Argentine broiler production is expected to reach a record 2.1 million metric tons (MMT), according to a report from USDA’s Foreign Agricultural Service (FAS).
This estimate is powered by lower production costs due to low feed prices, and modest export growth supported by excellent sanitary conditions and greater demand from South Africa, the Middle East and other markets.
The report forecasts 2016 Argentine broiler exports at 250,000 metric tons (MT), an increase of 19 per cent from the revised 2015 figure.
However, it says the outlook for the Argentine poultry industry remains challenging.
Venezuela, historically Argentina’s largest market (over 40 per cent of total exports over the years), dramatically lowered its purchases in 2014. Other petroleum producing countries decreased their purchases as a consequence of low global prices for petroleum.
By mid-2014, the report says the Argentine poultry industry was very optimistic and tried to capitalise on the opportunity to supply the Russian market after the country’s announcement of the ban on food imports from several countries including the United States, Canada and the European Union.
However, higher Argentine shipments to Russia only lasted a few months and ended with the devaluation of the ruble by the end of 2014.
Chile, traditionally one of the best markets for Argentina is now taking advantage of well-priced leg quarters offered by the United States, cutting into Argentina’s market share.
Argentina is looking to open new markets that would replace the loss of Venezuela as the largest market for Argentine poultry shipments, such as Mexico, Canada or South Korea.
High inflation combined with a strong exchange rate has put the sector in a competitive disadvantage, negatively impacting producer’s margins.
The upcoming presidential elections contribute to an uncertain economic environment as well. In December 2015, a new administration will take office, and much of industry expects monetary adjustments to be made.
Despite this, the FAS reports that the sanitary conditions of the country as well as its production capacity continue to be excellent, which make Argentina a key player to meet growing global demand.
Domestic consumption is estimated to be stagnant at 1.85 MMT as consumption of other animal proteins remains strong.
Due to the strong import restriction system imposed by the government of Argentina, 2016 imports are forecast to remain at 1,200 MT, the same volume estimated for 2015.