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Low Chicken Prices Bad for Georgia's Poultry Firms

by 5m Editor
31 August 2011, at 9:40am

GEORGIA, US - The state's poultry industry is being hit by rising costs and producers are cutting output.

High feed and fuel costs and slumping demand are pecking away at poultry prices, reports Online Athens.

The low cost of chicken is good for consumers but bad for Georgia's agricultural economy. The state's $13 billion poultry industry is scaling back production to boost prices again, experts say.

Sanderson Farms, the fourth-largest poultry producer in the US, reported a $56 million third-quarter loss last week that it attributed to low restaurant demand for chicken and low prices.

The US Department of Agriculture announced a chicken stimulus plan of sorts on 18 August. It is buying $40 million worth of poultry meat for school lunch and other government programmes in an effort to prop up the poultry industry, in addition to the $100 million it usually spends on hens annually.

Trade issues with China and efforts to raise more chickens in Russia mean the overseas market for US exports has shrunk, said Mike Lacy, the head of the University of Georgia's poultry science department. People in developing countries are eating less protein as well, he said.

Dr Lacy explained: "Our exports have gone down for those reasons, plus the worldwide economic situation. Supply and demand are a little out of whack."

Boneless, skinless chicken breasts are fetching producers about a $1.50 a pound now, down 20 per cent from a year ago, according to the state Department of Agriculture. In stores, those breasts are selling for an average of about $3.20 a pound.

At the same time, the cost of feed, which makes up more than half of poultry farmers' overhead, has risen by 70 per cent over the past year, said Mike Giles, president of the Gainesville-based Georgia Poultry Federation. Corn cost $4.50 per bushel a year ago, but is about $7.50 now, he said.

Dr Lacy continued: "Prices have gone down while the cost of production has gone up because of unprecedented high feed costs."

A five-pound chicken eats nine pounds of feed in the six-and-a-half weeks it takes to grow to maturity, he said.

The cost of fuel to ship poultry and heating oil to keep coops warm is also up, Dr Lacy added.

However, the long-term outlook for Georgia's poultry producers is good, Mr Giles said. Mexico has replaced China and Russia as the top market for Georgia poultry and because chicken is not a common food in many countries, there is room for growth overseas, he said.

Online Georgia reports Mr Giles saying he expects demand for food to double by 2050. When it does, access to the port of Savannah means Georgia will be well-positioned to take advantage, he added.