Poultry farm incomes are set to come under increasing pressure despite spiralling food prices, particularly eggs and poultry meat, which have been blamed for the biggest leap in annual inflation since records began in 1997.
Annual food inflation measured by the consumer prices index soared to a record 13.7% last month. But at the same time, the industry has seen an unprecedented increase in input costs.
Latest figures from the NFU survey for August show that costs were up 26.4% for cage eggs compared with the same time last year. Free range were up 22.5% and the rise for broilers was higher at 29.7%.
The biggest cost increase was for feed, accounting for 51.8% of the increase for broilers. After that electricity costs have risen 38.2% for cage and 45.4% for free range and for broilers, energy and water are up 18.3% year-on-year.
NFU chief poultry adviser Rob Newbery said: “Looking at the egg sector, it is important the packers continue to move prices as and when input costs rise. More concerning at the moment will be the seasonal effect of higher energy demands in the poultry meat sector.
“Many growers and farming supply chains are in a break even position now in the summer. Feed price rises have not been fully compensated at retail level and available margin has already been eroded. If we don’t get more money back to producers for the winter, many simply will not be able to afford to grow chicken year round.”
“Believe it or not, growing costs are now realistically at the £1/sq m per week. This is a frightening threshold to have reached, but when you consider capital depreciation, energy, water, and IPPC its actually quite conservative,” he said.
Retail sales are growing in the lower margin categories of value or economy, which is essentially the same product as the ever eroding standard assured bird. The only thing that can happen is continued price increases at retail level coupled with lower retail margin as the consumer moves toward value.
“If we don’t see the money at farm gate, producers will simply stop supplying. It’s all to easy to leave a shed empty for the winter, but hard to get the whole supply chain conveyor belt back to speed, when the sums start to add up again in the spring. Assuming retailers are committed to British they will have to pay, and that money will have to get to the grower.”
Input cost rises
- Input prices up 26.4% for cage eggs, 22.5% for free range and 29.7% for broilers
- Feed accounted for most of increase
- Growing costs now at £1/sq m a week for broilers