Suppliers experiencing 30% rise on poultry with stock issues on some chicken products. With further increases anticipated, price moves are inevitable.
The European poultry market hasn't yet recovered from the Avian Influenza outbreak, which started to hit countries such as France, Spain, Portugal and Poland in November. These outbreaks led to a shortage of chicken, turkey and particularly duck, with the latter so dramatically hit that its price moved by an average of 40%.
This surge in price was mainly due to farming losses on culled birds and the increase in the cost of natural feed. The ongoing Russian invasion of Ukraine will further acerbate this disruption to the supply chain. Ukraine is one of the largest chicken exporters to the EU, accounting for approximately 13-15% of the EU chicken import share. According to market participants, EU chicken imports from Ukraine have been massively disrupted by the current crisis. If imports continue to decline, chicken supplies will be tighter in the EU, which will have a knock-on effect for the UK.
The Russia-Ukraine geopolitical conflict will also drive up the price for feed grain, as both countries produce a quarter of the world's wheat. Both factors will increase UK chicken prices as feed generally accounts for 55-65% of the chicken production cost.
To add to these pressures, many Polish, Dutch and Romanian poultry farms employ Ukrainian nationals, who are now travelling home to help their country during this crisis. Obviously, less staff leads to a decrease in production, resulting in higher prices. And to make matters worse, Poland is also now reducing the number of chicken exports to keep the domestic price down. Although the Netherlands is the biggest poultry exporter to the UK, Poland is the second, so this is also forecast to affect the UK's supply.
All of this means price rises are inevitable. For example, one supply partner has informed us they expect to experience price rises of up to 30% for poultry products over the coming weeks. Additional increases could potentially arise as the year progresses. And, although they are doing their best to absorb much of this increase, the entire amount is commercially unviable. Another supplier has experienced similar price increases, plus a lack of availability of some stock. If you're affected, your supplier account manager will be confirming pricing for your specific range of products over the coming weeks.