Poultry supplies to remain tight
Birtwistles Market Report August 2022 showed demand for poultry, which is facing one of the highest-pressure avian flu seasons in history, is on the rise as the cost-of-living crisis forces consumers to purchase the lowest-priced meat protein.
While global demand is expected to only grow by 0.5% to 1% in 2022 due to supply restrictions, which is significantly below a ‘normal’ year’s growth of around 2.5%, companies with strong market power, high efficiency and solid procurement will likely outpace the market.
Demand outstripping supply
Birtwistles expects UK prices to rise slightly with demand for chicken thigh meat, inner fillets and wings outstripping supply at times.
The report stated: “Given these circumstances, supply will be tight. Mid-sized and small producers are downscaling in response to higher working capital requirements and risks. New investment projects have been delayed, given the rise in investment costs, with high steel prices, rising interest rates, high logistical costs and a tight labour supply.
“Chicken is often seen as a basic household staple – affordable, healthy and versatile. The average person in the UK consumes roughly 30kg to 33kg of chicken per year. This popularity means retailers could be hesitant to rapidly pass on the price increases to consumers with the interest in keeping the population fed.”
Meanwhile, GB deadweight cattle prices decreased slightly by 1.6p on the previous week to average 442.3p/kg, however, this was still 42p above where it was this time a year ago.
Breaking point
GB EU-spec standard pig prices rose by 1.98p to 193.09p/kg – a 32.4% increase year-on-year – while GB deadweight prices for new season lamb stood at 639.1p/kg, down 7p on the week, yet this price remains way above year-on-year (circa 550p/kg) and five-year average costs (circa 460p/kg).
The report concluded: “We are in a cost-of-living crisis. There is a balancing act to be maintained between feeding the population and ensuring all parties in the supply chain receive a fair return for their work, investment and achievements. If they are squeezed too hard, then the supply chain could reach a breaking point.
“Movements of grain from Ukraine are essential if we are to avoid suffering through hunger in other parts of the world. In regards to the UK, we welcome more grain coming onto the world market as this may help to bring the cost of feed down and, in turn, reduce the input costs for pigs and poultry during the present cost-of-living crisis.”
