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USDA International Egg and Poultry

07 November 2013

USDA International Egg and Poultry: Saudi ArabiaUSDA International Egg and Poultry: Saudi Arabia

Broiler meat production is expected to reach 640,000 MT IN 2013; unofficial projections for broiler meat production in 2014 are set at 670,000 MT.
USDA International Egg and Poultry

The increase in local production is mostly due to ongoing expansion in broiler production operations by the three largest Saudi poultry producers.

Production costs for local broiler farmers are very high due to heavy dependence on imported feed ingredients, poultry equipment and medicine, and the high costs of temperature control for the extreme hot weather year-around throughout the Kingdom. To compensate, the Saudi government (SAG) has been providing various subsidies to poultry producers, including interest free loans, rebates on costs of selected poultry equipment, as well as import subsidies for animal feed. The SAG provides import subsidies for 31 animal feeds, ranging from $49.33 to $202.13 MT, based on the energy and protein contents of each feed ingredient. Production costs for locally produced broilers currently range between 6 SAR ($1.60) and 7 SAR ($1.87) per kg average dressed weight. It is estimated that the value of various subsides offered to domestic broiler producers to be around 2 SAR ($0.53) per kg.

The growing cycle for broilers in the Kingdom varies between 28 to 35 days, with an average bird weight gain of 50 grams per day. The average live weight for broilers when marketed is about 1,350 grams, while the average ready to cook broiler carcasses weight when marketed is 1 kg. The feed conversion ratio (FCR) is between 1.55 kg to 1.79 kg.

Almost all poultry production in Saudi Arabia is broiler meat, with the exception of about 1,000 MT of quail meat. Currently, most spent chickens are killed and mechanically buried. Recently the Ministry of Agriculture has given options to poultry growers to slaughter spent chickens for further processing, but stipulated that slaughtering of the spent chickens must be scheduled on different days from when broilers are slaughtered.

Broiler meat consumption is expected to continue to increase, mostly due to relatively lower prices of poultry meat compared to other sources of animal protein. It is also perceived to be healthier compared to red meat. Saudis prefer domestically grown fresh broiler meat; more than 80% of locally grown broiler meat is sold chilled. All imported broiler meat is frozen and consumed mostly by the expatriates community and institutional customers.

The forecast for imports is 760,000 MT in 2013; unofficial forecasts are for 730,000 MT in 2014. The declining volumes are due to the anticipated increase in the local broiler meat production and reduced demand by catering companies as a result of a much smaller number of Umra and Jaij pilgrims anticipated this year. The Saudi government has significantly reduced the number of visas it issues to pilgrims to perform Haij this year to help avoid overcrowding at Makkah Grand Mosque, which has been undergoing huge expansion work.

Brazil has been the dominant broiler meat supplier to Saudi Arabia for the past two decades, followed by France, the US and Argentina. The US poultry meat market share in the huge Saudi imported broiler meat market has been very small because of the difficulties that US poultry meat exporters face meeting SAG’s requirement that imported poultry meat must come from poultry fed on vegetable only protein.

The available trade data for 2013 indicates that Saudi Arabia broiler meat imports increased by about 18% to 378,694 MT during the period January-May 2013, compared to 310,426 MT imported in the same period in 2012. However, post expects that poultry meat imports for the entire 2013 to only total 760,000 MT, compared to the official estimate of 807,000 MT. The expected decline in the total broiler meat import in 2013 will be mostly due to increased local broiler production and reduced consumption due to a smaller number of Haij pilgrims.

Major Saudi broiler meat importers indicated that the surge in the broiler meat imports for January-May of 2013 was to compensate for the huge decline in broiler meat stock levels at the end of 2012 and beginning of 2013 because of a sharp drop in domestic broiler meat production in 2012 that reduced supplies and sharply increased retail prices. Unofficial post estimates lowered production to 450,000MT in 2012 and 569,000 MT in 2013, sharply lower than official estimates. The increased imports have boosted stock levels at domestic cold stores and helped sharply reduce retail prices of imported broiler meat. Nowadays, broiler meat stocks are so high that major supermarket chains offer regular discounts that range between 15 to 27 percent for cardboard boxes containing ten chickens.

Saudi Arabia’s turkey meat imports are very small. In 2012, Saudi turkey imports totaled 1,817 MT, compared to 2,416 MT imported in 2011. Most of the imported turkey meat is used to process value added turkey products such as salami, bologna, smoked turkey breast, and honey roasted turkey. The rest is imported for distribution to upper class supermarkets for sale during Thanksgiving, Christmas and New Year holidays.

Saudi poultry exports are mostly fresh/chilled and destined to the five GCC countries (UAE, Qatar, Bahrain, Kuwait and Oman). In October 2012, the SAG banned exports of domestically produced broiler meat following an acute shortage of broiler meat in the local market that increased retail prices for up to 40%. In December 2012, the government announced a conditional lifting of the export ban. The SAG stipulated that domestic broiler meat producers interested in exporting domestically produced broiler meat pay back $533 per MT for various government subsidies they receive to produce the chicken. The refund requirement has reportedly reduced the profit margins of Saudi broiler meat exporters but has not caused them to discontinue exporting.

Source: USDA FAS GAIN Report SA1310

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