FDBusiness.com

Expectation of a dramatic shortfall in world feed grain harvests, coupled with US Government upping the level of corn-based ethanol in petrol, has sent corn and wheat prices soaring higher again, and with it the production costs of poultry and other grain based livestock and foods. “The cost hikes are so large that they cannot be absorbed by UK farmers or processors through greater efficiencies and inevitably must be passed on in higher prices,” says Peter Bradnock, chief executive of the British Poultry Council.

Feed is the biggest cost in getting poultry meat to the consumer’s table, and wheat or corn, and soya are the main ingredients in poultry feed. Since the beginning of July wheat prices have soared by over 50% and the soya prices jumped over 30%. Corn, which is used instead of wheat in many main producing countries, leapt by 60% in the last three months, driving up not just the cost of poultry meat but also other livestock products and grain based staple foods across the world.

“This is hitting poultry and other food producers worldwide and cannot be sidestepped in the UK through imports,” he adds. Indeed, members of the International Poultry Council (IPC) are strongly concerned about the rising cost of feed grains on world markets.

Several factors are contributing to the grain price hikes and increased volatility, including too much or too little rain in some countries. But the big new factor that will hold prices up, even when favourable climatic conditions return, is the massive and growing demand for corn, wheat and other feed crops for fuels which is pushing up prices and hitting those dependent on these crops for feed and food. The US Government has just announced a 50% increase in the level of bioethanol, which is derived from corn, permitted in petrol in the USA.

“We cannot sit and wait in the faint hope that these costs eventually fall. Our birds have to be fed now at much higher cost and there are no cheaper feed options available. I am confident that retailers and other customers understand the enormous pressure on producers and the crucial need to increase the price they pay for their poultry meat,” Peter Bradnock explains.