Page 8 - National Poultry Newspaper

Cost-push tipped to thin chicken’s discount
INFLATIONARY pres- sures on food being expe- rienced globally are fore- cast to narrow the price gap between chicken and red meat in Australia, ac- cording to Rabobank.
around four times the price of Australian beef, and the US, where it is 3.5 times higher.
35 percent of the average Australian’s annual protein consumption, compared to 40 percent or more for several other nations, in- cluding Argentina, Brazil, Mexico, New Zealand and the US.
“Lamb had its run a cou- ple of years ago, and since then it’s been more moder- ate in its growth.”
ary pressure but purchas- ing habits could change “around the edges”, for ex- ample by replacing a high- end beef meal with a more affordable chicken one. Production climbing already
retail price for Australian chicken.
world’s biggest chicken- meat exporters, Brazil and the US, Mr Gidley-Baird said Australia would be unlikely to compete.
Presented at a Rabobank event held at the Gold Coast to coincide with the Poultry Information Exchange, senior animal proteins analyst Angus Gidley-Baird’s talk was entitled ‘Chicken: making the most of a high-priced meat cabinet’.
He said one could argue a consumer would tolerate a rise in chicken prices, in part because hikes in beef and lamb prices have already been seen.
“If you push that Austral- ian consumption up into the realms of 40 percent of our overall protein con- sumption, you could po- tentially say there’s a 15 percent growth in volume allowed in the industry to accommodate that,” Mr Gidley-Baird said.
Australian Bureau of Sta- tistics March quarter 2022 data shows the Consumer Price Index rose 2.1 per- cent over the quarter, with food up 2.8 percent, veg- etables up 6.6 percent and beef up 7.6 percent.
Mr Gidley-Baird said Australia has been increas- ing its chicken production to new highs, and the de- mand pull has enabled retail prices to withstand supply-side pressure.
“You’d have to say there is overall growth available in that market.”
Mr Gidley-Baird said the shortage of labour in Australia was “a big chal- lenge” for all meat-pro- cessing sectors, and was largely responsible for red- meat processors operating at about 40 percent below capacity.
He said while chicken prices look set to reflect price increases as the re- sult of cost-push inflation, chicken still looked to be the cheapest meat choice on refrigerated shelves.
“You could probably lift that chicken price up,” Mr Gidley-Baird said.
“Meat prices based on the CPI data jumped 12.1 per- cent in the past 12 months, whereas all the others were quite subdued,” Mr Gid- ley-Baird said.
“The market is actually accommodating it,” he said.
He cited an Inghams re- port delivered earlier this month which said costs re- main elevated across the business, driven mainly by feed, supply chain and transport, and that price increases had already been achieved, with further ones sought to offset cost pres- sures.
“An average eastern states weekly kill number is about 110,000 head per week from a cattle point of view – we’re currently doing about 80,000 head,” he said.
“From a beef point of view in Australia, beef is about four and a half times more expensive than chicken, as an average retailprice,”MrGidley- Baird said.
At more than 120kg per person per year, Australia is the biggest consumer of protein including seafood in the world, with the US only slightly behind.
On beef and lamb, Mr Gidley-Baird said price rises in Australia have al- ready been seen.
He said Australia’s ex- ports of chicken meat were relatively small, and export isnotexpectedtobethe focus on increased produc- tion because sales tend to be either lower-value cuts, or go into niche markets such as Singapore.
“That’s not because the cattle aren’t there, it’s be- cause they can’t get people on the plant.
In terms of price rela- tivity, Mr Gidley-Baird said that was greater than in China and the United Kingdom, where beef was
Mr Gidley-Baird said Australia was right up there in terms of annual per-cap- ita consumption of chicken at 40kg plus per year.
“We’ve seen a change in seasonalconditions,we’ve got one of the lowest vol- umes of cattle that we’ve seen in the last 35 years... and that’s flowed through into that retail space,” he said.
He said he did not ex- pect people to reduce their overall protein consump- tion because of inflation-
Australiahastwodomi- nant processors – Baiada Steggles and Inghams – and the contract prices at which they sell into Aus- tralia’s two dominant su- permarkets largely set the
“The only way you can fixthatisbypayingpeople more and upskilling peo- ple more, which means it’s a long process and a costly process.”
“Looking at that, I’d say we’ve got the greatest price spreads between the beef, lamb and pork prices to chicken prices.”
By comparison, increases in pork and chicken prices have been “very slow”.
“They know exactly how far they can push that be- fore you start flooding the market and they end up hurting themselves because the retailers say they don’t need any more chicken, or they can’t send it somewhere else,” Mr Gidley-Baird said.
“We get burnt a little bit on our cost of production,” he said.
“In Australia, we’ve al- lowed that spread to grow quite wide.”
Increased market share possible
“Based on what some of the other countries are doing, we could fit more chicken in our diet at the expense of some of the other proteins.”
“There is the overlying concern about what hap- pens from a cost inflation point of view and the gen- eral consumer – are they going to be placed in a position where all the other costs have gone up and theyaregoingtorestrict their own consumption of food and protein?”
As food prices globally increase in this inflation- ary cycle, exacerbated by geopolitical factors headed up by the Ukraine-Russia War, Mr Gidley-Baird said chicken prices may well come to reflect cost-push rather than demand-pull inflation, which was prev- alent during COVID.
However, chicken ac- counts for only around
When put up against the
First appeared on beefcen tral.com
GRIND YOUR OWN LITTER WITH THE MIGHTY GIANT
• Hydraulic tilt tub
• Single operator friendly with remote control
• 25FT swivel conveyor
• Grind a straw bale to 20mm in a minute or less • Built in the US with all parts available and in
stock in Australia.
“There is no machine like it on the market. It will grind bales as fast as you can load them!”
Contact Tony Byron 0425 425 485 or tbonetone@hotmail.com
www.valtonfeedingsolutions.com.au
Page 8 – National Poultry Newspaper, June 2022
www.poultrynews.com.au