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Poultry industry leaders outline challenges beyond high feed prices
Story Date: 10/15/2012
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Source: Rita Jane Gabbett, MEATINGPLACE, 10/12/12
While high corn and soybean meal prices and frustration with the Renewable Fuels Standard dominated conversations at the National Chicken Council conference here this week, a panel of industry leaders also pointed to access to export markets, industry consolidation and access to labor as challenges ahead.
Exports
OK Foods CEO Paul Fox, Fieldale Farms President Tom Hensley and Case Foods Vice Chairman and CFO Michael Popowycz told attendees that access to India topped their list of export markets U.S. chicken needs access to, but is currently shut out of by tariff and non-tariff barriers.
“We have got to be able to get into that market,” said Popowycz, noting the middle class in India has tripled in recent years. Population growth there is also occurring at a more rapid pace than in China.
The panelists agreed Russia would continue its trajectory to poultry self-sufficiency, shrinking that market for U.S. poultry. They pointed to Mexico as a critical market, even as a dispute over Mexican tomato exports is causing concern about how it might impact U.S. poultry exports to Mexico.
Panel moderator Clayton Yeutter, a former U.S. Trade Representative and Agriculture Secretary, noted the importance of Canada joining the Trans-Pacific Partnership, given that poultry trade is not addressed in the Free Trade Agreement between Canada and the United States. Hensley agreed, noting high Canadian tariffs on U.S. breast meat exports to Canada.
Hensley also predicted that five years from now one-third of U.S. poultry would be exported.
Price volatility
The panelists said that even more difficult than escalating feed prices for poultry companies is price volatility.
“This is not a linear process,” Fox said. “If you knew what prices would be, even if they were going up, you could plan for that.” Other panelists agreed that wide corn and soybean meal price swings make pricing feed sometimes more a game of chance than skill.
Consolidation
The panelists agreed the poultry industry is headed into a very difficult fourth quarter financially and predicted more industry consolidation next year and beyond.
Popowycz predicted a couple more poultry companies would likely go up for sale in the next couple of years.
Labor
Asked to name the top issues facing the industry today, Hensley pointed to overregulation and difficulty in hiring and keeping a strong labor force.
He lamented the lack of available Hispanic workers that in the past proved to be good employees with a strong work ethic and the ability to succeed in jobs that demand physical strength and stamina.
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