Why did chicken prices rise 14% from March to July?

According to EMISS Rosstat, in June, the average retail price of chilled and frozen broiler carcasses reached 193.48 rubles per kilogram (+6.8% per month), breaking the previous historical record in April 2022 (190.85 rubles per kilogram). Chicken is still getting more expensive: on the 29th week (July 17–23), 2023, the same source recorded the figure at 196.93 rubles per kilogram. 

In mid-July, the Ministry of Agriculture described the jump in prices for chicken MEAT (+14% since March) as a seasonal phenomenon. The cost of poultry farming is growing with the rise in price of soybean meal and other consumables. Profitability does not exceed 5-8%. Poultry farmers raise prices so that the operating margin allows them to work further, said Albert Davleev, president of the consulting company Agrifood Strategies. He recalled that inflation must be taken into account when analyzing prices. If it is discounted, the difference is quite understandable. The ruble significantly depreciated against world currencies.

In addition, 55 outbreaks were registered in January-June in 24 regions, which could be another reason for the shortage, although Rosstat reported a decline in production (-4% per month) only in June, and in general recorded an increase in agricultural organizations (+1.9% yoy). In May, the National Union of Meat Processors (NCM) sent a letter to the Federal Ministry of Agriculture asking for restrictions on the EXPORT of chicken meat. There was a shortage of carcasses and chicken fillets on the domestic market, primarily due to failures at poultry farms in the Belgorod region, bordering Ukraine.

As a result, selling prices increased, but their growth slowed down in July. Meanwhile, to cut costs, meatpacking plants are changing recipes and replacing poultry with pork. NSM Executive DIRECTOR Nikolay Aksyonov stated that wholesale and retail prices for chicken meat have increased, and the association suggested that the Ministry of Agriculture move on to concluding "long contracts" for the supply of meat raw materials. The meat industry is the only one in the agro-industrial complex where this tool, which promotes flexible production planning, is still not used.

Chairman of the Presidium of the Association of Retail Companies (AKORT) Igor Karavaev specified that retailers have long been selling broiler carcasses with a negative margin (more than 2% in recent months), that is, they do not fully translate the difficulties of manufacturers on the shelves, and yet the demand is noticeable exceeds the offer. Albert Davleev attributed the increase in summer demand to a decrease in outbound tourism, and the reduction in supply to a decrease in stocking density during the hot season to improve feed conversion and weight gain. This is not a conspiracy, but a necessity, the expert stressed. In addition, there is an outflow of labor at enterprises, especially from slaughter and processing sites, so instead of cutting, manufacturers are more likely to sell whole carcasses.

However, the president of Agrifood Strategies argues that exports could not be the reason for the shortage of chicken. As a rule, products that are of little demand in RUSSIA are sent abroad: mainly paws, delicacy for the Chinese, as well as drumsticks and small carcasses of broilers, which are especially valued in the Middle East. Davleev expects the rise in chicken prices to slow down in August, when there is a traditional decline in demand: a lot of fresh vegetables and fruits appear on the market, and parents prepare their children for school and save money .

 

Read together with it: