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Chick-News.com Poultry Industry News, Comments and more by Simon M. Shane

Broiler Producers in Germany Squeezed By Escalating Feed Cost

08/27/2018

The Central Association of the German Poultry Industry (ZEG) is demanding increased prices for German poultry and eggs due to a 25 percent increase in ingredient costs during late July and August.

 

The E.U. wheat and canola crops have been adversely affected by unseasonable high temperatures.

 

Producers with grain-based contracts will presumably be compensated for rises in ingredient cost.  Producers selling product at market prices will be at a disadvantage. Demands by industry associations for higher prices based on escalation in production cost may be unsuccessful.

 

Thomas Storck, Chairman of the Association of German Turkey Producers and Rainer Wendt, Chairman of the Federal Association of Rural Chicken Producers maintain that farmers cannot be obliged to pay high costs due to extreme weather conditions beyond their control.  The representative of the two producers associations have demanded that food retailers increase wholesale price to be passed on to consumers.

 

The price for undifferentiated commodities is determined by supply and demand.  Germany as a member nation of the E.U. can import poultry from other nations within the Union though it is presumed that suppliers in both western and eastern European member nations will have also been impacted by escalation in ingredient costs.  Price will only increase if supply is restricted by farmers ceasing to place chicks and poults to avoid losses.  Ultimately price will rise in proportion to demand, with restoration of margins.  Simply demanding an increase in wholesale price based on an escalation in production cost can only be achieved if suppliers have pricing power. They apparently have not since they are asking for increases at the present time.


 
Copyright 2018 Simon M. Shane