Rising feed costs put pressure on poultry industry

Rising feed costs put pressure on poultry industry

The UK poultry industry has sent a letter to the country's retailers in a bid to highlight the increasing margin pressure the sector is coming under.

The letter, which has been seen by just-food, was sent by the National Farmers' Union, the British Poultry Council and the British Egg Industry Council to the UK's largest supermarket groups.  

The farming bodies state they want to draw attention to the impact the spiking cost of feed - which accounts for 60% of a poultry farmers' costs - is having on the cost of poultry production.

The letter states: "The poultry industry has made great efforts to invest in new capital infrastructure to grow in line with rising demand. To maintain this vital investment producers need a sustainable margin over variable costs of production.

"It is in all our interests to maintain long-term sustainable chains. We ask that you reflect the fundamental change in commodity prices that will impact poultry industry costs when in pricing considerations and promotional schedules for the year ahead."

Drought in the US has meant corn and soybean harvests are going to be significantly lower than originally forecast. Meanwhile, Russia recently cut its forecast wheat harvest due to poor weather conditions. This has prompted a jump in global feed prices and placed the margins of protein groups under increasing pressure.

A spokesperson for the NFU told just-food that, far from demanding price increases, the groups hoped to increase co-operation and transparency down the supply chain in order to ensure the sustainability of the industry.

"We aren't asking them to necessarily increase prices by a certain amount. We are literally pointing out that feed prices, due to weather conditions in America, have gone out of control," the spokesperson said.

"All parts of the supply chain - the farmers, the packers and processors and the retailers - need to work more closely together so we can ensure that product cost inflation does not result in lasting damage. It is in all our interests to maintain long-term sustainability chains. At the end of the day, it is what we all want."