Poultry

GVP $832 million est. Up 8% year-on-year.
Retail volumes declined in early 2022 due to processing and supply constraints.
Food service sector volumes grew year-on-year as COVID-induced lockdowns and travel restrictions eased.

NSW recorded moderate growth in poultry meat production in 2021-22. Supply/demand dynamics were severely challenged due to COVID-induced demand shifts and supply chain disruptions caused by industry workforce absenteeism. Volatile feed costs challenged industry profitability and operational efficiencies. Demand for chicken meat remained solid, both at retail and in the food service sector, as chicken meat prices remained highly competitive among other meat protein sources.

Production

Chicken slaughter CAGR 3.06%¹⁹⁶

Annual chicken slaughter

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NSW is the largest chicken meat producing state, accounting for 32% of national production in 2021-22.¹⁹⁶ . The major poultry meat growing regions in NSW include the Central Coast, Hunter, New England, Riverina and Western Sydney. Significant rain events resulted in widespread flooding across the Eastern seaboard during February and March 2022. Whilst processors worked hard to prepare for the floods by arranging additional feed deliveries and delaying placements, minor impacts to broiler supply were noted. Access to some grower sites in the Macarthur and Hunter regions, and the Sydney Basin, were delayed which impacted optimal slaughter weights, and whilst some processors took steps to arrange early pick up of birds almost at market age prior to the flooding, this also impacted ideal bird numbers and weights. Due to the largely intensive nature of the industry and the reliance on covered sheds, reported stock losses were minimal however, some free-range losses were recorded in the hard-hit Northern Rivers region. Despite these challenges, total NSW chicken meat production expanded over the 2021-22 period and broiler production grew by 7% year-on-year to 486,273 tonnes, 19% above the 10-year average production. Over the past 4 decades, the number of chickens slaughtered nationally has risen steadily at a compound average growth rate (CAGR) of 3.14% per year.¹⁹⁶

Price

The domestic price of poultry is estimated to have increased by 2% year-on-year to $2.24/kg.⁹⁰ The price gap between chicken and red meat continued to widen. A comparison of the retail price ratio between beef, lamb and chicken illustrates that over the last two decades, lamb has risen from about 1.5 to about 3.3 times the price of chicken and beef from 2.2 to 4.5 times the price.²³⁰ Beef and lamb are both priced at a huge premium to chicken and although both beef and lamb prices are largely driven by export market forces, the domestic market is still the largest single market for both meats.

Despite the temporary Omicron interruption to chicken supply, annual consumption rose, up by a marginal 1% year-on-year to 48.8 kg/person.⁹⁰ A 3-year investigation into the demand drivers for chicken meat in Australia found that most consumers are largely driven by price and cut, with the type of production system also taken into consideration.²²⁹

Relative importance of product characteristics when shopping for chicken meat²²⁹

Mean
Standard deviation

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Trade

Australian poultry meat is mainly grown for the domestic market, with very little exported. The relatively small amount that is exported is primarily to other countries in Asia. By value, the majority of poultry exports, 71%, were comprised of frozen chicken cuts and edible offal, namely feet, kidneys and livers, and because there is little domestic demand for these products, they generally attract a higher price in export markets than the domestic market. The remaining 29% consisted of live poultry exports, namely freshly hatched chicks³⁵ and most likely for breeding stock.

The total value of NSW poultry meat exports for 2021-22 rose year-on-year, up 58% to $19.4 million.³⁵ The Philippines was the largest market and the main driver behind export growth, increasing in value by 237% year-on-year.³⁵

Live chicks comprised the majority of this value. Despite the number of live chicks exported to the Philippines decreasing by 72% since 2019-20, the unit price per chick increased by 205% over the same time period. Most of the trade in day-old chicks to the Philippines is for high-value breeding stock for both egg layers and broilers, from chickens with sought-after genetic characteristics. The availability of live chicks in the Philippines during 2021-22 was restricted due to the prohibition of the importation of any kinds of birds (either domestic or wild), together with poultry meat and one-day-old chicks, in response to outbreaks of highly pathogenic avian influenza (HPAI) from the US and the Netherlands. Australian imports were included in this ban following an outbreak of HPAI in Victoria in August 2020 with the ban subsequently lifted in July 2021.

Macroeconomic conditions

The first half of the 2021-22 year was distinguished by a continuation of challenges resulting from the COVID-19 outbreak. As the first-round of restrictions were gradually eased, poultry sales grew in response to recovering demand however, whilst there was strong growth for portioned cuts, whole BBQ chicken sales volumes remained relatively soft due to growth in online sales.²²⁰ The rapid spread of the Omicron COVID variant from December 2021 resulted in workforce shortages and supply chain bottlenecks. Poultry processing plants and distribution centers were hit hard during early 2022, and the resulting staff shortages had a significant impact on the poultry meat supply chain. These workforce challenges culminated in extensive shortages of fresh chicken products across both the retail and food service sectors, particularly the availability of higher-margin, processed products such as breast fillets, thighs, and drumsticks.²²⁰ In response, processors redirected more product to the wholesale market. This caused significant wholesale oversupply and prices were impacted accordingly.²²⁰

Processing operations, wholesale market volumes, and prices, largely recovered by Q4 2022 however, due to the ongoing tight labour market, some supply chain operations continued to be negatively affected.²²⁸

Feed costs increased despite the increased domestic supply, driven by international market volatility and tight global grain stocks. Global soymeal pricing in particular was stronger as global consumption outstripped supply. Soybean meal is a major source of protein for the Australian poultry industry and Australia is a net importer of soybean due to a significant shortfall in domestic production.

Global poultry production remained steady at 90.9 million metric tonnes.²²⁶ For most countries, this production growth was expected, as economies recovered post-COVID however, growth was hindered by higher feed prices²²⁶ and outbreaks of HPAI outbreaks in Europe, Asia, Africa, and North America.²²⁷ As of the end of June 2022, 39 million birds had been affected in the U.S alone.²³¹

Outlook

Feed costs and operational inefficiencies such as logistics and absenteeism due to COVID-related illnesses will continue to have a substantial impact on the industry well into 2023. Feed costs will remain elevated, which will continue to impact industry returns although this is expected to be partially offset by meat price increases. As the COVID pandemic continues to ease, demand for poultry products should improve as food service demand recovers further.

Stronger Primary Industries Strategy

Food Labelling Assistant for SME’s

Food labelling is complex and the risks associated with incorrect labelling can be life threatening. Incorrect labelling is the leading cause of undeclared food allergen recalls and the third largest category of food safety reports and complaints to the NSW Food Authority.

Changes to food labelling laws add to the challenges faced by small to medium enterprises (SMEs) in particular, namely Plain English Allergen Labelling (PEAL) reform that commenced in February 2022.

SME’s do not have the same access as big businesses to internal labelling expertise or costly professional legal advice. This includes the home-based business sector, which continues to grow and these entrants to the food industry often have little prior knowledge or experience of food labelling. The COVID-19 pandemic has also seen diversification of many cafes and restaurants that have turned their kitchens to producing labelled foods for sale.

Strategic Outcome

Food Safety and Animal Welfare

The Food Labelling Assistant provides up to date information and guidance in an accessible, user friendly mobile format 24/7 making it easier for SMEs to manage the risks of incorrect labelling. The interactive web-based tool guides SMEs through labelling requirements, including allergen declaration, making it easier to label their products correctly.

The tool is complemented by Do I need a food label?, an interactive online quiz that provides guidance on whether a label is needed, or if there are other information requirements.

The Food Labelling Assistant can be used to:

Learn about food labelling requirements, section by section.
Produce a guide specific to a food product.
Save a draft to return to and finish later.
View a guide specific to a product on screen, save it and download it in a PDF format.
Clone a saved product to start a new one that is similar, without starting from scratch.
Create a link that can be saved and shared.

There are some labelling requirements that fall outside the remit of the Food Authority. For example, Country of Origin. Taking a customer centric approach, the Food Labelling Assistant consolidates all labelling requirements in one place, providing succinct information and direct links for requirements regulated by other agencies. This streamlines information for businesses who have a comprehensive starting point for their food labelling needs.

Additional functionality and enhancements are expected to be built into the Food Labelling Assistant over time, in response to user feedback and analytics once a review of version one is complete.