Prospects good, but investment cost looms over poultry businesses

In the last of our 2010 outlook articles, Farmers Weekly and consultant Andersons examine the prospects for poultry

“The general outlook for 2010 is positive with lower feed costs helping and demand for relatively low cost meat and eggs in the national diet,” says Andersons’ Mike Houghton.

“Prices began to improve for poultrymeat and eggs as sterling weakened in 2008 and, with fixed costs reducing, the 2009 year should have shown better margins.

“But there are challenges for both broiler and egg producers. It is a highly competitive industry with relatively few large-scale buyers and prices to producers are constantly being adjusted as feed costs move up and down.”

Broiler producers face significant reinvestment in housing, with recent surveys suggesting the average age of a UK broiler house is between 24 and 27 years.

“A similar investment is required in egg production,” says Mr Houghton. “Birds must not be kept in traditional cage systems after 1 January 2012. It is estimated that 58% of the UK laying flock is still in old-style cages. This means there has to be major investment in enriched cage or free-range systems in the next two years or the UK will have to import eggs.”

However, prospects for the egg sector are generally positive. Egg sales in the UK have grown for the third year in a row and FW’s sister magazine, Poultry World, predicts a substantial growth in the UK laying flock to 31m birds in early 2010 after a significant decline this year.

Average packer-producer prices in 2009 were 54.4p/dozen, marginally higher than last year.