October 25, 2006

 

Increases in chicken prices inevitable in Australia

 

 

Australia's drought is likely to bring about a hike in chicken prices as the shortage in grains is bringing about an increase in feed prices.

 

As the reality of lower grain production sink in, farmers are wondering about the impact it would have on chicken production and the possible implications it would have on chicken prices. 

 

Grain prices have increased more than 80 percent over the past year, Australian Chicken Meat Federation executive director Andreas Dubs said.

 

Feed in turn makes up more than 60 percent of the production costs, so the drought would have a impact on the chicken industry in a major way, he added.

 

In Australia, wheat and sorghum make up most of the feed contents, with other ingredients being corn, barley, oats, proteins and vitamins. Wheat prices have risen 34 percent in this year's drought.

 

Poultry feed accounts for a quarter of the grain consumed in Australia.

 

Dubs predicted there would be significant price increases for all chicken products, including processed chickens.

 

Even grain importation may pose some difficulties due to quarantine and customs procedures. When droughts caused a grain shortage in 2002-2003, it was the poultry industry which was first in line clamouring for imports, Dubs said.

 

This measure may not work so well this year as international prices do not seem to be any lower than Australian ones, Dubs said. Thus the impact on feed and production costs are seemingly inevitable.

 

Australia's top three processors are Ingham, Bartter and Baiada, which together hold about 80 percent of the market. Most of their supplies of raw poultry are contracted to more than 4,000 farmers in the country.