Chicken meat higher due to rising commodity prices, says Levy
Published:Sunday | May 23, 2021 | 12:08 AMSteven Jackson - Senior Business Reporter
Poultry prices are up due to higher commodity grain prices, says Jamaica Broilers Group President and CEO Christopher Levy.
“We have seen a run-up in price of corn and soy to seven-year highs, and that’s a straight pass-through,” said Levy at the weekly Mayberry Investment Forum held online on Wednesday.
Jamaica Broilers operates a poultry and grain group worth $47 billion in total assets, with operations spanning Jamaica, the Caribbean, and the United States.
“I think there is a broad challenge in the availability of raw material, and the logistical challenge to get things done … consumers want to consume, but the goods are not there,” said Levy. “Right now, the cost of chicken is moving up aggressively,” he said.
Grain commodity prices increased 11 per cent in 2020 and are up 17 per cent so far this year, according to the World Bank in its ‘Commodity Markets Outlook: Causes and Consequences’ published in April. Additionally, grain is forecast to rise 0.9 per cent in 2022.
“Price gains have been driven by supply shortfalls for some food commodities, especially maize and soybeans, strong demand for feed commodities by China, and US dollar depreciation,” said the World Bank in its report. “The largest price increase in the quarter was for grains due to production shortfalls, followed by oils and meals.”
In Jamaica, the consumer price index registered a 3.3 per cent rise in the cumulative price of meat between November 2020 and April 2021, according to data from the Statistical Institute of Jamaica. This movement outpaced the inflation rate of 0.8 per cent in the same six-month period.
The poultry sector employs some 150,000 persons directly of which 70 per cent are women, according to Levy.
Levy said Jamaica Broilers’ US operations would continue to drive the group’s growth. That is because it already dominates the largely mature poultry market in Jamaica but has the opportunity to add market share in the US.
“So, growth for US would be needle-moving growth, but growth in Jamaica will be cash-flow growth and cost containment and staff training and cross training,” he said.
Jamaica Broilers earned pre-tax profit of $2.46 billion on $41.3 billion in revenue for its nine months ending January 2021. Jamaica contributed $25 billion to revenue, while the US accounted for $16.9 billion.
Comparatively, pre-pandemic, the company earned $1.48 billion over nine months ending January 2020 off revenues of $40.6 billion.