Australian consumers are about to pay a lot more for chicken, with at least one retailer saying prices will double from next week. Chicken meat producers are bumping up their prices as the cost of feed grain soars because of drought in the United States.
The Australian landscape is dominated by seven large producers, but the top two - Baiada and Inghams - supply 70 per cent of the meat market. Those two companies are vertically integrated, meaning they make their own feed and own the entire chain of production from chick hatchery to slaughterhouse, making it easier to pass on cost increases.
Chicken Meat Federation deputy director Vivien Kite says grain prices have increased significantly over the last three months on the back of forecasts of heavy drought impacts on the US corn crop.
"For example, we've seen wheat prices here increase by about $100 a tonne over the last three months and that represents an increase of around 30 per cent, perhaps even more," she said. "Feed costs make up around about 65 to 70 per cent of the cost of producing a live chicken, so taking all of that into account we would expect that this surge in feed grain prices will push chicken meat production costs up by about 5 per cent."