Global Poultry Production

and Market Outlook

Shaping industry focus in fast changing times

Nan-Dirk Mulder 31 November 2022

Content

1. Global Production and Market Outlook

2. Regional Asia Outlook 2023
3. Long term perspectives
 Global protein markets 2019-2022: a perfect storm
Poultry industry performance has improved in 2022 but what to expect in 2023?
Global animal protein market monitor: 2019-2022
170 African Swine Fever 250
Covid-19
Feed price rally and HPAI
150 Ukraine
Eggs
200
Poultry

Feed price index Jan 2019=100

130 Beef
Index Jan 2019 =100

Pork
150

110

Sheep 100

90

50
70

50 0

Feed price index Poultry Pork Beef Egg Sheep

Source: Rabobank analysis based on FAO, CBOT and local statistics, 2022
 Global protein demand: slower growth
Eggs and poultry fastest growing proteins long term and in crisis years
Global meat and egg consumption 2010-2022f
2018> ASF, AI, Covid, input prices: +0.5%
2010-2018 meat and egg consumption: +1.9% YOY
450 YOY
+3.3% +0.5%
-1.0% 0.0%
400
350 Beef: +0.1% YOY
Beef: +1.2% YOY
300
x million tons

Pork: -0.5% YOY

250 Pork: +0.8% YOY
200
150 Poultry: +1.5% YOY
Poultry: +2.5% YOY
100
50 Eggs: +1.9% YOY
Eggs: +2.6% YOY
-
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022f
Eggs Poultry Pork Beef Sheep
Source: Rabobank based on USDA, FAO and local statistics, 2022
 Economic outlook 2023: slower growth
Ukraine is impacting global growth and leads to further rising inflation levels
Global GDP growth 2015-2023f IMF Economic outlook: GDP Growth 2020-2022f
8,0 +4.7%
+7.4%
6,0
+4.6%
+3.6%
Russia
+3.3%
4,0
-2.7% +8.1%
-3.4%
2,0 Canada +5.7% UK +5.3% +1.6% +1.7%
+3.1% +5.7% +3.2%
- -5.2% +1.6%
+5.0% +2.3%
+4.8% Japan
(2,0) +2.1%
-9.4% Euro zone -4.5% +5.3%
United States China
+3.4%
+10.7% MENA +8.9% +6.8%
(4,0) -3.4%
-6.4% +4.5%
Mexico +2.2% +3.8%
(6,0) ASEAN
-3.5% +4.2%
+10.0% Colombia Sub Saharan +3.8%
-8.3% +4.7% -1.7% Africa India
+4.9%
+2.8%
-6.8%
World +4.0% +2.1%
Australia
Legend
-7.3%
Advanced economies 2020 Argentina Brazil South Africa -2.2%

Emerging market and developing 2021

-3.9%

economies 2022f -6.4%

Source: Rabobank analysis based on IMF, World Bank Economic Outlook, Oct 2022 -10.0%
 Big pressure on consumer spending power
Sharp increase in consumer prices - trading down protein demand to be expected
Rising global price inflation (Sept 2022 YOY) Trading down in animal protein demand
Ukraine
Nigeria Sales channel Product Concepts
Poland species
Russia
“Expensive” Premium Beef Organic
Netherlands
restaurants
Colombia
UK
Germany
Kenya Premium Pork
Mexico retail Free range
US
Peru
South Africa Quick service
Brazil restaurants
Canada Poultry Barn
Thailand
Australia Supermarkets
Indonesia
India Slow growing
Ghana Discount Eggs
Vietnam
Saudi Arabia
Japan Traditional Vegetable
China “Cheap” markets protein Regular
0% 5% 10% 15% 20% 25%
Source: Rabobank analysis based on IMF 2022 CPI Interannual
Japan market: Covid 19 and trading down impact
Chicken the winning protein in times of re-opening food service and more price focus

Japan protein at-home consumption 2020-2022 vs 2019 Food service demand 2020-22 vs 2019
25% 100%
5-20% higher at-home
20% consumption 80%

15% 60%
Chicken

Change 2020/2021 vs 2019

40%
10%
Change YOY

20%
5%
Pork
0%
0%
-20%
-5%
Beef -40%
-10%
-60%
-15%
-80%
-20% Fish -100%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2020 2021 2022
2020 2021 2022
Beef Pork Chicken Fish US Germany UK
High costs (1): Feed price to stay high but lower then Q2
Demand destruction plus rising supply will lead to high but lower prices in 2023
Rabobank Grains and oilseed price outlook Key drivers for outlook
1.800 Base case forecast
1.692
1.600 1.580
1.497 1.533
Soy Bean Fertilizer Low global
1.400 1.388 1.400 1.360
1.361 1.345 1.330
1.310
prices stocks
1.200 1.238
1.135
USD/bushel

1.073
1.000 Wheat
892 925 905 Black sea
851 865 868 880 870870 El Nina
800 779 777 814 region supply
659 698
646 680 670 660 660 650 645 625
600 602 605
550 518 529 538 560 567
400 417 Corn
375 US-biofuel Low China
323 340
200
demand
Strong
0
South
America
supply
Wheat Corn Soy bean
Source: Rabobank analysis, November 2022
High costs (2): High energy and fertilizer prices
Big potential impact on chicken production and grains and oilseed supply
Natural gas prices: high but big global differences US Urea fertilizer price: high level
1.000 Old average Covid-19 Ukraine Ukraine
Old averages Covid-19
900
800
700
Index Jan 2018=100

600
500
400
300
200
100
0
Jan/18

Jan/19

Jan/20

Jan/21

Jan/22
Jul/18

Jul/19

Jul/20

Jul/21

Jul/22
Apr/18

Oct/18

Apr/19

Oct/19

Apr/20

Oct/20

Apr/21

Oct/21

Apr/22

Oct/22

Dutch natural gas US natural gas China LNG

Source: Rabobank analysis based on Tradingeconomics, 2022

ASF and Avian Flu’s impact on global markets
Ongoing outbreak throughout the year with big impact on global supply, trade and prices

ASF worldwide 2020 – September 2022 HPAI in poultry, captive and wild birds Jan- Aug 2022

Source: Rabobank analysis based on OIE, Sept 2022

Global chicken production 2020-2022
Historic slow growth mainly driven by supply issues, demand is relative strong
Chicken production growth by country 2020-2022f

25%
Historic slow
20% growth
2019-2022 3%
15%

10%
YOY change

5%

0%

-5%

-10%

-15%

2020 2021 2022

Source: Rabobank projections based on FAO, USDA, local statistics, 2022
Outlook 2023: Focus on operational excellence
Key focus 2023: Managing big operational challenges in times of price driven market conditions
Demand: Strong poultry demand but more price focused
Economy Food prices Covid-19 Distribution Consumption
Weaker economic context Move to record ‘Living with Covid”, Recovery food Trading down,
Less spending power high level but winter risks service more price driven

Operational excellence Winners in times of change

- Flexible distribution and contracts - Market power
- Efficiency - International operations
- Strong procurement - Efficiency in value chain
- Feed formulation - Flexible supply chains
- Energy efficiency and access - Access to capital
- Low labor use

Feed costs Distribution Energy Labor Construction ASF, Avian Flu

Ongoing high and High costs and High cost and Availability Higher costs Ongoing supply
volatile disruptions availability challenges challenges impact

Operation challenges: Higher costs, supply disruptions and volatility

Source: Rabobank analysis, 2022
Regional Asia
Outlook 2023
China’s fast meat production recovery after 2018 ASF impact
Poultry fastest growing protein, but fast recovery leads to big volatility
China animal protein production: fast ASF recovery China protein prices 2019-2022
140 2018-2022f 300
Total: +1%
ASF
120
Eggs: +9% 250

Index Jan 2019=100

100
Eggs 200
x million tons

80 Poultry:+21%

Poultry 150
60 Sheep +6%
Beef: +8%
100
40
Pork: - 1%
20 50
Pork

Jan

Jan

Jan

Jan
Jul

Jul

Jul

Jul
Oct

Oct

Oct

Oct
Apr

Apr

Apr

Apr
0
2018 2019 2020 2021 2022f 2019 2020 2021 2022

Pork Beef Sheepmeat Poultry Eggs Pork Chicken Beef Eggs

Source: Rabobank, 2022

China domestic feed prices higher but less volatile
Modernization of industry to lead to higher soybean and corn imports
China corn, soy and feed price index 2019-2022 China grains and oilseed imports
7.000 180 180.000

Feed ratio price index Jan 2019=100

6.000 160 160.000

140 140.000
5.000
120 120.000
4.000
CNY/ton

100

x 1,000 tons
100.000

3.000 80 80.000
60 60.000
2.000
40
40.000
1.000
20
20.000
0 0
0
Jan

Jan

Jan

Jan
April

Oct

April

Oct

April

Oct

April

Oct
Jul

Jul

Jul

Jul

2019 2020 2021 2022

Feed ratio price index Corn Soybean Corn Barley Sorghum Wheat Rapeseed

Soybeans Soybean Meal

 Japan: Further shift to chicken, market supply is tight
More demand for domestic fresh chicken, import prices still very high
Japan chicken supply 2019-2022f Japan price trend: Strong chicken prices especially breast
+2%
3.000
750 400

2.500 700 350

Chicken leg price JPY/kg

Breat meat price JPY/kg

X 1,000 tons

2.000 +3% 650 300

1.500 600 250

0%
550 200
1.000

500 150

Jan

Jan

Jan

Jan

Jan
May

May

May

May

May
Sep

Sep

Sep

Sep

Sep
500

2018 2019 2020 2021 2022

0
Consumption Production Imports
Legs
2019 2020 2021 2022f
Thailand: Big impact ASF on Thai meat industry
ASF related 35% decline in pig herd pushes up prices, chicken industry well positioned in 2023
Thailand supply balance sheet 2018-2022f Thailand poultry market: higher prices
200
3.500 Strong chicken market
180

3.000
160

2.500 140

120
x 1,000 tons

2.000

Index Jan 2019=100

100
1.500
80

1.000 60

500 40

20
0
Production Exports Production Production -
Chicken Pork Beef Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct

2019 2020 2021 2022f 2019 2020 2021 2022

Feed index Broiler

 Vietnam: recovering meat supply
ASF and Covid-19 has hit industry significantly, market shows recovery
Vietnam meat supply 2018-2022f Vietnam pig prices : Lower but still abover break even
3.000 Solid position chicken

2.500

2.000
x 1,000 tons

1.500

1.000

500

Recovering
0 Pig herd chicken market
Production

Production

Production
Imports

Imports

Imports

Chicken
rebuilding but due to full
industry steady
slower and reopening and
growth mode
bumpy economic
recovery
Pork Chicken Beef

2018 2019 2020 2021 2022f

 Philippines: Ongoing tight supply keeps prices high
Pig industry in rebuilding mode, but with ongoing disease pressure
Philippines meat production 2019-2022f Philippines chicken prices 2018-2022
1.800
120
1.600 115
1.400 110

1.200
ASF 105
100
x 1,000 tons

PHP/kg
1.000
95
800
90
600 85
400 80

200
75
70
0
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2
Production Imports Production Imports Production Imports
Chicken Pork Beef 2019 2020 2021 2022
2018 2019 2020 2021 2022
India: Industry recovery via a bumpy road
Recovered market after Covid- industry needs to rebalance supply/demand
India meat production 2019-2022f High chicken prices in India, rising feed costs
5.000 200

4.500 180

4.000 160

3.500 140

Index Jan 2019=100

3.000 120
X 1,000 tons

2.500 100

2.000 80

1.500 60

1.000 40

500 20

- -
Production Production Exports Production Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Chicken Beef Pork 2019 2020 2021 2022
2018 2019 2020 2021 2022f
Malaysia – Market highly impacted by government interventions
Export ban on live poultry trade to Singapore impacted markets, now gradually relieved

Malaysia chicken balance : dropping production Singapore imports of live birds from Malaysia
1.800 Price ceiling,
subsidies 60 Export ban Feb: Ceiling price
1.600 (price control
50 scheme) + subsidy
1.400
to producers
1.200
40
x 1,000 tons

Million birds
1.000 May- Oct: Ban on
30 export live birds
800
until “market
600 Removal 20
balance returns”
PAPS 40-50% of
400 Singapore
10 demand
200 May: Abolishment of
APs for import of
0 - meat
Production Consumption Exports Imports 2017 2018 2019 2020 2021

2017 2018 2019 2020 2021 2022

Indonesia: Rising supply but consumers buy price driven
Production is recovering with big investments but pressured consumer demand and prices

Indonesia compound feed production 2015-2022f Indonesia chicken production

25 4.000
Covid-19 3.500
+5% 3.000
CAGR: +7% -8% +3%

x 1,000 tons
20 2.500
2.000
1.500
15 1.000
Million tons

500
0
2018 2019 2020 2021 2022
10
Indonesia poultry prices
40

35

IND X 1,000
5
30

25
0
2015 2016 2017 2018 2019 2020 2021 2022f 20
Jan Feb Mrt Apr Mei Jun Jul Aug Sep Okt Nov Dec

2020 2021 2022

 Slow down in global chicken market growth
High costs, avian flu and market uncertainty keep production growth levels low
Global chicken production outlook 2023f
Global chicken meat production
Thailand
25.000
Vietnam
Malaysia
Philippines
20.000 Chile
Turkey
Colombia
15.000 Russia
X 1,000 tons

Saudi Arabia
Mexico
Indonesia
10.000
Argentina
Canada
South Africa
5.000 United Kingdom
Peru
China
0 South Korea
Brazil
United States

Mexico

Colombia

South Africa

Chile
Thailand

Saudi Arabia
Ukraine
European Union
Russia

Indonesia

Peru
Brazil

Other
China

Japan

Malaysia

South Korea
Turkey

Vietnam
United Kingdom

Egypt

Canada
Philippines
Argentina

Australia

Australia
Egypt
Japan
Ukraine
United States
European Union
2019 2020 2021 2022
-1% 0% 1% 2% 3% 4% 5% 6%
23
Global poultry market outlook 2023
Global supply of chicken will be tight – most industries perform above breakeven
Global key poultry markets in 2023 Global outlook 2023
Global demand
2022: +0.6%, 2023: +1.0%
- trading down impact
+ 0
Supply challenges Challenges with breeding stock High and volatile feed annd
Labor issues, high Trade restrictions, FX, input supply
production costs More local support, grain taxes
energy costs
Covid-19: More ‘living-with-
0 + Covid-strategies, but potential
Rising oversupply worries 0/+
Balanced market context
Improving prices
winter setbacks
Avian flu concerns
Ongoing tight supply
Slower but still strong demand Wet market closures
AI +peaking production costs Avian influenza: Major global
Declining production
+ 0 concern with ongoing impact
+
Strong demand Rising domestic demand
Food security Reopening economy
+
Supply recovered in Q3
0/+ Strong economy Feed costs ASF and AI
Labor and logistics issue will
Avian flu concerns
Low supply,high prices disrupt markets, oil prices
Disrupted value chain
Feed costs
0/+
Self sufficiency +
strategy
Labor availaiblity
Supply disruption: Working
Strong global trade ASF impact capital and PS availability
Weak domestic market 0/+ Improving exports
Improving market
Poultry masterplan
Input challenges
Peformance: Moderate optimistic
Lifting safeguard dispite operational challenges

Source: Rabobank analysis , 2022

Long term
implications
The food supply challenge 2050
Supplying 50% more food in a context of more pressure on resources

Meat demand Food demand Bio fuel Food:

demand +50% in 2050

Food supply Fuel supply Expansion

Meat supply
efficiency
Yield
Sustainability

Livestock/poultry supply Efficiency

Livestock supply cultivation
Grain and oilseed supply Yield
Sustainability

Land use Declining

Global animal protein consumption 2031: +16%
Poultry and eggs the winning protein, but in changing investment perspective
Global protein market 2022-2030 Long term investment perspective
800 Projections 2021-2031 Chicken the winning protein
Animal protein: +16% • Chicken the fastest growing proteins
700
• Alternative protein will grow fast but from small base
600 Seafood: +12% • 85% of growth in emerging markets
Social driven change
500
Eggs: +22% • Feeding the world
x 1,000 tons

• Food security
400
• Food or fuel
Beef: +8%
300 • More concepts, meat alternatives – but slower growth?
• Sustainable and climate friendly
Pork: +9%
200
Changing supply chains
100 • More local and customer driven
Poultry:+26% • More online, digital and smart
- • Food security
1991 2001 2011 2021 2031f
More consolidation and internationalisation
Poultry Pork Beef Sheep Eggs Seafood
• Industry to consolidate and integrate
• Relocation of the industry
Source: Rabobank, 2022
Global dynamics in animal protein markets
Different perspectives on social themes in each stage

1 ECONOMIC TAKE-OFF 4 ECONOMIC REINVENTION

Food as a need Food as stimulation,
Time free social awareness
Income: < $ 5,000
- Elimination of poverty Income: > $40,000
- Nutrition Environment, animal welfare,
health
- Live bird markets
Sustainability and new technology
Alternative proteins
Location Bound Location free

2 ECONOMIC DEVELOPMENT 3 ECONOMIC CONSOLIDATION

Food as a social occasion Food as nutrition/well-being
Income: $ 5,000 - $15,000 Income: $15,000 - $40,000
- Rising consumption Food safety, health and
convenience
- Modern distribution
Consolidation
- Greenfield expansion Time bound
Source: Rabobank analysis, 2022
 Fast changing global protein industry landscape
Fast growth and modernizing in emerging markets, social concerns in emerged markets
Poultry, egg and pork projected industry growth and development 2021-2031 Key drivers for change

CAGR:
Industry structure +1%
Modern CAGR:
+3%
Northeast
Northeast
Asia Changing
Asia Economic
consumer
China Northeast growth
Asia behaviour
China

MENA Social Increasing

Modernizing CAGR:
+5%
concerns efficiency

Southeast
Asia Southeast
Asia

Legend
Backyard
Poultry Eggs Constant investment
process to adjust
Fast economic growth
Economic Mature industry to changing
Take-off consolidation
fast development
Economic development stage context
Source: Rabobank analysis, 2022
Asia is the world’s leading growth in next decade
65% of global market growth will be in Asia, significant industry expansion needed

Global meat and egg production growth 2021-2031f

14.000

12.000

10.000

8.000
x 1,000 tons

6.000

4.000

2.000

(2.000)

(4.000)

Poultry Eggs Pork Beef

Changing value chain models and technology
Industry adaption of new technology to accelerate due to market and social change

Grains & Farming/

Feed Processing Customer
Oilseed breeding

Food and resource security

Reduce carbon footprint/carbon neutral/Circular models

Digital and smart value chains

Strategic supply chain management and investments

Inventory management

Labor
More focus on
Early feeding Robotics Online
food and Non soy
Manure Artificial Remote working
resource GM Free
Sexing technology intelligence Social concerns
security PAP
Antibiotics Data Price
Insect meal
reduction 3d Printing
Labeling

Source: Rabobank analysis, 2021

Value chain efficiency to stay key important
Optimal efficiency of the whole value chain is more important than ever before
Broiler cost price structure in 2017

France 29.2 30.3 1.67 1.9 20 31 154

UK 31.5 40.5 1.62 2.3 15 27 151
Germany 31.5 31.5 1.58 2.4 15 28 145
Poland 31.4 31.5 1.62 2.3 6 22 134
Thailand 29.6 28.9 1.65 2.4 2 17 120
US 24.1 27.0 1.83 2.7 14 25 117
Ukraine 24.2 32.0 1.74 2.5 2 18 114
Brazil 24.4 22.3 1.79 2.6 3 17 108

• Efficiency • Modernisation • Modernisation at plant

• Feed grains access
• Feed formulation
• Alternative sources
Source: Rabobank analysis based on LEI data, 2017 Basis
• Efficient hatching • Size farms level
egg production • Skills farmers • Line speed
• Pricing model • Labor use plant
Value chain supply management
Pricing
Communication
More focus on value added and concepts
Value added poultry products: fast growth, innovation potential and margin potential
The poultry value added pyramid The US chicken sandwich “battle”:
booming chicken sales

High
2019
Brand

Value added
food 2019
Margin
level Value added poultry

Premium poultry 2020

Standard poultry
Low Live bird markets

Source: Rabobank analysis, 2022

Online food distribution grows >40% per year
Plenty of new opportunities to market and position poultry and eggs
Online food sales (YOY growth) Value chain tracking & tracing Personal advertisements Inspire via social media
120%

100%

80%
YOY Change

60%

40%

20% Meal planners DNA based food choices Personal food advice
0%

%2015-1019 %2019-2021

Source: Rabobank analysis based on IGD, 2022

Value chain models will change
Towards digital, smart and more multi-discipliairy value chains
More multi-disciplinary view on production Industry benefits
• Growth rates • Mortality rates
• FCR • Density
• Yields • Diseases
• Stress
Higher efficiency
Financial and
Animal health
technical
and welfare Benchmarking
performance

Future customer standards

Quality
Environmental Data ownership
management
impact
and guarantees

• Foot print • Tracking & tracing

• Efficiency • Value chain level Sector performance
• Energy • Antibiotics
• Water usage • Salmonella
• Campylobacter

Source: Rabobank analysis, 2021

Take-aways
Short term outlook 2023
- Strong poultry demand with more trading down and demand liquidation due to high prices
- Rising concerns on emerging market food supply: chicken can support as cheapest meat protein
- Poultry to outperform other proteins in most markets, global trade volumes will be strong
- Major supply challenges: input costs, distribution, labor, avian flu
- Leadership in feed and energy efficiency, strength in procurement, flexibility and market positioning to pay off more then
ever before

Long-term strategic implication

- Chicken and eggs will be the fastest growing animal protein due to its price competitiveness especially with high feed prices
- Asia the leading global market with 65% of global growth, ongoing opportunities for greenfield investments
- Higher incomes to lead to more modern distribution and changing, more digital and smart value chains
- Focus on efficiency and sustainability to be key in times of high costs, rising food demand and limited resources
- Internationalisation in Asian region as well as globalisation to continue via two way street of investments

36
Thank you for your
attention
Nan-Dirk Mulder
Senior Global Specialist Animal Protein
nan-dirk.mulder@rabobank.com