January 13, 2011

UK poultry industry calls on increased meat, egg prices

Leading figures in the UK poultry sector have called on supermarkets to increase the meat and egg prices as farmers face rising raw material costs.

NFU poultry board chairman Charles Bourns and British Free-Range Egg Producers Association chairman John Retson have written an open letter to supermarket operators to highlight the effect that rising prices are having on their suppliers.

"Rising feed and energy costs, which represent the majority of variable costs at farm level, are making continued production financially unsustainable at the current price your farmer suppliers are receiving," the letter says.

The letter explains that the price of wheat used to feed poultry has increased from GBP100/tonne to GBP190/tonne (US$157.48-$299.21) by January 2011, leading to an increase in the cost of feed from GBP230/tonne (US$360.20/tonne) in January 2010 to GBP300/tonne (US$472.44/tonne) now.

"Feedback from producers is that the net effect of feed and energy cost inflation over the last six months is between 15p and 17p per dozen eggs, and between 14p and 16p per kg liveweight on a chicken ex-farm - costs which are not being met by the supply chain. The sheer magnitude of this inflation means your supply chain simply cannot absorb it. If the price you pay your suppliers does not rise sufficiently to cover these cost price rises, then we fear producers will have no choice but to cease production," Bourns and Retson stated.

The officers have also asked to meet supermarket executives to discuss further the problems facing the poultry industry and how they may pay more for eggs and meat to ensure the quality of products are maintained.

They also asked in the letter to meet with supermarkets to discuss the current conditions facing producers. Supermarket payment has long been a cause for complaint from farmers and the store chains have always maintained that they give a reasonable price to their suppliers.

Andrew Opie from the British Retail Consortium said that supermarkets were paying a decent market price and were promoting poultry welfare.

"Retailers do take full responsibility for their chains. Not only are they paying a sustainable price, they are helping to promote free-range egg sales, working with customers to promote the sector generally," he said. He said that retail prices were not based on the cost of production and insisted that stores are spending on promotions for farm goods without any impact on the farmers.