When is a price rise chicken feed?

The prices of chicken feed and chicken are increasing, but the sums don’t seem to add up. Felicity Lawrence investigates If you buy free range chicken at Sainsbury’s you may have noticed a price rise recently. Up from around £4.19 a kilo in December for a whole bird to £4.75 a kilo this week, according to the farmers who produce them and monitor retail prices. Chickens are fed on grain and the price has been rocketing, so no surprise that they suddenly cost more – rather a lot more, in fact, with that 14% hike which works out at roughly 87p more for an average size bird. But now here’s a mystery. The farmers who actually produce the chickens say they have had a cut in how much they are paid imposed on them retrospectively. They say that in February the large processor that supplies Sainsbury’s with free range birds, 2 Sisters Food Group (which pays the feed costs) told them that it was paying them 6p per bird less for chickens that they began farming in mid-December and which have already been sold to customers in the shops. The company also insisted that this new lower rate is what they will be paid from now on. The farmers calculate that the commodity price spikes translate into an increase in the cost of feed to the processing company of 27p per bird. They say too that they have been told by Sainsbury that the supermarket has already increased what it pays to the processor to take into account its rising feed costs. So what’s going on? And if costs are up by around 27p per bird why are consumers being charged an extra 87p per bird? I asked 2 Sisters for their version of this price war: “Rising commodity prices have created challenges through all parts of the protein supply chain. In addressing these challenges we have sought some temporary support from all our partners and growers. We have received this support in the vast majority of cases and we will address any outstanding issues through continued dialogue,” its spokesman Peter King told me. It declined to discuss any terms between it and the retailers it. Retail margins are commercially sensitive and Sainsbury simply said: “We know that current high feed prices are putting pressure on farmers’ costs of production, which is why we’ve increased the price we pay to our poultry suppliers. We remain committed to offering our customers the best quality food at competitive prices in this challenging economic climate.” The farmers involved are a cooperative of 47 poultry producers in the West Country and three of the group have now lodged claims in court to try to get back the money they say they are owed by 2 Sisters. “This is an illegal retrospective breaking of contractual commitments on payments for birds already shipped to supermarkets and purchased by customers,” their chairman Bob Shipley said. Their real fear is that what 2 Sisters calls “temporary support” farming families may end up having to call bankruptcy. Food & drink Food Felicity Lawrence guardian.co.uk

Posted by on March 21, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.