May 5, 2008

High grain costs driving up Australia's poultry prices
 

Surging grain prices have driven up the price of poultry meat and eggs in Australia and the situation is expected to continue into 2009.

The prices of grain, which takes up about 60 percent of total variable costs, has doubled, leading to a 40 cents production costs increase for a dozen eggs, according to Jame Kellaway, MD of Australian Egg Corporation.

Eggs producers have had grain contracts which are now expiring, he said. Kellaway added that the contracts were about AUD 2 to AUD 2.30 per tonne of grain but it has since increased to AUD 4.8 per tonne.

Grain prices have been driven up by a growing global demand for biofuels, while the drought in Australia is also a major factor in the price increases of poultry meat.

Prices of chicken meat had increased by about 12 percent in the past one year while prices went up by almost 5 percent in the last quarter, said Andreas Dubs, executive director of the Australian Chicken Meat Federation.

A rise in grain prices as well as electricity and transport have contributed to the increases, Dubs said.

Dubs said while the drought in Australia has an impact on global grain supply, but other supplying countries are also having problems that contribute to a global shortage of grains, which drives up grain prices.

Poultry industry players are expecting the rises to continue into 2009.

AUD 1 = US$0.93 (May 5, 2008)