NFU calls for fairer margins for poultry farmers
FWi--Shoppers want to buy British chicken, but producers need to receive a fair price to ensure they can meet the demand in the long term, according to the NFU.
As poultry producers gathered today on the first day of the British Pig and Poultry Fair at Stoneleigh Park, Warwickshire, NFU poultry board chairman Charles Bourns said that more money needed to be passed back down the supply chain to safeguard the sector's future.
Production costs in the chicken meat sector have risen by nearly 25% (14p/kg liveweight) in the past year, but producers are not receiving enough money back to cover their costs. A survey carried out by the NFU revealed that, on average, producers are making a loss of 2.7% on every bird they produce once production costs are added in.
Mr Bourns added: A recent British Marketing Survey showed consumers are still actively seeking to buy assured British chicken, but we need to ensure enough money is passed back down the supply chain to make businesses economically viable in the long term.
Consumer tastes are changing and producers are ready and willing to produce what shoppers want to buy. But to be able to keep up with these changing demands, producers must receive enough money to ensure their businesses are sustainable.
It's a harsh reality of life that costs are rising, not just for producers, and everyone is finding it difficult. But producers cannot continue to absorb the cost of rising input prices without receiving a fairer return.
US poultry firm to cut production
In response to continued increases in feed ingredient cost, effective immediately Cagle's Inc. is reducing its chicken production by 4%.
The reduction will affect the number of birds processed at the company's location in Pine Mountain Valley, Georgia (one of two slaughter plants Cagle's operates in the southeast supplying product throughout the United States and internationally). No layoffs are planned as a result of the decrease in production.
According to Doug Cagle, President and CEO, "Current chicken prices have failed to reflect the tremendous increase in the cost of feed. Ingredient prices, mostly corn and soybean meal, have increased over 80 percent in the last two years raising the cost to produce chicken by more than $.17 a pound. These are unprecedented times and given current USDA forecasts it appears that high feed costs are here for the foreseeable future. The cutback in production will not affect our customers with existing commitments but will reduce product being sold through less profitable commodity outlets."
Pilgrim's Pride baling out
According to local reports, Pilgrim's Pride may close its facilities in El Dorado, Arkansas, if it does not see improvement in quality and a return on its investment.
The El Dorado site includes a poultry processing plant, a feed mill and a hatchery. The site employs over 1,600 people. "This is an extremely serious situation in El Dorado. We don't want to close that complex, but unless there are immediate changes that will be our only option," Pilgrim's Pride spokesman Ray Atkinson told the local press.
The news comes only a month after Pilgrim's Pride announced it would close a processing plant in North Carolina as well as 6 of its 12 distribution centres “in response to the crisis facing the U.S. chicken industry from soaring feed-ingredient costs resulting from corn-based ethanol production”.
The company also said it would review its other operations and would consider more closures. The assessment at El Dorado is part of that review, Atkinson said.Pilgrim's Pride acquired the El Dorado plant in 2003 from ConAgra.
Also last month, Pilgrim's Pride announced the sale of its turkey production facility and distribution centre in New Oxford, Pennsylvania, to New Oxford Foods, LLC, a subsidiary of Hain Pure Protein Corp.
Ethanol Boom Forces Closure of US Poultry Plant
Maple Leaf Farms has blamed the rocketing price of corn for its decision to shut down its duck plant in Wisconsin with the loss of up to 200 jobs and slammed the US Government ethanol policy as “misguided”.
The cost of feeding the ducks on high-priced corn now outweighs the market price of the birds, a Maple Leaf spokesman was reported as saying.
The price of corn has soared because of the ethanol boom with farmers able to yield greater profits selling their grain to ethanol producers who are willing to pay higher prices. In CBOT corn this week, the benchmark May contract rose the maximum 20 cents allowed in a session to settle at $5.44-3/4 per bushel.
Rade Dimitrijevic, of Maple Leaf, said: “We've had to offset low demand with a price increase in an attempt to stabilize. That wasn't able to do it. We've tried to manage our way through this.
“But what forced the company's hand the most was not the cost of labour but rather the cost of corn.”
Sources quoted Maple Leaf Co-President Scott Tucker as saying the company had struggled to make the decision but in the end it had no choice.
"Unfortunately, we have analyzed the situation, and the only way we can cope with skyrocketing feed costs brought on by the government's misguided ethanol policies is to cut our own production and consolidate some of our operations,” he said.
Mr Tucker added: "Feed ingredients represent nearly half of our annual operating costs. In the last year, every single feed ingredient we use has gone up in price, and many have doubled or tripled,".
