Poultry prices on the rise, as beef begins to fall slowly

OTTAWA - Just as the sky-high price of beef has started falling, poultry prices have started to take off, according to the most recent Consumer Price Index.

Also read, Inflation rate 1.3% in July amid lower fuel prices, higher food costs: Statcan.

The cost of fresh or frozen poultry per kilogram  increased by nearly five per cent between June and August 2016 in Alberta, according to the most recent Consumer Price Index.

On average, food prices across Canada were up 1.1 per cent year over year in August, after rising 1.6 per cent in July, according to the report.

The Consumer Price Index (CPI) is an indicator of changes in consumer prices experienced by Canadians. It is obtained by comparing, over time, the cost of a fixed basket of goods and services purchased by consumers.

Sylvain Charlebois has a few theories as to why the cost of poultry is climbing.

"I suspect retailers are seeing chicken as a mover … and if they see it moves off the shelf, they're tempted to increase the price to improve their margins because they're not moving other products," said the professor of food distribution and policy at Dalhousie University in Halifax.

It can be as simple as consumers reacting to the latest health studies and flocking to chicken and retailers pushing the prices up, says Charlebois.

In a random check of Calgary grocery stores, prices per kilogram for a package of eight boneless, skinless chicken breasts ranged from $19.82 to about $22 per kilogram at Safeway. A bag of frozen organic skinless boneless chicken breasts at the Superstore retailed for $23 per kilogram.

But profits are not necessarily landing in the pockets of poultry producers, says Erna Ference, chair of Alberta Chicken Producers, who also runs a chicken farm outside of Calgary in the Black Diamond area.

"From a producer perspective, we've actually taken a price decrease," she says. She says producers will be paid $1.63 per kilogram until October and then five cents less after that.   

Ference says some of the costs are likely because of increased labour and benefits costs.  
"I know at a farm level we're seeing an increased level of scrutiny as far as we have bio-security programs and auditing … that are an increased cost to us," she said.

"Our costs have increased with the Canadian Price Index, just the way other consumers have. The one thing that has decreased for us is, in the last little while when beef prices were high, and that improved our bottom line."

Mike Von Massow, associate professor in food,  agricultural and resource economics at the University of Guelph, says beef and chicken are ruled by different pricing structures. Beef is a commodity based on daily prices, while chicken is a supply managed commodity based on demand. 

He doesn't expect the high prices will stick around.

Because chicken is a supply managed commodity, prices have traditionally been more stable. 

But now "Chicken has become more price competitive as a protein. Now we're seeing over the past year, the price of beef come down a little bit ... but is becoming more competitive relative to chicken, which didn't get the dramatic increases, but won't see the dramatic decreases once there's market correction. The market for chicken is much more stable."

He agrees the price jumps are bigger than expected. 

"Some of it may be short-term shortages, a change in the cost of production formula and we've seen the cost of chicken production go up and that gets passed along to consumers."

Whether that is sustained over several months remains to be seen, he says. 

Source CBC News