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Distributors Blamed for High Chicken Prices

by 5m Editor
7 July 2011, at 8:03am

SAUDI ARABIA - Prices have risen 10 to 15 per cent recently.

Poultry merchants and companies are blaming distributors for the recent 10 to 15 per cent price hike, according to Saudi Gazette, citing a report in the Al-Watan newspaper yesterday, 6 July.

Ibrahim Al-Thunaiyan, Chairman of the Poultry Committee at the Riyadh Chamber of Commerce and Industry, said there could be price-fixing on the part of distributors. He stressed that producers are seeking to control prices despite higher operational costs. Another factor is that the local production of poultry has dropped significantly, from supplying 65 per cent of market needs to the current 45 per cent, which 'is a large gap'.

An Al-Watania Poultry official said his company is committed to the previous prices, and has not raised prices for distributors or major stores that deal with it directly. The company has nothing to do with prices at stores. Disagreement between distributors and stores over profit margins may have caused the price hike, he said.

Muhammad Al-Ghamdi, an investor and shop owner, said distributors told him two days previously that prices had gone up, without any explanation. His group will approach the distributing companies formally for clarification, he said.

Mr Al-Thunaiyan said that the demand for poultry is greater than the supply.

He said: "Over last year, the demand for white meat went up from 800,000 tons to about 1.2 million tons a year. He said importing – from countries such as Brazil and France – is not the solution because global prices are also high. Forming a consortium of local poultry companies would also not be ideal because it would only reduce operational costs by about six per cent.

Mr Al-Thunaiyan said national production should be encouraged with financial support from government. Producers are currently cooperating with the Ministry of Agriculture to solve the shortage in poultry production in the country.