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While the poultry industry has sustained some hard knocks in the past, it will have to adapt to major changes in the future.

Tough times ahead for US poultry industry

January 12, 2012
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Tough market for poultry industryWhile the poultry industry has often had a hard, bumpy road, the industry is expected to face some permanent and significant challenges in the near future, says a report from Rabobank’s global Food & Agribusiness Research and Advisory (FAR) department. Entitled This is not your grandfather’s chicken industry—Thoughts from a banker’s perspective, the study is a wake-up call to the US chicken industry by Rabobank’s poultry sector experts.

According to the report, the US chicken industry is encountering permanent rather than cyclical changes that will require significant changes in how it operates in the future. These challenges include:

• Structurally higher and more volatile feed input costs

• Maturation of the US domestic market

• Rapid globalization of the industry, requiring US companies to develop new export products for new export markets

• Increasing government regulation that makes it difficult to achieve competitive cost management and efficiency

• Excess supply in the industry, which has been made difficult to remedy given recent court rulings that inhibit companies’ ability to eliminate capacity or even reduce production.

Rabobank believes the industry will adjust eventually, but those that will survive and thrive in the future will be the ones that recognize the operating environment has changed forever, and alter the way they run their businesses.

For more information, contact Lynne Burns; 212-808-2581; lynne.burns@rabobank.com; www.rabobank.com

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