The August 2022 Birtwistles market report showed that demand for poultry, which is facing one of the most intense avian flu seasons in history, is on the rise as the crisis in the cost of life forces consumers to buy the cheapest meat protein.
While global demand is only expected to grow by 0.5% to 1% in 2022 due to supply restrictions, which is significantly lower than “normal” one-year growth of around 2.5%, companies with strong market power, high efficiency and strong purchases will likely overtake the market.
Demand exceeds supply
Birtwistles expect prices in the UK to rise slightly as demand for chicken thigh meat, inner fillets and wings sometimes outstrips supply.
The report said: “Given these circumstances, supply will be tight. Small and medium producers are reducing their production in response to working capital needs and higher risks. New investment projects have been delayed amid rising investment costs, with high steel prices, rising interest rates, high logistics costs and labor supply tense work.
“Chicken is often considered a household staple – affordable, healthy and versatile. The average person in the UK consumes around 30kg to 33kg of chicken per year. This popularity means that retailers may be reluctant to quickly pass price increases on to consumers in the interests of feeding the population.
Meanwhile, dead cattle prices in Britain fell slightly by 1.6p from the previous week to an average of 442.3p/kg, however, it was still 42p above of what it was at this time a year ago.
Prices for standard GB pork to EU specification rose by 1.98p to 193.09p/kg – a 32.4% year-on-year increase – while prices for GB deadweight for new season lamb stood at 639.1p/kg, down 7p on the week, but this price remains well above year-on-year (around 550p/kg) and average costs over five years (around 460p/kg).
The report concludes: “We are in a cost of living crisis. There is a balance to be maintained between feeding the population and ensuring that all parties in the supply chain receive a fair return for their work, investments and achievements. If they are in too much of a rush, the supply chain could reach a breaking point.
“Movements of grain from Ukraine are essential if we are to avoid going hungry in other parts of the world. As far as the UK is concerned, we welcome the arrival of more cereals on the world market, as this could help to reduce the cost of animal feed and, therefore, reduce the cost of inputs for the pigs and poultry during the current cost of living crisis.