,1682343704007401,24020065,3375,06 3 Total, World237222HK430219 China424374 Mexico725748 Japan1,1501,190 Russia20072005 WORLD S TOP IMPORTERSIMPORTS & EXPORT (in 000 MT)Source: USDA FAS, Livestock and Poultry, October, 2006 AVIAN AVIAN INFLUENZAINFLUENZA5 PATH OF MIGRATORY BIRDSAVIAN INFLUENZAN ations with confirmed H5N1 casesSource: USDAN orth AmericaSouth AmericaAfricaAsia6 AVIAN INFLUENZA TIMELINE2003 JuneSE Asia: Outbreaks start but unreportedDecember Thailand: Zoo animals die.

3 Start of investigationDecember: deaths in poultryJanuary Vietnam, Japan, Thailand, Cambodia, LaosFebruaryIndonesia & ChinaJune/Julyrecurrence in China, Indonesia, Thailand and VietnamWAVE 1 AugustMalaysiaSeptemberKorea disease freeOctober Brussels: H5N1 in eagles from ThailandJanuary Malaysia declared disease freeWAVE 220042005 April China birds die in Qinghai LakeJuly Russia reports H5N1 August Kazakhstan and Mongolia report H5N1 OctoberTurkey, Romania & Croatia affectedDecember Ukraine and Kuwait reportFebruary Iraq, Nigeria, Azerbaijan, Bulgaria, Greece, Italy, Slovenia, Iran, Austria, Germany, Egypt, India, France, Hungary, Malaysia.

4 Slovakia, Bosnia, Georgia, NigerMarch Switzerland, Serbia, Poland, Albania, Cameroon, Myanmar, Denmark, Sweden, Afghanistan, Israel, Pakistan, Jordan, Czech RepublicApril Burkina Faso, UK2006 May Sudan, Cote d IvoireJuly SpainWAVE 3 Data from World Health OrganizationEFFECTS OF AI FELT WORLDWIDE ..Principal transmission is still between animals and between animals and humans; pandemic is feared and countries are taking steps to prevent thisEconomic and social costs felt only in poultry sectors of the affected countriesAround 200 people have died since 2003 due to exposure to animals with the H5N1 virusSource: Milan Brambhatt, WB, Conference of Avian Influenza in Humans, June 29, 20067 Economic and social costs felt only in poultry sectors of the affected countriesEFFECTS OF AI FELT WORLDWIDE.

5 East / Southeast Asian countries hit by AI have thriving economies except Thailand where slowdown was noted; 40% in drop in Exports of ThailandSource: Milan Brambhatt, WB, Conference of Avian Influenza in Humans, June 29, 2006 ECONOMIC COSTS OF AI ..Direct productions costs due to:losses on poultry due to disease and culling over 200 million poultry15-20% decline in stocks in Vietnam and Thailand (effects a decline in GDP)impact on poultry traders, feed mills (in EU, 40% decline in demand for poultry feeds), breedersadditional losses due to lower egg productionIndirect effects due to:shifts in market demands due to consumer fearstrade restrictions to limit spread of AISource: Milan Brambhatt, WB, Conference of Avian Influenza in Humans, June 29, 20068 ECONOMIC COSTS OF AI.

6 Prevention and control costspurchase of poultry vaccines and medicationhiring workers for culling and clean upset up of surveillance and diagnostic systemscompensation of poultry ownersCost to the community affected by AIunemploymentdecline in labor productivitycost of hospitalization and medical treatmenteffect on travel and tourism20% decline in tourism, transportation and key services = decline in 2% world GDP = $800 B/yearSource: Milan Brambhatt, WB, Conference of Avian Influenza in Humans, June 29, 2006 ASIAN POULTRY9 PRODUCTION(million metric tons) &OceanicLatinAmericaUSA &CanadaEuropeMiddleEast &AfricaPRODUCTION(million metric tons) &OceanicLatinAmericaUSA &CanadaEuropeMiddleEast &AfricaFuture Regional 45% 13% 26% 43% 17% Asia is by far the greatest opportunity for volume growth China mmt (38%) India mmt (154%) Latin America Brazil mmt (25%) Mexico mmt (34%) Europe Western Europe steady or declining Russia mmt (68%)Source.

7 Gordon ButlandPoultry Production in Southeast Asia has been growing consistently throughout the Systems in Selected South East Asian Countries, 200565%15%20%Vietnam10%20%70%Thailand90% 10%Lao < 1%< 1%CambodiaBackyardSmall CommercialLarge CommercialIntegratorCountryPHILIPPINE PHILIPPINE Broiler Broiler 11 CHICKEN PRODUCTION IN THE PHILIPPINESNATIVE -13%LAYERS -17%OTHERS -3% Broiler -67%COMMERCIAL 35%INTEGRATOR 35%KEY Industry PLAYERS(Ranked According to Production Volume)Foster6. Foster FoodsNone5. Universal s4. VitarichCorporationSwift3. Swift FoodsBounty Fresh2. Tyson / Bounty Agro VenturesMagnolia, Supermanok1.

8 San Miguel Pure FoodsBrandCompany12 Small is Beautiful Critical Q2nd Q3rd Q4th Q453473494482438 CHICKEN PRODUCTION IN THE PHILIPPINES, 02- 06 (BAI, PABI DATA)13 CHICKEN IMPORTS (in MT), 2002-200605,00010,00015,00020,00025,0003 0,00020022003200420052006In 2006, Industry players were given the chance to import leg quarters under a special importation agreement to alleviate short ACCESS VOLUMES (MAV)continued implementation of Minimum Access Volume (MAV) mechanism beyond June 30, 2005DA expected to maintain its final year MAV commitments until a new WTO agreement is reachedvolume under MAV (in-quota) shall continue to be exempt from special safeguards which has been in place since Year Volume: 216,940 MTCorn40%40%Frozen Chicken (Cuts)OUTINF inal Year Volume.

9 23,490 MTPoultry50%35%Corn100540%40%Frozen Chicken (Whole)0207 Tariff RatesProductHS Code143035404550556065707580859095 JFMAMJJASONDLiveDressed2006 COMPARATIVE LIVE & DRESSED CHICKEN PRICES68%14%10%3%3%2%Fish/SeafdPorkPoult ryPr MeatsBeefOthersPHILIPPINE ANIMAL PROTEIN CONSUMPTIONS ource: USDA FAS GAIN Report15 CONSUMPTION OF CHICKEN MEAT IN THE BUDGET SHARES FOR SELECTED as % of ExpensesOtherFruits, VegFats, OilsDairyFishMeatBreads, CerealsBev& TobaccoCountrySource: USDA FAS, 2006 Broiler Broiler PRODUCTIONPRODUCTION16 GRAND PARENT FARMSPARENT STOCK FARMSBROILER FARMSFEEDMILLSHATCHERIESANIMAL HEALTH GROUPQUALITY ASSURANCEPRODUCT DEVELOPMENTPROCESSING PLANTSSALES & MARKETINGINTEGRATED POULTRY PRODUCTIONTHE PRODUCTION CYCLETHE PRODUCTION CYCLEG rand ParentAt week 24, they start to lay until week 68 Growing period is from day 1 to week 23 Day old chicks from eggs that hatched are selected to get the hybrid male and female line for transferto the Parent stock farmsAt week 24.

10 They start to lay until week 68 Day old chicks from eggs that hatched are then transferred to the Contract Growing farmsGrowing period is from day 1 to week 23 BroilerDay old chicks become full grown broilers at an average of 35 daysProcessingHarvested broilers are brought to the dressing plant where they are processedHatcheryFeedmillTwo major facilities supportthe farm operations namelythe Hatchery and FeedmillKey support groups are :Animal NutritionDiagnostic LabAnimal HealthFirst egg laid GParent162 daysHatching period 21 daysFirst egg laid Parent 162 daysHatching period 21 daysDOC delivered to CG 366 daysDOC to Broiler 35 daysTotal Cycle 401 daysOr 1 year.