The conflict escalating between the United States, Israel, and Iran is beginning to create ripples across the global poultry industry. This situation is disrupting essential trade routes, elevating production costs, and unsettling export markets spanning from Europe to the Middle East.
While immediate consequences may still be manageable, industry experts caution that the longer the conflict continues, the more profound the repercussions will become.
Impact on European Poultry Producers
European poultry producers are already feeling the effects of the ongoing war, primarily due to rising energy costs and increasing volatility in feed markets that are squeezing production expenses.
According to the International Poultry Council (IPC), developments in the Middle East could influence European producers mainly through indirect channels such as energy prices, fertilizer supply, and logistics.
“Poultry production is highly sensitive to energy costs since heating, electricity, processing, and transportation are all energy-intensive,” the IPC explained. “If geopolitical tensions result in sustained hikes in oil or natural gas prices, additional cost pressures could arise for producers.”
Duration and Intensity of the Conflict
The overall impact largely hinges on the duration and intensity of the ongoing conflict. Stig Munck Larsen, chief consultant at the Danish Agriculture and Food Council while also chairing the AVEC’s Trade Working Group, stated that the scale of negative repercussions on the poultry value chain will grow as time progresses.
“Short-term impacts are likely to escalate, and any further escalation can adversely affect the supply of vital inputs, including energy, feed, transport costs, and wages, especially if inflation rises,” Larsen emphasized.
Risks to Global Trade Flows
The conflict poses significant risks to key global transport routes and, thereby, the global poultry trade. Larsen notes that exports of meat and livestock to the Middle East may cease or dwindle considerably due to ongoing transportation issues.
“Trade volumes may be redirected towards other markets, particularly in Africa, with Brazil and certain non-EU countries in Europe stepping in. This shift could negatively impact bulk pricing,” he warned. Furthermore, disruptions could also hinder exports to Asian markets, extending shipping times by 10-14 days and raising costs significantly.
Disruptions to Poultry Trade
IPC has confirmed that international trade route disruptions could have serious implications for poultry trade. “While genetics, such as day-old chicks and parent stock, are primarily transported via air, poultry meat trade heavily relies on maritime shipping. Thus, increased freight costs, soaring insurance premiums, or limited access to specific shipping routes could significantly alter trade flows,” the IPC commented.
Moreover, potential disruptions in fertilizer markets—which are closely tied to energy supply—could impact crucial crop production necessary for poultry feed, such as maize and soybeans. Any disruption in fertilizers could subsequently lead to increased feed costs.
Potential Long-term Risks
If the conflict evolves into a long-term situation, its repercussions for the poultry sector could be considerable. “Imbalances in the supply and demand of key inputs could drive production costs higher, elevate product prices, and contribute to food inflation, which may diminish consumers’ purchasing power,” Larsen predicted.
There’s a risk that additional supply volumes from exporting third countries could flow into the EU at lower prices, creating added price pressure for EU producers operating within an environment of increasing costs throughout the entire value chain.
The Resilient Side of Poultry
On a more positive note, poultry remains one of the most affordable sources of animal protein during periods of economic instability. “Historically, as households face rising living costs, demand typically shifts toward poultry due to its relative affordability compared to other meats. Thus, the sector can show a certain level of resilience even when broader market conditions become challenging,” the IPC remarked.
