“The Food and Agriculture Organization (FAO) of the United Nations estimates that using long term population and income projections, global food production needs to increase more than 40% by 2030 and 70% by 2050, compared to average 2005-07 levels.”

OECD-FAO Agricultural Outlook 2009–2018

3.1 The chicken meat industry in Australia - Overview

The chicken meat industry in Australia is vertically integrated, which has driven industry productivity and resulted in a number of important benefits for consumers. Chicken is the most economical meat option, a result of industry efficiencies and economies of scale. Consumers also enjoy consistent quality in terms of tenderness and flavour of the chicken available in the Australian market.

This vertical integration, where companies own or control most aspects of the supply and production chain, means that large chicken meat operations may include:

  • Breeder farms – focus on producing fertile eggs to produce the next generations of meat (broiler) chickens. The industry does not sell eggs for consumption. Larger chicken meat companies tend to import new genetic stock as fertile hatching eggs (under extremely strict quarantine conditions) from specialist international breeding companies and keep several generations of breeder flocks, while some medium and smaller companies keep a single generation of parent breeder flocks to produce their own meat chickens. Some companies do not keep breeder flocks at all and simply buy fertile eggs or day-old meat chickens from other companies.
  • Hatcheries – incubate fertile eggs until the chicks hatch. Hatcheries are physically separated from other parts of the operation to ensure the highest biosecurity standards. Modern hatcheries make extensive use of technology to ensure optimal environmental conditions are maintained at all times.
  • Meat chicken growing farms – grow day old chicks to maturity. Typically, meat chicken growing is contracted out, with around 800 contract growers producing 80 per cent of Australia’s meat chickens. In these arrangements the processing companies own the birds and supply feed, technical direction and other support services to the grower.
  • Processing plants – slaughter birds and prepare chicken meat products for sale.
  • Further Processing Plants – receive processed raw meat and use it to produce value-added (generally cooked) products.
  • Feed mills – produce animal feed to exacting nutritional specifications.
  • Laboratories – contribute to food safety and quality control and assist in managing flock health and ensuring high standards of biosecurity.
  • Research and development – ensures ongoing improvement to industry practices on farm (in particular animal nutrition, health and welfare), in processing (food safety) and product development (increased range of cuts and further processed products).

Generally medium and small integrated processors will have some of these facilities, but will use third parties for others.

Well over 95 per cent of the chicken meat grown and eaten in Australia is produced by seven privately owned Australian chicken meat processing companies. The two largest, Baiada Poultry and Inghams Enterprises, supply more than 70 per cent of Australia’s chicken meat, with the next five companies each supplying between 3–9 per cent of the market. A large number of smaller processors make up the balance.

The relatively concentrated nature of the industry is balanced by its small direct customer base (i.e. the supermarket chains and major quick service restaurant chains), as chicken is purchased from processors by a small number of major companies with substantial market power. Despite only limited exposure to international trade, the result is a highly competitive domestic market.

Copyright © 2012 Australian Chicken Meat Federation Inc.