Global Market Trends and Challenges

Gary Millar, International Business Development Manager (Asia)

Northern Ireland Poultry Industry Conference2nd November 2017

Global Market Trends & Challenges:

Global Market Production & Consumption Trends

Evolution of Global Farm Structure

Global Market Trade

Global Market Developments & Challenges

EU 28 Egg Consumption 2000-2016

11

11

12

12

13

13

14

14

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014e 2015f 2016f

KG

's

00

0's

MT

Production Consumption Per Capita Consumption

EU Egg consumption

recovery since 2012

Global Production

rising by 2-2.5% per year from 2013 - 2015

EU Consumption

13kg per capita 2015

Source: Watt Global Media 2016

Global Meat Consumption Projections by type 2014-2026

33.9

34.0

34.1

34.2

34.3

34.4

34.5

34.6

34.7

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

2014-16 2018 2020 2022 2024 2026

Kgs

/per

son

Kt'

s

Beef &Veal Pigmeat Poultry Meat Sheep Meat Per Capita Consumption

Source: OECD 2017

+11.5% by 2026

Poultry Most

Consumed 2017

USA21%

Brasil15%

China12%

EU13%

Other 39%

PRODUCTION

USA18%

China13%

EU12%

Brasil9%

Other48%

CONSUMPTION

Source: AVEC Annual Report 2017; USDA 2017

Total 91,278 (1000 mt’s)

Total 88,135 (1000 mt’s)

Annual % Production Growth

2014 2015 2016 2017 2018

2.7 2.6 0.0 1.2 1.2

Annual % Consumption Growth

2014 2015 2016 2017 2018

2.7 2.5 0.0 0.9 1.1

World Broiler Meat Production & Consumption 2017

Chicken Meat Consumption in Select Countries 2010 to 2016

Source: AVEC 2017; ABARES 2017

0102030405060

Au

stria

France

Germ

any

Italy

Neth

erland

s

Po

rtugal

Un

ited K

ingd

om

Arge

ntin

a

Au

stralia

Brasil

Ch

ina

Ind

ia

Iran

Japan

Mexico

Sou

th A

frica

UA

E

USA

Kg'

s/ca

pit

a/ye

ar

UK23.2KG’s

Ireland30.4KG’s*

Australia46.0KG’s

* 2014 AVEC

Source: ENSIA 2015, https://ensia.carto.com/viz/23cd092c-83ce-11e5-8841-0ecd1babdde5/public_map

Projected Change in Poultry Consumption 2014 - 2024

China -11.4kg +23.8%

Indonesia -6.3kg +15.8%

India – 1.8kgs +20.1%

Tanzania –1.0kg +21.2%

Vietnam –12.7kg +36.9%

Ukraine – 23.4kg +28.7%

USA -44.5kg +10.8%

Colombia -22kgs +23.8%

Brasil – 38.7kgs+9.3%

EU – 21.6kg+7.1%

Countries with the greatest share of additional poultry production

2025 vs. 2013-15

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5

Vietnam

Pakistan

Argentina

Indonesia

Russia

India

Mexico

European Union

China

United States

Brazil

Poultry (x 1 million metric tons, rtc or cwe)Source: Watt Global Media 2016

Brasil, USA and China continue

to dominate

Poultry Numbers in UK and N. Ireland 1971-2016 (millions)

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

5.0

7.0

9.0

11.0

13.0

15.0

17.0

19.0

21.0

23.0

19

71

19

72

19

73

19

74

19

75

19

76

19

77

19

78

19

79

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

2

00

9(a

)

20

10

20

11

20

12

20

13

20

14

20

15

20

16

UK

Po

ult

ry N

um

ber

s

N.I

Po

ult

ry N

um

ber

s

Northern Ireland United KingdomSource: DEFRA 2016

UK 1.7% since

2000

NI 41.7% since

2000

UK Chicken Meat 30% since 2000

0

500

1000

1500

2000

2500

3000

00

0’S

To

nes

Car

cass

Wei

ght

Axis Title

2011 2012 2013 2014 2015 2016

Top 10 EU Poultry Producing Countries 2011 -2016

Source: AVEC Annual Report 2017

Global Market Trends & Challenges:

Global Market Production & Consumption Trends

Evolution of Global Farm Structure

Global Market Trade

Global Market Developments & Challenges

1-100001%

10-9999934%

100000+65%

2014

<100040%

1-500011%

5-1000013%

10-2000014%

20-5000013%

50000+9%

1971

Source: Richardson 1976 - "UK Poultry Industry 1960-1975" Source: DEFRA 2015

Broiler Farms in England and Wales by Size 1971 & 2014

Clear trend for fewer but larger farms

<10001%

1-50001%

5-100003%

10-2000021%

20-5000043%

50000+31%

61% of broilers grown on farms with 50K or more birds

Source: DAERA 2016

Broiler Farms in Northern Ireland by size 2016

House Design Evolution in AsiaIndonesia

House Design Evolution in AsiaIndonesia

House Design Evolution in AsiaIndonesia

House Design Evolution in AsiaChina: Slat system

18

House Design Evolution in AsiaChina: Floor System

19

House Design Evolution in AsiaChina: small family slatted

Small family farms: trend for closure due to

environmental pressures and air pollution from

coal fire heating

Global Market Trends & Challenges:

Global Market Production & Consumption Trends

Evolution of Global Farm Structure

Global Market Trade

Global Market Developments & Challenges

Broiler Imports in Top 10 Countries 2013-2018

100

200

300

400

500

600

700

800

900

1000

2013 2014 2015 2016 2017 2018

00

0’S

TO

NN

ES

Japan Mexico Saudi Arabia EU

Iraq South Africa China Hong Kong

UAE Cuba

11%

6%

7%

8%

9%8%

5%

4%

4%3%

Strong Japanese

Import Growth

S. Africa imports

reduced by embargo

China Imports

increasing from Latin America

Source: USDA 2017

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2013 2014 2015 2016 2017 2018

00

0 ‘S

TO

NN

ES

Brazil USA EU Thailand China Turkey

Ukraine Argentina Belarus Canada Russia Others

Broiler Exports from Top 10 Countries 2013-2018

Source: USDA 2017

Brasil, US and

Thailand increasing

China HPAI embargoes continue to impact US

EU UtilisingDomestic

Production

36%

28%

11%

7%

18%

Global Market Trends & Challenges:

Global Market Production & Consumption Trends

Evolution of Global Farm Structure

Global Market Trade

Global Market Developments & Challenges

Quality of the product in all respects

Fresh meat produced at an acceptable price

Food Safety and Traceability

Basic consumer requirements for standard chicken meat products

Meeting Basic Consumer Expectations

Evolving welfare standards and diversification

Minimal use of Anti-microbial treatments

Sustainable production

The expectations of the modern consumer, particularly in mature markets, have evolved from the basic expectations of the past, bringing opportunities and challenges to industry.

Modern Consumer Expectations

Antimicrobial Stewardship examples of developments in Asia Pacific

China: Announced it will join the EU and ban use of antimicrobial growth

promoters

Vietnam: April 17 announced it

will ban the use of AGP’s for food safety reasons.

By 2020 Prophylactic use will be stopped

Australia: Late 2016 published First

National Antimicrobial Resistance Strategy 2015-19. Will ensure evidence

based best practice in antimicrobial stewardship.

New Zealand: Launched National

Antimicrobial Resistance Action Plan

in August 2017.

Thailand: Banned the use of

antimicrobial growth promoters in 2015. 2016 started a 5 year plan to

reduce use by a further 30%

South Korea:Only Asia Pacific country

to completely ban antibiotics as growth

promoters in feed in 2012

Indonesia:Animal drugs commission

recommends to limit use of AGP’s. Authorities passed a law prohibiting use of feed

with AGP’s, one exception plus anti-coccidials

Source: Daniel Ramirez & Tim Goossens, July 2017

A Global Broiler Market….Which develops and differentiates continuously

Alternatives(“Quality/Welfare”)• Differentiation• Robustness,

Reliability• Tradition & Quality

• Welfare

Possible solutions to developments in the broiler market

• Optimization of costs

• Maximization of Quality, Welfare, Health ,

Environment

Conventional(“Technology”)

• High Technical level• Maximum investments

Conventional Systems: Less Room for Errors in Technical Management at any stage

Hatchery

-Incubation=40% of chicks life by 2020.

-No room for deviation from ideal incubation parameters

Breeder

-Growth and uniformity in Rear and increasing challenge

-No room for error with separate sex feeding

Broiler

-achieving 7 day weights critical!

-7 hrs equipment failure = 1% life

- Little room for compensatory growth

-

Skilled, Professional & Motivated Staff essential in ensuring success!

UK Egg Supplies by Layer Housing Type –An indicator of future meat trends?

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

% o

f To

tal

Enriched cage Barn Free range Organic Source: Watt Global Media 2016

Small Niche

Organic Market

Egg market

may give indication of future

Trend toward

‘Welfare’ Systems

• EU Directive 2000/13/EC

• 81days: Traditional Free Range/Total Freedom FR

• 56 days : Free Range & Extensive Indoor

• Organic

• Standard

EU Concepts

• Label Rouge-80days+

• Certified

• Regional –Poulet de Bresse

• Organic

• Standard

France

• 2007 BeterLeven 3 star system

• 2013 Chicken of Tomorrow

Netherlands

• Global Animal Partnership

• Commitments to move to slow grow by 2024

USA

• UK – RSPCA Assured

• Germany –Tierschutzlabel(2 step “Stufe”)

• Australia -RSPCA Farm Assurance Scheme

• Global roll-out of fast food strategies e.g. McDonalds

Others

Alternatives: A quickly evolving diverse approach to chicken production

USA Perspective

2012-2017:+35%/year

Thank you very much for your attention !

• Illustrate the success and potential for further growth

1. Global Industry Trends

• Remains a major global bio-security threat with associated trade risks

2. HPAI

• Advances have facilitated much improved growth and FCR

3. Genetics and Management

• Improved ADG and reduction of antimicrobials leaves little room for management errors

4. Conventional Performance

• Leading to increased diversification on the basis of taste and welfare

5. Customer expectations

The performance data contained in this document was obtained from results and experience from our own research flocks and flocks of our customers. In no way does the data

contained in this document constitute a warranty or guarantee of the same performance under different conditions of

nutrition, density or physical or biological environment. In particular (but without limitation of the foregoing) we do not

grant any warranties regarding the fitness for purpose, performance, use, nature or quality of the flocks. HUBBARD

makes no representation as to the accuracy or completeness of the information contained in this document.

Disclaimer