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  • 1

    TRENDS & PROSPECTS IN THE BROILER INDUSTRY

    JOVEN P. DYSenior Vice President

    Bounty Agro Ventures, Inc.

    WORLD BROILER

  • 2

    QUANTIFYING BROILER INPUTSQUANTIFYING BROILER INPUTS

    Source: G. Butland, New Delhi

    8.5 million GP - US$ 200 - 250 million350 million PS - US$ 850 -950 million 100 Million MT live bird >US$ 60 billion200 million MT feed - > US$ 40 billion130 million MT corn/wheat US$ 15 18 billion45 million ton SBM US$ 9 12 billionAnimal health products US$ 2 billion> 8 billion kms. transport for feed and birds alone

    WORLD ANIMAL PROTEIN CONSUMPTION IN 2005

    0

    20

    40

    60

    80

    100

    120

    Million MT

    2005 103 81 63 64

    Pork Poultry Beef Eggs

    Source: FAOSTAT

    Although there are no official figures yet for 2006, preliminary USDA estimates show almost very small increase in consumption.

  • 3

    PER CAPITA CONSUMPTION OF MEAT IN SELECTED COUNTRIES, 2006

    42.929.046.3US

    65.228.2Argentina

    18.043.916.2EU - 25

    23.114.828.0Mexico

    32.228.129.8Canada

    4.542.029.5Taiwan

    4.013.97.5Philippines

    36.911.736.0Brazil

    36.0Saudi

    38.3Malaysia

    15.365.738.8Hong Kong

    43.0Kuwait

    60.3UAE

    BEEFPORKBROILER

    Source: USDA FAS, Livestock and Poultry, October, 2006

    9.79.39.4Brazil

    60.1

    1.2

    1.1

    1.2

    2.6

    7.4

    10.4

    16.2

    2006

    61.158.7World

    1.21.2Japan

    1.11.0Thailand

    1.31.9India

    2.72.5Mexico

    7.57.6EU-25

    10.510.2China

    16.415.9US

    2007(f)2005

    WORLDS TOP PRODUCERS

    7.57.47.4EU-25

    58.9

    1.9

    2.3

    2.0

    3.0

    6.8

    10.4

    13.8

    2006

    59.756.9World

    1.91.9Japan

    2.41.9Russia

    2.21.9India

    3.12.9Mexico

    7.16.6Brazil

    10.610.2China

    13.913.5US

    20072005

    WORLDS TOP CONSUMERS

    Poultry Production & Consumption (in Million MT)

    Source: USDA FAS, Livestock and Poultry, October, 2006

  • 4

    9595101Canada

    685620755EU-25

    6,470

    90

    280

    350

    2,454

    2,500

    2006

    6,7376,791Total, World11084Argentina

    280240Thailand

    365331China

    2,5082,360US

    2,5502,739Brazil

    20072005

    WORLDS TOP EXPORTERS

    645600522EU 25

    470434480Saudi

    5,168

    234

    370

    400

    740

    1,240

    2006

    5,3375,063Total, World

    237222HK

    430219China

    424374Mexico

    725748Japan

    1,1501,190Russia

    20072005

    WORLDS TOP IMPORTERS

    IMPORTS & EXPORT (in 000 MT)

    Source: USDA FAS, Livestock and Poultry, October, 2006

    AVIAN AVIAN INFLUENZAINFLUENZA

  • 5

    PATH OF MIGRATORY

    BIRDS

    AVIAN INFLUENZANations with confirmed H5N1 cases

    Source: USDA

    North America

    South America

    Africa

    Asia

  • 6

    AVIAN INFLUENZA TIMELINE

    2003

    JuneSE Asia:

    Outbreaks start but

    unreported

    December Thailand:

    Zoo animals die; start of investigation

    December: S.Korea reports

    deaths in poultry

    January Vietnam, Japan,

    Thailand, Cambodia, Laos

    FebruaryIndonesia

    & China

    June/Julyrecurrence

    in China, Indonesia, Thailand

    and Vietnam

    WAVE 1

    AugustMalaysia

    SeptemberKorea

    disease free

    October Brussels: H5N1 in eagles from

    Thailand

    January Malaysia declared disease

    free

    WAVE 2

    2004

    2005April China

    birds die in Qinghai

    Lake

    July Russia reports H5N1

    August Kazakhstan

    and Mongolia

    report H5N1

    OctoberTurkey,

    Romania & Croatia

    affected

    December Ukraine

    and Kuwait report

    February Iraq,

    Nigeria, Azerbaijan,

    Bulgaria, Greece,

    Italy, Slovenia,

    Iran, Austria,

    Germany, Egypt, India,

    France, Hungary, Malaysia. Slovakia, Bosnia, Georgia,

    Niger

    March Switzerland,

    Serbia, Poland, Albania,

    Cameroon, Myanmar, Denmark, Sweden,

    Afghanistan, Israel,

    Pakistan, Jordan, Czech

    Republic

    April Burkina

    Faso, UK

    2006

    May Sudan, Cote

    dIvoire

    July Spain

    WAVE 3

    Data from World Health Organization

    EFFECTS OF AI FELT WORLDWIDE . . .Principal transmission is still between animals and

    between animals and humans; pandemic is feared and countries are taking steps to prevent this

    Economic and social costs felt only in poultry sectors of the affected countries

    Around 200 people have died since 2003 due to exposure to animals with the H5N1 virus

    Source: Milan Brambhatt, WB, Conference of Avian Influenza in Humans, June 29, 2006

  • 7

    Economic and social costs felt only in poultry sectors of the affected countries

    EFFECTS OF AI FELT WORLDWIDE . . .

    East / Southeast Asian countries hit by AI have thriving economies except Thailand where slowdown was noted; 40% in drop in Exports of Thailand

    Source: Milan Brambhatt, WB, Conference of Avian Influenza in Humans, June 29, 2006

    ECONOMIC COSTS OF AI . . .

    Direct productions costs due to:

    losses on poultry due to disease and culling over 200 million poultry

    15-20% decline in stocks in Vietnam and Thailand (effects a 0.1 0.2% decline in GDP)

    impact on poultry traders, feed mills (in EU, 40% decline in demand for poultry feeds), breeders

    additional losses due to lower egg production

    Indirect effects due to:

    shifts in market demands due to consumer fears

    trade restrictions to limit spread of AI

    Source: Milan Brambhatt, WB, Conference of Avian Influenza in Humans, June 29, 2006

  • 8

    ECONOMIC COSTS OF AI . . .

    Prevention and control costs

    purchase of poultry vaccines and medication

    hiring workers for culling and clean up

    set up of surveillance and diagnostic systems

    compensation of poultry owners

    Cost to the community affected by AI

    unemployment

    decline in labor productivity

    cost of hospitalization and medical treatment

    effect on travel and tourism

    20% decline in tourism, transportation and key services = decline in 2% world GDP = $800 B/year

    Source: Milan Brambhatt, WB, Conference of Avian Influenza in Humans, June 29, 2006

    ASIAN POULTRY

  • 9

    PRODUCTION(million metric tons)

    0.0

    5.0

    10.0

    15.0

    20.0

    25.0

    30.020

    04

    2013

    2004

    2013

    2004

    2013

    2004

    2013

    2004

    2013

    Asia &Oceanic

    LatinAmerica

    USA &Canada

    Europe MiddleEast &Africa

    PRODUCTION(million metric tons)

    0.0

    5.0

    10.0

    15.0

    20.0

    25.0

    30.020

    04

    2013

    2004

    2013

    2004

    2013

    2004

    2013

    2004

    2013

    Asia &Oceanic

    LatinAmerica

    USA &Canada

    Europe MiddleEast &Africa

    Future Regional Production

    8.4m 45%

    1.4m 13%

    4.1m 26%

    2.3m 43%

    2.8m 17%

    Asia is by far the greatest opportunity for volume growth China 3.8 mmt (38%) India 2.5 mmt (154%)

    Latin America Brazil 2.2 mmt (25%) Mexico 0.7 mmt (34%)

    Europe Western Europe steady

    or declining Russia 0.7 mmt (68%)

    Source: Gordon Butland

    Poultry Production in Southeast Asia has been growing consistently throughout the years.

  • 10

    Poultry Systems in Selected South East Asian Countries, 2005

    65%15%20%Vietnam

    10%20%70%Thailand

    90%10%Lao PDR

    63.4%11.8%21.2%3.5%Indonesia

    98%< 1%< 1%Cambodia

    BackyardSmall Commercial

    Large Commercial

    IntegratorCountry

    PHILIPPINE PHILIPPINE BROILER BROILER

  • 11

    CHICKEN PRODUCTION IN THE PHILIPPINES

    NATIVE -13%

    LAYERS -17%

    OTHERS - 3%

    BROILER -67%

    COMMERCIAL35%

    INTEGRATOR 35%

    KEY INDUSTRY PLAYERS(Ranked According to Production Volume)

    Foster6. Foster Foods

    None5. Universal Robina Corp.

    Cooks4. Vitarich Corporation

    Swift3. Swift Foods

    Bounty Fresh2. Tyson / Bounty Agro Ventures

    Magnolia, Supermanok1. San Miguel Pure Foods

    BrandCompany

  • 12

    Small is Beautiful

    Critical Units:

    1. Contract Growing

    2. Dressing Plant

    3. Sales

    0

    20

    40

    60

    80

    100

    120

    140

    2002 2003 2004 2005 2006

    1st Q 2nd Q 3rd Q 4th Q

    453 473 494 482 438

    CHICKEN PRODUCTION IN THE PHILIPPINES, 02-06

    (BAI, PABI DATA)

  • 13

    CHICKEN IMPORTS (in MT), 2002-2006

    0

    5,000

    10,000

    15,000

    20,000

    25,000

    30,000

    2002 2003 2004 2005 2006

    In 2006, industry players were given the chance to import leg quarters under a special importation agreement to alleviate short supply.

    MINIMUM ACCESS VOLUMES (MAV)

    continued implementation of Minimum Access Volume (MAV) mechanism beyond June 30, 2005

    DA expected to maintain its final year MAV commitments until a new WTO agreement is reached

    volume under MAV (in-quota) shall continue to be exempt from special safeguards which has been in place since 2001.

    Final Year Volume: 216,940 MTCorn

    40%40%Frozen Chicken (Cuts)

    OUTINFinal Year Volume: 23,490 MTPoultry

    50%35%Corn1005

    40%40%Frozen Chicken (Whole)0207

    Tariff RatesProductHS Code

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    30

    35

    40

    45

    50

    55

    60

    65

    70

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