Chicken PDF
Chicken PDF
Chicken PDF
vol. 6
This publication was prepared by the FAO Investment Centre under the FAO/EBRD
cooperation agreement to provide quick technical and economical reference material to
EBRD’s agribusiness team in sub-sectors where they often work. Focus was given to the
Bank’s countries of operation in Eastern Europe and the Commonwealth of Independent
States, with indicators of technical and economical performance in other regions of the world
noted for comparison.
The series of handbooks contained in this publication cover specific agribusiness sub-sectors,
with information on production and processing techniques, costs and margins, world
production, prices and trade trends. Data were collected from a number of official and
unofficial sources as indicative information that should be interpreted with caution, and do not
imply the expression of any opinion by FAO concerning the economic situation of countries
mentioned.
(October 1999)
• Specialised firms/institutes obtain chicks from hybrid lines selected for specific
characteristics such as resistance to diseases, growth curve, adaptation to certain types of
feed, etc… Female chicks are systematically killed.
• Male chicks are sold to breeders. They can be sold vaccinated or not. In the last case,
breeders must vaccinate their chicks themselves.
• Production cycles of about 6 weeks. The quicker the growth is, the lower quality meat is
obtained. Therefore, a tuned calculation has to be done to establish the best profitability
(costs of breeding vs mature broilers sale's prices).
• Feed quality, heat regulation, sanitary control and animal density within breeding houses
(in average 10 animals/m²) are the most important factors having an impact on growth.
• After 6 weeks, broilers reach 2 to 3 kg, with an average weight of 2,5 kg.
• They are then gathered into cages and sold to processors for slaughtering.
Production costs are very volatile. They depend a lot on the final product desired
characteristics (brand-named or low quality chicken), but also on feed prices (mainly grain
prices), climatic conditions, and genetic lines used. Therefore, they vary a lot from one region
to another.
Ref. page # 55
1
in European Union, Chicken accounts only for 70% of total poultry meat produced and consumed.
Average Prices Paid to Producers for Mature Broilers in Different Regions of the World
(farm cost in US$ per kg liveweight - 1994)
Price ranges may vary significantly, influenced by seasonal patterns, input costs and relative
costs of competing meats. If for example red meat courses collapse, poultry meat prices will
automatically decreased since on the meat market for consumers, it must stay the cheapest
choice, as it is one of major poultry sector strengths.
Margins for broilers producers depend a lot on final product characteristics (low or high quality
product - brand-named chicken with more tender flesh and more flavour). Indeed, high quality
products have a slower and longer growing period, which means higher production costs since
more feed is used, but also other miscellaneous variable costs are slightly increased. The
choice for final product characteristics is largely determined by how much consumers are
ready to pay for high quality broilers.
It is nevertheless possible to draw approximation for the calculation of average margins.
OUTPUT ............................................................................................................................1.66
Variable costs
Food: 4.35 kg per bird @ US$ 250 per tonne ...............................................................1.09
Heat, light, labour, miscellaneous (b)..............................................................................0.20
In 1999, returns for producers have become more favourable due to ample soybean and corn
supplies resulting in low feed prices. Feed costs typically account for 70% of all production costs.
A poultry slaughterhouse consists of an aerial conveyor belt, from which the birds hang
suspended by the feet. The conveyor belt brings the poultry through certain automatic
machines, or in front of manual posts, so as to execute the following operations:
Reception of living
animals from source of Weighting of cages
breeding
Optional
Processing
Optional carving
Optional deboning
The figure commonly used is the carcass yield, which corresponds to carcass weight v.s.
weight of the alive animal. This figure varies a lot depending on production conditions - some
estimates are given hereafter:
Average Broiler Carcass Yield in Different Regions of the World - 1997
The genetic potential for broiler production under ideal conditions can be estimated from the
claims of the breeding companies. An example is the standard published by Arbor Acres,
which claims the following:
Liveweight 2.57 kgs
Feed Conversion Ratio (FCR) 1.91 (kg feed needed / kg meat produced)
Age at slaughter 49 days
Index value 274.6
The index is a summary indicator of technical performances. It is calculated as:
liveweight x 10,000
Index = -----------------------------------------------
feed conversion ratio x days of age
Investment costs for a 4 000 chickens/hour slaughterhouse represent around US$ 2.4 million,
including equipment (US$ 1 000 000), surface building (around 1 100 m²) and surface land
(around 2 500 m²).
Eastern European countries are characterised by a relatively high cost structure caused by an
inadequate bird performance in spite of a rather favourable raw material position.
Because the raw materials are perishable, the conception / organisation of the slaughterhouse
must be closely adapted to supply conditions (average weight of animals, age, available
quantity per week, seasonality of supplies, …).
Wholesale prices depend a lot on product quality standard (label policy based on feed quality,
intensive/extensive production). Farm chicken may be twice more expensive than an industrial one.
A spreading of the global economic contagion to Brazil and the resulting devaluation of the
Real in January 1999 is leading to considerable uncertainty about 1999 prospects for the
Brazilian poultry industry. Brazil continues nevertheless to be the lowest cost producer of
broiler meat in the world, turning out live broilers at a cost of around US$ 0.64/kg, thus
allowing Brazil to maintain its position as the world's second largest exporter.
Russian poultry meat output which increased slightly in 1998 due to low feed prices,
increased regional government support and higher levels of investment in the industry is
expected to jump 13% to 720 000 tons in 1999. Besides government support, Russian
financial groups, foreign companies and meat processing plants are making investments in the
poultry industry. This recovery in production is expected to dramatically drop Russia's import
dependence on imported poultry meat which reached 70 percent in 1997
Output growth of the Mexican poultry industry, the fourth largest in the world, is expected to
be constrained in 1999 by high interest rates and the industry's difficulty procuring feed
requirements.
The Russian crisis, lower WTO subsidised export commitments, an overburdened pork
industry, the return of consumer confidence in beef meat and increasing government pressure
for more stringent environmental regulations are setting the stage for a slowdown in EU
poultry meat production in 1999. Concern about waning export opportunities in 1999 has for
example prompted the French and the Dutch industries to limit chicken placements and
increase the time between production cycles.
Asia is already the leading area in terms of the number of birds killed, but the average weight
at slaughter is considerable below that in North/Central America
Major Broiler Meat Importers and Exporters ('000 metric tons in Ready-to-Cook equivalent)
After experiencing double-digit export gains over the past decade, poultry meat exports in
1998 registered an unprecedented decline as the financial crisis in Russia put the brakes on
the growth in world poultry meat trade in mid-year. The pervasiveness of the economic crisis
in Russia is expected to generate a decline in overall poultry meat imports by selected
countries in 1999 to 4.4 million tons.
In Eastern European Countries, poultry meat consumption per capita should keep growing
quickly, while production curve should follow more slowly: quantities available for export
should thus decrease globally. Hungary will remain by far the most important exporter within
the region.
While continuing to be the world's major poultry meat supplier, U.S. exports are expected to
drop, benefiting to changing competitive position of major poultry meat exporters due to
currency devaluations, such as Brazil and some Asian countries.
China's role in the poultry meat export market is being increasingly challenged by the wave of
competitor currency devaluations and product quality concerns. While China continued to be
Japan's (the world's fourth largest poultry import market) major poultry meat supplier in 1998,
strong competition from Thailand and Brazil arose.
The strong export growth enjoyed by the EU poultry meat industry over the past few years
came to a halt in 1998. The devaluation of the Brazilian currency in expected to generate
extreme price competition in the Middle East for French whole birds, especially in the context
of declining subsidised export limits.
source: OFIVAL
• Specialised firm/institutes obtain chicks from hybrid lines selected for specific
characteristics such as yearly number of eggs laid, eggs size, adaptation to certain types
of feed, etc… Male chicks are systematically killed.
• Female chicks are sold to breeders. They can be sold vaccinated or not. In the last case,
breeders must vaccinate themselves their chicks.
• During the two first weeks of growth there are no differences with male chicks grown to
become broilers. Feed quality, heat regulation, sanitary control and animal density within
hen-houses are key factors on which depends chicks' mortality.
• Nutrition balance changes from the third week, with the view to ensuring a relatively low
development of muscles which will give better laying performances.
• From the 17th week, begins the regulation of the light cycle, which has an important impact
on laying frequency. First laying takes place in week 20.
• A laying hen will give from 200 up to 300 eggs during its life. After about 50 weeks, when
the laying curve decreases too much, hens are gathered a few weeks out of the regulated
light cycle in order to perform the so-called moulting (change of feathers). A second laying
cycle can then begin.
Average Producers' Prices of Hen Shell Eggs (Large) in different region of the world
(local currency per dozen)
source: National Agricultural Statistics Service - USDA & FAO Stat & International Egg Commission
US$
Cages Free range
per bird per egg per bird per egg
(a)
Egg returns 17.07 0.059 27.65 0.096
LESS Livestock depreciation (b) 3.92 0.013 4.19 0.014
Variable costs
Food (c) 8.17 0.028 9.88 0.034
Heat, light, labour, miscellaneous 1.55 0.005 1.49 0.005
• China is by far the world's largest producer and consumer of eggs. China's production has
more than doubled since the early 1990's, with nearly a record 400 billion (33.3 billion
dozen) produced in 1997, about half of the world's total.
• The U.S. is the world's second largest egg producer with 1997 production estimated at 78
billion (6.5 billion dozen). However, a major difference persists between the two nations in
respect to usage. Much of China's production is directly consumed as fresh brown eggs
whereas in the U.S. about a third of production is processed and white eggs are favored
for table use.
• Egg consumption gains in developed countries and China are slowing in 1998 and 1999.
Growing at a more sedate pace than the 4 percent yearly gains witnessed since the mid-
1980's, egg consumption is expected to slow to a two percent annual increase.
• Foreign trade in eggs is small. The net total favour exports. The EU generally accounts for
about a third of world exports while Asia, paced by Japan and Hong Kong import about
75% of the total.
• Asia, which constitutes nearly two-thirds of imports by selected countries (Japan and
Hong Kong accounts for more than 60 percent of total imports) encountered concerns
about health aspects of egg in 1998. Consequently, imports by selected countries are
poised to witness a 8 percent decline in 1997, before recovering to more than 5 billion
eggs in 1998.
• The United States continues to be the largest shipper of egg products to world markets,
supplying nearly 40 percent of imports by selected countries in 1997.
• Despite declining WTO limits on export subsidies, EU exports remain surprisingly robust.
An oversupply of eggs in most EU countries dropped prices in mid-1997 and 1998.
Authorised restitution levels for eggs are moving progressively downward to 109 700 tons
in 1998, as restitution levels edge upward to US$ 0.13/dozen. The Netherlands is the EU's
leading exporter, exporting nearly 80 percent of production and accounting for nearly 60
percent of EU exports to third countries.
• U.S. and EU egg exports are nevertheless experiencing increasing competition in the
Middle East from regional competitors such as Turkey, Thailand and India. Turkish egg
exports are destined mainly to FSU republics. They are supported through export
• Hen eggs' weight may vary from 50 up to 70 grams, but the average figure one should use
is 55 grams / egg.
• One of the important by products of poultry production is the manure, which has a
significant economic value, be it sold or directly used by producers applied to the crops
grown, if any.