No End in Sight to High Chicken Prices10 October 2011
JAMAICA - Leading chicken producers have warned that continuing high feed prices will push up the cost of Christmas poultry.
Jamaicans can expect to pay record sums for their Christmas birds this year, the country's two top poultry producers warn.
According to Jamaica Observer, soaring prices for imported corn and soybean plus monopoly-priced electricity have driven the costs of producing chickens to their highest fall levels ever, says Jamaica Broilers.
The benchmark price for a Grade A Whole Bird now stands at JMD283 per kg, up from JMD244 per kg this time last year, said Ian Parsard, vice-president finance and energy at Jamaica Broilers. "That's a 16 per cent increase."
Dr Keith Amiel, the head of corporate communications at Caribbean Broilers, put the rise over the past three months at 3.5 per cent – equivalent to an annual rate of 14 per cent.
He added: "The public is seeing a markup that is outside of our control. There's no increased profit in that for us. The margins are being squeezed."
Different packages of cuts can cost more than the whole bird benchmark and supermarket prices are even higher, as retailers add an additional 25 to 35 per cent mark-up to cover their overhead costs and profit.
And there's little chance of those prices falling before the holidays as most chicken feed is bought three to six months in advance.
Mr Parsard said: "The only hope is a bumper crop in the US, and that's not expected." Flooding delayed planting in some parts of the American corn belt last spring while other areas were hit by drought.
"Last year, the December futures for corn were getting close to US$6 per bushel. Since then, Corn has increased steadily up to June, hitting almost US$8 a bushel. That represents an increase of a third. It's huge."
Although feed grain prices have slipped since then, corn is still trading at around US$7.75, he said. "All the reports we are seeing are leading to grain prices remaining on the higher side."
Jamaica currently imports 160,000 tonnes (6.3 million bushels) of corn and 80,000 tonnes of soybean a year, though not all of that is for poultry.
Mr Amiel said: "Grain is at least 65 per cent of the cost of producing a pound of chicken." The next highest input is electricity.
Chicken prices have risen steadily over the past few years, with brief reductions in 2008 and 2010, said Mr Parsard.
While weather is responsible for the short-term fluctuation in the price of grains for chicken feed, the push for renewable energy in America is having a long-term influence, Mr Amiel told Jamaica Observer.
He said: "International demand is led by ethanol. The US aims to produce 22 billion gallons a year within the next five years."
Jamaican producers could try to import corn from Latin America but the transportation costs are much higher due to the distance from Brazil and Argentina and delays in port before loading can add up to two additional weeks to shipping times.
Jamaica could also grow its own corn but that option faces several problems, including competition for land from sugar cane and housing. But one of the biggest hurdles that would have to be overcome is the threat of losses, both by theft and by feral animals.