UK warns of sharp rise in poultry production costs

Production costs of UK poultry and other grain-based livestock and foods are rising, due to a dramatic shortfall in world feed grain harvests and with the US Government's upping of the level of corn-based ethanol in petrol.

''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 Peter Bradnock, Chief Executive of the British Poultry Council (BPC).

Feed is the biggest cost in getting poultry meat to the consumer's table. Wheat, corn, and soy are the main ingredients in poultry feed. Since the beginning of July, wheat prices have soared by over 50% and soy prices have jumped by 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.

''This is hitting poultry and other food producers worldwide and cannot be sidestepped in the UK through imports,'' Bradnock said. ''Members of the International Poultry Council (IPC) meeting in Santiago, Chile, earlier this month, were strongly concerned about the rising cost of feed grains on world markets,'' he said.

Several factors are contributing to 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 climate conditions return, is the massive and growing demand for corn, wheat and other feed crops for fuels which is pushing up prices and hitting those dependent on these crops for feed and food.

The US Government has just announced a 50% increase in the level of bioethanol, which is derived from corn and permitted in petrol in the US.