Friday, October 3, 2014

Chicken margins balloon

Chicken processors fared much better this summer than last, according to pricing data published by the Chicken Farmers of Canada national supply-management agency for farmers.

Farm prices went down, reflecting a decline in feed costs, but wholesale chicken prices surged up. Retail prices also went down.

Farm prices for quota period A-125 (this summer) averaged $1.60 a kilogram in both Ontario and Quebec, down by nine cents reflecting lower feed costs. 

Part of that is an  order from the Ontario Farm Products Marketing Commission to update feed conversion ratios to reflect the fact that feed costs per kilogram of chicken produced have declined.

At the wholesale level, the composite price went up by 7.87 per cent this August compared with August of 2013.

The breast composite price and the whole bird prices both rose by 8.4 per cent.

The consumer price index for chicken – i.e. based on supermarket prices – declined marginally from 14.63 to 14.62 for the first eight months of this year compared with 2013.

There are no chicken-agency retail comparisons with a year ago, but the prices for this May, June and July show they went down.

Boneless breast meat that sold for an average of $11.97 a kilogram in Ontario in May declined to $10.43 by June, a drop of 12.9 per cent.

Not only did Ontario processors enjoy much-increased margins, but they also managed to reduce storage stocks.

Apparently they were riding the coat-tails of huge price increases for pork and beef.

What I find galling is that at the same time members of the Association of Ontario Chicken Processors were raking in all that profit, they had their lawyer, Herman Turkstra, telling the appeal tribunal that they don't want to yield any of their chicken supplies so wee little processors can innovate and develop niche and specialty markets.

If the marketing boards don't kill supply management, the greedy processors surely will.