Meat+Poultry - June 2020 - 57

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I

n 2020, success for stakeholders in the global
poultry trade will be defined by the sector's
ability to manage supply chain challenges
caused by the coronavirus (COVID-19)
pandemic and animal diseases such as African
swine fever.
Some supply chain complications required
short-term fixes. Shelter-in-place orders
and panic-buying consumers led poultry
processors to shift production to retail outlets
from foodservice clients; not an easy feat to
accomplish in only a month or two.
"It has been challenging, especially for
those integrators that service the foodservice
industry," said Christine McCracken of
Rabobank. "It really is very challenging to shift
production in chicken given the differences in
size of the birds that service the foodservice
industry relative to retail. There isn't that ability
to move products in between channels as easily.
"For those guys it's been really difficult. But
they've been really resourceful; they've found
ways to market their birds - whole birds and
parts in bags - through the retail channels.
They've done truckload sales that have been
quite successful in a lot of areas."
Stop-gap measures would only brace the
industry until more restaurants opened, and
there were signs of foodservice springing back
to life by late May. Still, uncertainty remains
surrounding the duration of the pandemic and
the depth an economic recession forecast for
later in the year.
"Fortunately, they've been able to cut back
production pretty hard," McCracken said.
"So, through this summer, we'll have a lot less
chicken, which should help improve prices and
stabilize profits. But through the rest of the
year, there's still a lot of questions."
What is certain is that the pandemic
has upended global poultry markets. The
Foreign Agricultural Service (FAS) of the US
Department of Agriculture recently lowered its
2020 export forecasts for poultry.
FAS revised its forecast for global chicken
meat production 2% lower to 100.5 million tons
with the expectation that gains in China would
fail to offset lowered production forecasts
for all major producers, the agency said in
its Livestock and Poultry: World Markets and
Trade report.
FAS revised its outlook for 4% lower for
global chicken meat trade on downward

revisions for all major exporters accept Brazil,
according to the agency's report. As a result,
FAS expects world chicken meat trade to
contract 1% in 2020 compared to 2019 despite
minor gains in the United States and Brazil.

THE UPSHOT
But, FAS said that world production is forecast
1% higher compared to 2019 as gains in Brazil,
China and the United States offset declines
in the European Union, the United Kingdom,
Thailand and Turkey.
"Compared to red meats, chicken meat
demand is expected to be more resilient when
faced with economic turmoil due to its position
as a low-cost versatile animal protein culturally
acceptable in virtually all markets," FAS said.
McCracken said that in her career, the meat
and poultry industry has been challenged by
animal diseases in the past - avian influenza,
bovine spongiform encephalopathy (BSE),
porcine epidemic diarrhea (PED). But never
has a zoonotic disease like coronavirus
delivered so many body blows to the sector at
one time.
"This definitely is the most impactful to all
segments," she said. "It's global, it's obviously
impacting all parts of the channel. It's hitting
it in such a different way in that we're forced
to close plants, but at the same time, there's
an economic shock impacting the American
consumer at the same time.
"And then, all our export customers...really
there's nothing quite like this for sure."

"It really
is very
challenging
to shift
production in
chicken given
the differences
in size of the
birds that
service the
foodservice
industry
relative to
retail."
- CHRISTINE MCCRACKEN

LABOR AND LOGISTICS
In its Poultry Quarterly Q2 2020 report
released in March, Rabobank maintained a
moderately positive outlook for most markets
for poultry with coronavirus adding significant
uncertainty. Labor availability and logistics
issues developed in the months following the
release of the report.
In the United States, the industry already
was grappling with a shortage of qualified
truck drivers. At the processing plants,
workers and food safety inspectors became
sick with COVID-19, the disease caused by the
coronavirus. Processing plants across proteins
became "hot spots" for infections because, as
processors ramped up on-site testing for the
virus, more workers were found to have the
virus without showing symptoms.
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Meat+Poultry - June 2020

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