October 18, 2010

UK poultry group warns of poultry price rises

Increased poultry prices by retailers and other purchasers are essential to help producers and processors survive the severe cost pressure they are under, according to the British Poultry Council (BPC).

Expectation of a dramatic shortfall in world feed grain, coupled with the US government upping the level of corn-based ethanol in petrol, has sent corn and wheat prices soaring again this week, and with it the production costs of poultry and other grain-based livestock and foods, BPC said.

"The cost hikes are so large that they cannot be absorbed by UK farmers or processors through greater efficiencies and inevitably must be passed on in higher prices," said BPC chief executive Peter Bradnock.

Feed is the biggest cost in getting poultrymeat to the consumer's table, and wheat or corn, and soya are the main ingredients in poultry feed.

Since the beginning of July, wheat prices have soared by over 50% and soy prices jumped over 30%. Corn, which is used instead of wheat in many main producing countries, leapt by 60% in the last three months, driving up not just the cost of poultry meat, but also other livestock products and grain based staple foods across the world.

Several factors are contributing to the grain price hikes and increased volatility, including too much or too little rain in some countries.

But the big new factor that will hold prices up, even when favourable climatic conditions return, is the massive and growing demand for corn, wheat and other feed crops for fuels which is hitting those dependent on these crops for feed and food. Meanwhile, the US government has just late last week announced a 50% increase in the level of bioethanol permitted in petrol in the US.