With United Nations figures projecting a world population of more than 9.6 billion people by 2050, the pressure on food producers to keep up and plan ahead has reached critical levels. Not only are they obligated to feed this exponentially growing population, but they are also being asked to do so with fewer inputs, changing production systems and a focus on reducing environmental impacts and water, land and energy use. These requirements pose a unique challenge to animal protein producers, as they are also responsible for animal welfare by providing more space and resources for their animals’ care than ever before. Balancing consumer needs with producing a high-quality animal product is the necessary and delicate predicament of U.S. Soy’s No. 1 customer. Soybean farmers, processors, buyers and sellers all play a crucial role in the future of the meat and egg products industry, both as central players in its success as providers of feed inputs and competitors.
The International Production & Processing Expo, the world’s largest annual poultry, meat and feed industry event of its kind, gathers experts from around the world to discuss key trends and changes that will impact the future of the market. IPPE gives the soybean industry strategic information about how these shifts in poultry will impact feed and soy. As all indicators point to these being permanent changes, the entire soybean value chain should prepare to meet these new realities.
Key Points:
Soybean meal is included in more than 90% of diets for poultry and swine, so changes in market demands and management practices stand to have significant impacts on the soybean industry. Soybean buyers and sellers looking to stay on top of opportunities and get ahead of challenges should be aware of the ongoing changes in the poultry industry.
- The same drivers motivating most alternative protein purchases are also supporting the poultry protein market: lower environmental impact and higher protein for the diet.
- Antibiotic-free production not only changes medical practices for poultry but also the dietary needs of animals raised in these operations with a focus on quality.
- In an era of outbreaks, feed and animal traceability is a safety precaution, adding to consumer demands for sustainability and welfare measures.
Antibiotic-Free Poultry Production
According to data provided by Rabobank at IPPE, there will be a 35% increase in demand for animal protein in the next 20 years, with poultry projected as the highest growth segment. Although just producing that much food is a challenge in itself, consumers in many regions of the world are pushing the food industry to do it without antibiotics. What many consumers don’t understand is that while reducing the use of antibiotics in poultry management reduces humans’ exposure, it also changes the dietary needs of the birds in order to combat drops in performance and increases in mortality.
Soybean meal is the foundation of most poultry diets. The favorable protein and amino acid profile of soybean meal delivers crucial nutrients needed for healthy bird growth and performance. U.S. soybean meal provides a “Total Value Package” of digestible amino acids, metabolizable energy and available phosphorous, which are considered to be three of the costliest nutrients making up the diet. When these important nutrients are not provided in the ration in sufficient quantity or quality, animal gut health and subsequent performance will suffer, and profitability will be greatly reduced.
Dr. Charles Hofacre, president of the Southern Poultry Research Group and professor emeritus at the University of Georgia, presented his guiding principles for successful antibiotic-free production at IPPE.
“A good feeding program is key in antibiotic-free production,” he said. “Bird health is gut health.”
The gut is the combat zone for antibiotic-free production. With less medical support, poultry requires higher-quality feed ingredients to maintain their gut health. Low quality feedstuffs can cause digestion issues and build-up in the hindgut. These irritations can prove costly to final yield and the mortality of the bird. This positions U.S. Soy as the preferred choice of poultry producers who have gone from wanting to add value to their production through feeding high-quality soybean meal to requiring it.
There is also an opportunity for the soybean industry to continue to innovate to create an even better bean for poultry producers. U.S. Soy is already known for some of the highest quality soybeans and soybean meal in the world, but plant scientists are already working through crucial partnerships with the United Soybean Board and others to continue serving customers the gold standard in poultry feed they know and expect.
Poultry Industry Leverages Digital Data Management & Sharing
The modern consumer is looking for more insight into how food makes it to the table, and traceability has emerged as a big part of answering this call.
Traceability used to be exclusively tied with contaminations and recalls, but now traceability refers to tracking a product back from customer to origination. Food companies are facing increased pressure from consumers coupled with additional regulation from the U.S. Food and Drug Administration[1] since the introduction of the Food Safety Modernization Act. This act allows FDA to issue mandatory recalls, increasing transparency and pressure to provide the information needed to address any issues. So, while it was forcibly implemented in the processing and packing segment of the food industry, poultry companies have uncovered ways to use technology and traceabiliy to improve their own operations. In fact, products that use artificial intelligence or sensors are already integrated into many large poultry operations. Mike Banks, a poultry business manager at Alltech[2], spoke at IPPE about Alltech’s use of technology. But, the future of data collection in the poultry sector lies in the integration.
“It’s not far-fetched to talk about sensors, because we use them every day,” he said. “What we don’t have is a consistent connection to get the data that’s on the sensor mined for use in other informational purposes.”
Chinese retail giant Alibaba takes traceability data straight to its grocery store customers, according to a recent article by WATTAgNet. Digital price tags on meat and eggs include the product’s origin and additional information with a simple swipe. But many customers are asking for information beyond the life of the bird. Consumers are exploring the sustainability of the production environment of poultry all the way back to the feed. Banks said blockchain and other advancements could integrate information and track feed ingredients back from initial production through exiting the feed mill.
Trucking companies are holding up their end of the deal, utilizing advanced electronic logging software. Banks said traceability software could track feed “going from the field, onto the truck, to the grain holding facility, back to a truck, to a feed mill, to a truck, to farm.” But, the poultry industry is still working to improve its tracking abilities, and it is poised to receive greater support from their feed ingredients to complete the story.
As some of the most sustainable producers in the agriculture industry, soybean farmers are exactly what the poultry industry needs now to prepare for the future. Since 1980, U.S. farmers have increased soy production by 96% while using 8% less energy[3]. This is the sort of accomplishment and narrative today’s consumer wants. Soybeans answer the call for a sustainable diet for poultry and a path to a product consumers can get behind.
Alternative Proteins and the Poultry Industry
Soy burgers, kale chips and veggie sticks would have been dismissed as limited niche items just over a decade ago. Now, these items are not only available but also frequently appear on fast food menus and grocery store shelves across the country. Poultry producers wonder if they should fear the soy burger, but current market conditions indicate: no, or not yet at least.
For soy, this developing segment provides an obvious market opportunity. However, there are overlooked opportunities for the poultry industry to meet the same consumer needs meal alternatives fulfill.
“Plant-based protein alternatives will not be the demise of traditional meat. Meat and meat alternatives can co-exist,” Meagan Nelson with Nielsen told attendees at the 2019 Chicken Marketing Summit.
To Nelson’s point, an increasing number of consumers are following a flexitarian diet— a diet consisting of mostly vegetable and non-meat proteins but allowing for the occasional meat and egg dish. This shift in diet, coupled with concerns about animal welfare, antibiotic treatment of animals and the impact livestock production has on the environment, has led to an increased demand for meat alternatives. According to the Plant Based Food Association, sales of plant-based foods exceeded $3 billion in 2018. Furthermore, 14% of the U.S. population[4] regularly consumes plant-based alternatives to animal products, according to David Portalatin, NPD Group vice president and food/beverage industry advisor. Most of these consumers are choosing mainly dairy and meat protein alternatives.
“This is important because 86% of those do not consider themselves to be vegan or vegetarian,” Portalatin said. “Plant-based protein consumption is going mainstream.”
But, although Portalatin’s data surprised many in attendance at his learning session at IPPE, he brought forward two opportunities for the meat sector — particularly poultry — to step up and protect its remaining market share: address consumers’ concerns (sustainability) and capitalize on strong segments (price-to-protein ratio).
Protein for a Price
The fact remains that chicken provides a high-protein[5], low-cost ingredient that is adaptable to a plethora of different diets. According to the 2018 Food and Health Survey conducted by the International Food Informational Council Foundation, price is still the No. 2 motivating factor behind a purchase — second only to taste.
“Chicken, pork and turkey cost the least per gram, at 2 cents, well below the 10 cents for meat alternatives, 13 cents for nuts and 20 cents for nutrition bars,” said Nelson.
That’s not much for an individual serving, but when feeding a family, that places a significant increase on monthly food costs. A recent study also shared at the Chicken Marketing Summit indicated that only 42% of surveyed individuals[6] could correctly identify the protein levels of chicken, which illustrates further opportunity in this market with more protein content education. Until the alternative protein market is able to reduce costs, poultry products will continue to lead in the market— particularly in the low-income demographics. Consumers driven by cost and taste are satisfied with the quality products the poultry industry provides for their families.
Strength in Sustainability
Consumers are calling for a more sustainable food system. To address this, poultry producers can communicate their sustainability story to support consumers’ attention to how their food is raised and prepared. The Food and Health Survey[7]also reported 6 in 10 consumers say it is important to them that the food they purchase or consume is produced in a sustainable way, which is increasing year after year. Many of the consumers surveyed indicated they would purchase the product with a more appealing sustainability story when presented with equally nutritious products.
“Consumers buy labels because it leads them to believe they are making progress on their path to purity in their foods,” said Portalatin.
Nielsen data supports the idea that consumers’ concern for the environment is something they truly do consider important. The data showed 43% of consumers said they are willing to replace meat-based protein with plant-based protein alternatives if it helps the environment. So, although consumers are looking for higher protein diets, it doesn’t necessarily mean more meat — growth in the segment is stymied. Consumers want to take advantage of the attractive price-to-protein ratio poultry products provide, but face barriers when it comes to environmental concerns. Higher income consumers may feel more motivated to purchase based on their sustainability values over their budget and even taste criteria.
With poultry consuming billions of soybeans[8] in feed, the poultry industry has an opportunity to tell both the sustainability story of that animal’s life and care — which many leading poultry companies are starting to communicate better — but also the sustainability story of its feed. U.S. soybean farmers are committed to implementing new production practices to continue improving sustainability for their operations, but also for their customers. Farmers have contributed to reducing greenhouse gas emissions by almost half since 1980 and continue to make impressive strides forward. As farmers continue to innovate and improve, both the soybean and poultry industry need to share this important part of the sustainability story with consumers. It’s a win-win.
Looking Ahead
It was clear by the speakers and content shared at IPPE that the poultry industry is in a period of transition. Technological advances, changes in the stewardship of antibiotics and the movement of alternative proteins toward the center of the plate will all have significant and lasting impacts on the industry and the world food system.
It’s important to look beyond the obstacles toward the opportunities for poultry and its partner industries, such as soy. The same drivers motivating most alternative protein purchases are also supporting the poultry protein market. Consumers are searching for diets with lower impact on the environment and higher protein for an affordable price. Antibiotic-free production not only changes medical practices for poultry but also the dietary needs of animals raised in these operations, but there are solutions. High-quality soybean meal plays an important role in an effective poultry diet. In an era of outbreaks, feed and animal traceability is a safety precaution, and consumers are demanding more in regards to sustainability and welfare before making purchases.
In all these cases, the stability, quality and environmental stewardship soybean farmers provide to their customers in the poultry industry only serve to better position chicken and egg companies for success in feeding the growing world and its changing priorities.
[1]https://www.foodsafetymagazine.com/magazine-archive1/december-2014january-2015/the-evolution-of-traceability-in-the-meat-poultry-industry/
[2]https://www.feednavigator.com/Article/2019/02/21/AgTech-may-boost-feed-traceability-improve-ration-formulation
[3]https://ussec.org/wp-content/uploads/2017/11/20180416-U.S.-Soy-Sustainability-Assurance-Protocol-low-res.pdf
[4]https://www.wattagnet.com/articles/36816-protein-production-2030-animal-vs-plant-based-proteins
[5]https://www.verywellfit.com/high-protein-foods-and-the-amount-of-protein-in-each-2242514
[6]https://www.wattagnet.com/articles/38396-flexitarian-not-an-f-word-for-chicken-producers
[7]https://foodinsight.org/wp-content/uploads/2018/05/2018-FHS-Report-FINAL.pdf
[8]https://www.unitedsoybean.org/media-center/issue-briefs/animal-agriculture/
