Turkey producers are expected to increase prices by up to 5% this Christmas as they strive to claw back margins lost during the recession.
This is despite some in the sector believing prices hikes are unjustified.
Production costs have remained relatively static this season – largely because cheaper feed has offset other increases in input costs. But market sentiment suggests demand for good birds will be stronger this year as Britain continues its recovery from the credit crunch.
“Poult quality has been very good this season,” NFU poultry adviser Helen Hunt told the annual marketing meeting of the Anglian Turkey Association.
“Poults placed are around 3% lower than last year – possibly because people expect lower mortality following a good rearing year.”
Feed costs have fallen by 5.86% to £8.20 for a 5.5kg Christmas turkey in 2014, according to Industry Intelligence figures produced for the NFU. This more than offset increases in other overheads, with total costs very similar to last year at £30.57 a bird.
At the farmgate level, whole birds account for almost 75% of sales at Christmas, with crowns accounting for 25%. At the supermarket level, the consumer trend towards buying crowns, smaller birds and smaller joints is expected to continue.
“There’s a thought that people want to eat turkey on Christmas day but don’t want the leftovers,” Mrs Hunt told producers at Prested Hall, Feering, near Kelvedon, Essex, on 9 September. “Supermarkets also report more interest in higher-valued products such as stuffed birds.”
Static costs are being seen by some within the industry as an opportunity to increase prices at least by the rate of inflation this Christmas – especially by those producers and butchers who chose not to increase prices despite rising costs during the recession.
Ed Hurford, general manager for Copas Turkeys, said: “The only input price that has gone down is the feed price. Producers should remember that most input prices have gone up and take the lower feed price with a pinch of salt.”
But other producers are likely to hold prices at last year’s level.
Paul Kelly, of Kelly Turkeys, said he could not justify a price increase because he had seen no cost increase.
“I didn’t buy feed particularly well this year but it is still costing £1.30 a bird less to produce and feed,” he said.
There is also a trend towards unit pricing. Some butchers believe consumers are more likely to buy a bird or crown if the total price is displayed, rather than expecting a shopper to calculate the overall cost when a bird’s weight is given and it is priced per kilogramme.
“Price for some consumers is more important than the weight,” said Ipswich butcher George Debman, who said he was considering “no increase” in his retail turkey price this Christmas. “At the same time, some consumers don’t know what a kilo is.”