October 23, 2007

Higher retail prices could endanger UK's organic poultry potential

Although the organic egg and poultry meat production offer real opportunities for farmers, there is a danger that farmers may price themselves out of the market as feed costs grow.

The topic was brought up by speakers at an SAC organic business conference in Birnam, Perthshire, the Farmers Guardian reported.

Kevin Smith of Highland Organics, part of the Grampian Country Food Group, said Highland Organics produced about 14,000 organic table birds and 40,000 conventional free range table birds per week from seven farms in North East Scotland.

The capital cost of a unit producing 700 organic birds per week based on a 71 day cycle worked out at about GBP70,000 with cash flow. Pay back is only expected in three and a half years. Highland Organics had also established its own breeding unit and its own organic hatchery to supply pullets for its farms.

Organic feed was currently GBP350-GBP360 per tonne, though the company had tried cutting this down by forward buying.

Retail price of the birds are up 25 percent from GBP 4.39 to GBP 5.49 per kg, but he feared further prices would bring prices to around GBP5.99, a point he believed would meet resistance from consumers.

(GBP 1 = US$2.04)