Wednesday, 18th July 2012
The last five weeks of wet conditions in Ireland and the severe weather front in the United States are affecting the cost of food production in Ireland. Met Éireann has already confirmed that June was the wettest since records began, for most of the country. The warning from Vincent Carton of Carton Bros Chicken, is that it is only a matter of time before the consumer sees the impact.
"Commodity prices are at an all-time high with no relief in sight" explains Vincent Carton, managing director of Carton Bros and member of the Bord Bia Quality Assurance and Meat & Livestock Board. "the severe weather conditions at home and in the US are pushing up the price of wheat, rapeseed and oil."
Since December 2011, Soya has increased in price by 38% from €300 to €455 per tonne. Wheat has increased in price from €195 to €242 per tonne or by 21%, and rapeseed has increased by 23% or from €455 to €565 per tonne these represent over 80% of feed costs. Chickens are fed on feed mainly comprising these three grains mainly.
"As a company and an industry we are under severe pressure with the rising cost of wheat and many other cereals as they have a direct impact on the cost of producing chicken" explains Vincent Carton. "After all chicken is basically value added feed."
"We have already absorbed the increases in costs for gas, electricity and other costs such as Diesel which has led to increased distribution costs. However these pale in to insignificance compared to the increase in the cost of feed. Feed represents just over 50% of the cost of a chicken."
Emerging markets including China and India require more wheat and cereals as their population become more affluent and move to a western diet and hence push up the price. Weakness of the Euro is also a contributing factor as the market is traded in dollars.
"Chicken has become better value in recent years with the consumer benefiting from lower retail prices however these weather induced increases are now much too high for us to take on and we are forced to pass them on. We will, in consultation with retailers make every effort to keep the increases to a minimum," explains Vincent Carton.
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