The Canadian chicken industry is growing this year, says the chair of Chicken Farmers of Canada, but it’s facing a dilemma: how to accommodate sharply rising feed costs without overpricing its product.
“(Last year) was another challenging year for CFC,” Nova Scotia producer David Fuller told the annual meeting March 20 in Ottawa. “I anticipate 2007 will be no different.”
The CFC annual report says national production last year declined 0.6 percent to 975.5 million kilograms of chicken on an eviscerated basis.
As well, the average producer price was a nickel lower than the previous year, down to $1.145 per kilogram and almost seven percent below 2004 levels.
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The average Canadian producer price in 2006 was “the lowest level since 2000 and the second lowest in the last 25 years.”
However, Fuller said in an interview that production dropped last year because farmers sent too much chicken to market in 2005.
“The reason for a decline in production, to be honest with you, was overproduction in the fall of the previous year and industry needed to react to take that into account to bring profitability back into the industry.”
He said reduced production lowered storage stocks and raised prices.
“The industry now is very stable,” said Fuller.
“There’s opportunity for growth in 2007. We already have put significant growth in for 2007.”
Prices were lower last year because the Canadian farmgate price is based on the Ontario margin backed off to other provinces. When feed costs fell last year, so did live prices.
With feed prices now increasing, Fuller said chicken prices will also go up, but it will be a delicate balancing act.
“We have to be careful that we don’t price our product out, but we understand people have to be able to cover their costs.”
Although national chicken production declined last year, Saskatchewan had the biggest percentage production increase, calculated on a relatively small base. Production increased 16.7 percent in 2006 to almost 38 million kilograms, less than four percent of national production.
Fuller said the increase in that province was caused by the arrival of Prairie Pride Natural Foods in Saskatoon last year and the impact of the CFC market development program that finds markets for dark meat.
Like the other supply management agencies that held annual meetings in Ottawa last week, Chicken Farmers of Canada officials said a key issue in the coming year is whether a new World Trade Organization deal would reduce protection against cheaper imports.
“We must tell the current government that the WTO package that’s on the table is not a good deal for farmers in Canada,” Fuller said.
