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World competition for animal production

World competition for animal production. IP Erasmus June 25th 2010. Today’s objective? «food for thought » . Set the scene and update on worldwide market facts and dynamics Supplying/ demand Industry: structure and strategies Focus on Poultry… as an illustration ..

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World competition for animal production

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  1. World competition for animal production IP Erasmus June 25th 2010

  2. Today’s objective?«food for thought »  • Set the scene and update on worldwide market facts and dynamics • Supplying/ demand • Industry: structure and strategies • Focus on Poultry… as an illustration • .. • + Ability of main producing areas to fullfill expectations ( consumers…)

  3. Meat production led by Asia 57 72 100 17% 1,3 2 2,2 18% 8 9 22 13 16 12,5 36% 12 17 54 13% 14 15 4,5 13% 9 13 5,6 Mt -2009- USDA

  4. Consumption led by China 20% 46% 23% 8 12 21 13 30 51 15 21 11 12% 10 11 3 12% 2009-mt-FAO-USDA

  5. Highest consumption growth between 2010 and 2015 in Latin america and Asia -2% 3% 4% 9% 13% 8% 2% 8% 5% 7% 25% 16% FAO

  6. +23% +25% +29% +34% Consumption increase: where ? Poultry and Pork Asia for the major part Fueled by population growth, economic growth … and urbanisation FAO

  7. Most of the trade growth will be in red meat… US MENA RU CH MENA CH RU MENA CH US US RU CH 30000 25000 20000 Sheepmeat '000 t cwe Beef 15000 Pork Poultry 10000 5000 0 2000 2005 2010 2015 rather than poultry & pigmeat … FAO

  8. 37% 45% 41% 48% 25% 30% 12% 14% Brazil’s ambitions Forecasts – Share of WW export in % by specie FAO – Brazil Ministry of agriculture

  9. Brazilian players emergence in Top 3 • US firms …traditionally biggest operators but brazilian meat processors expanding quickly globally

  10. JBS …through acquisitions 2010 Key world positions www.JBS.com.br

  11. Brazil’s JBS……in 2010 www.JBS.com.br

  12. Concentration going on.. Poultry Top 3: 10% JBS Tyson BRF Pork Top 3: 7% Smithfield Tyson Vion ea DC Beef Top 3 : 23% JBS Tyson Cargill

  13. Poultry highlights • Worldwide production, consumption, trade • Cost price advantage • No restrictions to consumption • Processing ability ( & added value) • F.S. • (Relatively low) requirements for land, water, feed ingredients

  14. 100000 90000 TH 80000 ARG JP 70000 RUS 60000 IND MENA ('000 t cwe) 50000 MX Other S.AM 40000 BR 30000 EU CN 20000 US 10000 0 1995 2000 2005 2010 2015 China and Brazil challenging « traditional » producers World average growth: 95-05: +4.1% p.a. 05-10: +2.9% p.a. 10-15: +2.5% p.a. www.JBS.com.br

  15. Value Added Trade ARG Self sufficiency Producing areasDifferent needs… and strategies Prod 2009 – X 1000t Prod increase 2005-2010 in % IND TH IR CH BR Mx JP EU US Export/ Prod Volume - %

  16. Net exportersPoultry

  17. Exportations of poultry meatUSDA Forecasts Real devaluation EU Salted meat Free from Influenza 1st WW Exp MS 41%

  18. Brazil and US in top 3 • Consolidation driven by Brazil/ US • Bargaining power – Risk management • EU still to consolidate/ retructure/ use EU opportunities • 2 industry segments different competitive areas • « Global trade/ local trade «  • «  Scale or niche » • Attn! Brazil making their way in EU: added value Sce: from Rabobank 2009, updates

  19. Europe still national and fragmented A fragmented. Nation based industry Top 10 – 30%

  20. Where and how to produce …..and sell? • Basic criteria ? • Population growth & demographics • Economic prosperity • Relative cost/price advantage • Consumer expectations • Food Safety ( traceability, compliance to rules..) • Environmental concerns • Animal welfare • Consumer friendly products

  21. Composition of the production cost for the primary farm by country Production costs after slaughter €c/ kg carcass weight NL 1,38 Thailand 1,11 US 1,01 Brazil 0,9 LEI study 2009 based on 2007 costs

  22. EU: regulation and competiveness« Expected » increase in broiler cost between 2004-2012 €cent per kg of LW Salmonella Bird density Ammonia Growth prom G UK FR PL NL LEI P Van Horne

  23. Political & pressures: CAP Reform… Price Pressure Safety Rising regulatory costs WTO-Rising imports Long term demand potential Meat in Hard Discount & Retail Branding Retail driven supply chain rationalisation Emerging markets Processors "Zero risk“- Law Retailer concentration & internationalisation Developped markets Low consumption growth Segmentation … Food service Cost reduction Rising feed, labour, fuel Marketing Segmentation NPD Higher volatility in feed ingredients Risk management Ethanol/ finance as competitors Horizontal & vertical consolidation of slaughter groups Driven by US BR players

  24. Thanks for your attention

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