The Australian chicken meat industry is a highly concentrated and vertically integrated industry, with approximately 70% of meat chickens processed by two large companies; Baiada Poultry Pty Ltd and the Inghams Group. Turi Foods Pty Ltd is the third largest chicken processor, and the largest in Victoria.
Baiada has recently grown its business in New South Wales (NSW), investing significantly in Tamworth and Griffith, while Inghams has reduced its production capacity in NSW, focusing on facilities in South Australia and Queensland.
The Rural Funds Group (RFF) owns poultry farms in Griffith NSW and Lethbridge Victoria. RFM Poultry (RFP) is the lessee of these assets, growing chickens on behalf of two processors; Baiada in Griffith and Turi Foods in Lethbridge (see the RFP webpage for further information).
Major chicken meat production locations1 &
Australian State shares of poultry meat production2
1Source: Australian Chicken Meat Federation
2Source: NSW DPI, based on ABS data as at 2014. Note that WA and Tasmania are estimates
Chicken growing in Australia is typically outsourced to specialist contractors. Under such arrangements, the processors retain ownership of the birds and supply the necessary inputs to grow them, such as food. The contractors are paid a fee and compensated for the majority of the costs incurred, after the chickens are collected. The advantage of this structure is the removal of exposure to the chicken meat price for contract growers. The contracts between RFP and processors are similar to ‘take-or-pay’ contracts, which provides further security to RFF’s lessee.
The Australian chicken meat industry is largely unaffected by competition from imports. Other than a small amount of heat treated, tinned products, chicken meat cannot be freely imported into Australia due to strict quarantine requirements. These protocols protect both local commercial poultry and native birds from disease, and consumers from food safety hazards. New Zealand is the only country able to import uncooked chicken to Australia under strict conditions following recent changes to import rules.
Australia processes around 640 million chickens per annum, with approximately 95% of chicken meat production consumed by the domestic market. The remaining production, which primarily represents low value cuts, are exported with these cuts attracting higher prices in export markets than domestically.
Australians consume on average approximately 45 kilograms (kg) of chicken meat per annum, up from 31.4 kg per person per annum in 2000. This compares with 32 kg of beef and veal per person and just 10 kgs of lamb and mutton (2014-15).
Consumption of various meats
3Australian Chicken Meat Federation
In line with increasing demand, Australia’s production of chicken meat has grown by over 160% in the last 20 years. Chicken meat now comprises one quarter of all meat production in Australia, up from 18% of production a decade ago. Production growth is forecast to continue at 3% per annum in the near term, and chicken is forecast to represent 28% of all meat consumed in Australia by 2018-19.
Forecast Australian poultry production4
4Source: ABARES (s=estimate)
According to the Australian Bureau of Statistics (ABS) data, Australia’s annual chicken production increased 7.9% in FY16, reaching 1.15 million tonnes. In the same period, Australian cattle prices reached record highs with the lowest levels of beef production in four years, positioning chicken as a cost effective alternative to beef.
One of the key drivers for increasing chicken meat demand, is the competitive pricing relative to beef, lamb and pork. Over the five years to 2012-13 chicken meat was on average:
- 22% cheaper than beef
- 45% cheaper than lamb
- 21% cheaper than pork
Efficiency, driven by selective breeding techniques, is another advantage enjoyed by the chicken meat industry and drives strong productivity growth for the industry. This efficiency, combined with stable consumer demand and the availability of long-term contracts with processors, make the broiler chickens a suitable sector for RFF.
- Australian Chicken Meat Federation
- NSW Department of Primary Industries
- Australian Bureau of Statistics
- Meat and Livestock Australia
- Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES)