Source: Alamy 

Rising production costs in excess of 18% are outstripping retail price inflation

Chicken could become the latest food item to see shortages in major supermarkets, with producers reducing production by up to 10% in the last month due to soaring costs.

Average prices for fresh primary chicken rose by 12.6% last year in the mults [Kantar 52 w/e 27 November]. However, rising production costs in excess of 18% year on year were outpacing any changes to retail pricing, said British Poultry Council CEO Richard Griffiths.

Avian flu and rising feed and fuel prices – exacerbated by the government’s failure to include poultry production in its energy price support scheme – meant some producers were pulling back on production, Griffiths told The Grocer.

“We have seen shrinkage in terms of placements of up to 10% over the past month. People are just not putting many birds down as they are not seeing the returns.”

BPC members were also growing increasingly concerned over an anecdotal increase in cheaper Spanish chicken in UK supermarkets, Griffiths added, particularly in areas where the mults traditionally did not have any commitments to source British, like ready meals.

“Our shelves could be the next ones to see shortages,” he said, pointing to recent eggs and fruit & veg shortages, unless producers and even some of the larger processors saw an improvement in returns.

Griffiths’ comments echo warnings – first reported by The Grocer in February – from chicken supplier Whittern Farms’ MD Jo Hilditch, that many producers were “not restocking” birds in the face of chronically low returns and soaring costs.

There was also mounting uncertainty around the supply of festive turkeys this year, with Griffiths pointing out that many producers, especially smaller-scale businesses, “did not want to take the risk” of another bird flu-affected season.

The sector would have a clearer picture of supply by April, when poults for the Christmas season will have been ordered, he added.

But on a more positive note, progress was being made on a bird flu vaccine, which was now being trialled, said Paul Kelly, MD of supplier Kelly Turkeys.

“I do believe we will have a vaccine in the short to medium term, probably circa 12 months from now. I understand the French will be vaccinating high-risk areas of the country in the autumn of this year,” he pointed out.