Required Report - public distribution

**Date:** 8/31/2006

**GAIN Report Number:** KU6002

KU6002

**Kuwait**

**Poultry and Products**

**Annual Poultry Meat Report**

**2006**

**Approved by:**

![](media/image1.wmf)ATO: David J. Williams

U.S. Consulate General

**Prepared by:**

Marketing Specialist: Mohamed Taha

**Report Highlights:**

In 2007, Kuwait's broiler production is projected at 35,000 metric tons.
Imports of frozen chicken are forecast at 95,000 MT for 2006 due to
slower re-exports to Iraq, Kuwait's main re-export market. Imports in
2007 are expected to bounce back to 145,000 MT. Brazil will continue to
be the principal whole chicken and part supplier to Kuwait.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Dubai \[TC1\]

\[KU\]

Table of Contents

[Executive Summary 2](#executive-summary)

[Production 2](#production)

[Consumption/Utilization/Stocks 2](#consumptionutilizationstocks)

[Trade/Marketing 2](#trademarketing)

# Executive Summary

# 

# Note: "Data included in this report is not official USDA data. Official USDA data is available at <http://www.fas.usda.gov/psd>".

Kuwait's broiler meat production in CY 2007 is expected to remain at the
35,000 metric ton (MT) level. Lingering concerns about the effects of
avian influenza (AI) findings in exporting countries on consumer demand
have prompted local producers to shy away from any substantial expansion
plans.

Poultry consumption has rebounded after declining in response to AI
concerns among consumers and is expected to increase modestly during
both 2006 and 2007. Consumers have become better educated about the
effects of AI.

Poultry imports are expected to increase significantly to 145,000 MT
during 2007 as re-exports to Iraq resume following the lifting of Iraq's
AI import ban. About half of total imports are consumed in Kuwait.
Brazil continues to be the dominant supplier.

# Production

In CY 2007, Kuwait's broiler meat production is expected to remain at
35,000 metric tons (MT) in response to anticipated tepid poultry demand
as a result of AI concerns among consumers, particularly those consumers
who are most likely to consume locally produced poultry. Two major
producers account for 75 percent of local production, a third, smaller
producer accounts for another 15 percent, with five to six small farms
accounting for the balance. An estimated 40 to 60 percent of the
production is sold live with nearly all remaining poultry marketed as
frozen or chilled whole birds. Only one percent of production goes for
further processing. Demand for live chickens is declining due mainly to
the convenience of frozen or chilled birds and health concerns.
Mortality runs at 8-10 percent annually. Harsh climatic conditions are
the principal cause of high mortality, but rates would likely decline
with enhanced veterinary oversight.

Local broiler production does not compete directly with imported
broilers. Local whole frozen chicken retails at prices about 50-60
percent higher than imported frozen chicken, while chilled local chicken
retails at more than double the price of imported frozen chicken. Price
differences are driven by high production costs, as most inputs must be
imported. One of the two major poultry operations produces 1.5-2.0
million quails annually, marketed mostly as chilled. Finally, one
smaller farm produces about 100,000 ducks annually, marketed mostly as
live, and to lesser extent, as chilled. Production operations are
disbursed across the country with no concentration of farms in one
single area.

Major farms prepare their own feed from imported ingredients. Corn is
imported by the government-owned Kuwait Flour Mills Company and is sold
to farmers at a subsidized price. Other ingredients, such as soybean
meal, concentrates and pre-mixes, are imported by private companies and
sold to poultry farms at market rates. The use of growth hormones is not
permitted. The feed conversion rate runs at about 2 to 1 as most farms,
but falls to 1.8 to 1 on well-managed farms. Birds are usually
slaughtered after 35 days weighing 1.3 kg, on average. Dressed weight is
typically about 900 gms, on average.

All major farms run modern well-equipped operations and routinely
upgrade and expand facilities with the latest technology and equipment.
Aside from reduced corn prices, the Government of Kuwait does not
provide any direct support to the poultry sector. However, the cost of
water and electricity is the cheapest in the Middle East. The largest
three farms run their own slaughterhouses while other farms market their
production live.

Hatching eggs for broiler production are imported from India and Egypt
while hatching eggs and day-old-chicks for layers are imported primarily
from Saudi Arabia.

The second largest producer owns and supplies a local started and
supplies a local fast food chain.

# 

# Consumption/Utilization/Stocks

Kuwaiti consumers, who account for about 50 percent of the population of
2.5 million, prefer locally produced live and/or chilled broilers. The
appeal of these birds, despite their high price, is their perceived
freshness (locally slaughtered) and compliance with Islamic Halal
requirements. Local whole frozen chicken retails at prices about 50-60
percent higher than imported frozen chicken, while chilled local chicken
retails at prices more than double imported frozen chicken prices.
Foreigners living and working in Kuwait, particularly those with low
incomes, consume imported frozen chicken that is usually less expensive
than the locally produced. Individually wrapped, oval shaped, and white
skinned frozen whole birds in the 800‑1,000 gram size range are the
ideal shape, color, and size for Kuwaiti consumers. Brazilian, Saudi
Arabian, and European whole chickens conform more closely to consumer
preferences and enjoy strong local demand. U.S. whole chickens are not
available in the Kuwaiti market since they are more expensive than
chicken imported from other sources. U.S. chicken parts are used
primarily in HRI sector.

The AI scare had a limited and short-term negative impact on chicken
sales in Kuwait. Production and consumption have rebounded, but are not
expected to increase significantly during CY 2007 due to lingering AI
concerns. Generally, chicken meat is more popular than red meats because
it is perceived as a healthier meat and costs less. Some small
cafeterias and restaurants are starting to utilize leg quarters, which
is a positive development for U.S. chicken prospects in the Kuwaiti
market.

In 2007 total chicken meat consumption is forecast at about 105,000
metric tons, of which 12,000 metric tons or 11 percent are parts.
Imports are estimated to cover about 70 percent of total consumption and
the remaining 30 percent will be covered by local production. Per capita
chicken meat consumption is forecast at 43 kg. As increasing numbers of
Kuwaiti families dine away from home, longer-term prospects for growth
in chicken consumption are good.

Retail prices for Brazilian whole chickens, by far the dominant origin
in the Kuwaiti market, range from \$2.21-\$2.30/kilogram. Saudi Arabian
brands retail at about \$2.60/kilogram, while French brands sell for
\$2.00 - \$2.15/kilogram. Kuwaiti origin frozen whole chicken is
retailing at \$2.85/kilogram. Consumption is comprised of broilers only.
Local spent hens are discarded or recycled in the feed industry as local
regulations prohibit such birds from entering the food chain.

Below is a table showing current retail prices for poultry products in
Kuwait:

  ------------------------ -------------------------- ------------------------------
  **[Type]{.underline}**   **[Source]{.underline}**   **[Price\$/Kg]{.underline}**

  Turkey                   Brazil                     4.0

  Turkey                   USA                        4.59

  Duckling                                            4.38

  **Frozen Chicken**                                  

  Chicken                  S.Arabia                   2.12-2.66

  \"                       Brazil                     2.09-2.66

  \"                       France                     2.17-2.35

  \"                       Kuwait                     2.99-3.39

  Mini Broil               Kuwait                     3.85

  Chicken Breast           Brazil                     3.02

  Chicken Wings            Brazil                     2.33

  Chicken Thighs           Brazil                     2.26-3.02

  Half Breast              Brazil                     5.02

  Drumsticks               S. Arabia                  3.00

  Chicken Legs             Kuwait                     3.23

  Chicken Legs             S. Arabia                  4.22

  Quails                   Kuwait                     6 pcs=\$4.10

  **Fresh Chicken**                                   

  Chicken whole            Kuwait                     4.46

  Chicken -mini            Kuwait                     5.29

  Chicken Wings            Kuwait                     3.54

  Chicken Breasts          Kuwait                     5.29

                                                      
  ------------------------ -------------------------- ------------------------------

Boneless parts, normally packed in 1 or 2 kg packages, are popular both
with consumers and with restaurants, particularly \"Shawarma\" sandwich
shops, because of their practicality. However, the high cost of this
product is an impediment to wider household use.

Kuwait does not have an official stock holding program. Producers and
importers prefer to maintain minimal stocks, defined as supply to
satisfy one month's market requirements.

# Trade/Marketing

Kuwaiti poultry re-export activities to Iraq suffered a major set back
during the first 6 months of 2006 as a result of the AI concerns when
the Iraqi Government banned imports of poultry from all origins. Iraq
has since resumed poultry imports and poultry re-exports from Kuwait to
Iraq are expected to reach 75,000 MT during 2007. Poultry imports for
both re-export and domestic consumption are expected to increase 50,000
MT to 145,000 MT in 2007.

Brazil is currently the principal supplier of frozen chicken to Kuwait
for both the domestic and re-export markets with an estimated 80 percent
market share. Brazil's strong position in the market stems from a number
of factors including:

-   The public perception that Brazilian producers adhere more closely
    to Islamic Halal slaughter procedures than competing suppliers.

-   The reduction in French market share following the detection of H5N1
    AI in France.

-   The public boycott of Danish products following the publication of a
    cartoon in a Danish newspaper.

In the Kuwaiti market, Saudi Arabian suppliers have benefited, albeit to
a smaller degree, from these developments despite the 20 percent price
difference between its products and those from Brazil. Brazilian
suppliers provide competitive prices, attractive packaging and intensive
marketing efforts, including print media and TV advertising. Brazilian
parts are also popular with local consumers due to their smaller sizes
and attractive retail tray packs. Brazilian suppliers have a good
reputation for meeting importers' requirements. Imports from China and
Thailand were banned from the market following H5N1 AI detections in
those countries.

The U.S. is the second largest chicken parts supplier to Kuwait due to
its competitively priced leg quarters. In 2006, the United States is
expected to export about 15,000 MT of chicken parts to Kuwait; mainly
leg quarters for re-export to Iraq. U.S. exports are expected to
increase during 2007 given the expectation that re-exports to Iraq will
continue.

Brazilian and to a much lesser extent European chicken brands grew in
popularity because of their small sizes, competitive prices and
aggressive marketing. U.S. whole chicken is not competitive with
products imported from Brazil and Saudi Arabia. Brazil and the United
States share, albeit unequally, the boned chicken parts market.
Currently several U.S. chicken part brands are available in the market.

Brazil replaced China and Thailand in the boneless market when those two
countries were banned for on-going avian influenza problems.

Turkey meat, imported mainly from the United States and Brazil, is
imported in limited quantities. Turkey consumption remains seasonal and
concentrated mostly around the Thanksgiving and Christmas holidays. Duck
meat, imported mainly from the United States, France and Canada, is
estimated at 80 tons annually.

Both importers and domestic producers of poultry are well equipped with
excellent cold storage warehousing facilities and refrigerated trucks
for distribution. Both sectors are staffed with well-trained sales
staff. Major retailers are constructing state-of-the-art super-and
hypermarkets and are focusing on customer service to ensure that their
products are ideally presented and marketed to consumers.