Huge feed price increases to flow down to supermarket chicken meat, as grain costs soar amid US drought, Ukraine war

The cost of groceries already has SA families’ budgets in a flap, but producers are warning a popular staple is about to get even more expensive.

Huge increases in feed and diesel costs are pumping up the price of producing chicken, as the effects of the Ukraine war and global grain shortages flow down to SA farms.

While in the UK, predictions are surfacing of chicken becoming just as expensive as beef, the local industry is expecting much more modest rises at South Australian supermarket check-outs.

Matthew Greenslade farms free range chickens and pigs at Riverton, and said his feed costs had gone up $4000-$5000 per week compared with last year, as prices climbed by about $120 per tonne.

A global decline in grain supplies, due to Russia’s invasion of Ukraine and drought in the northern hemisphere, has resulted in skyrocketing prices, which Mr Greenslade labelled as “just incredible”.

“Ukraine is such a huge exporter of grain, and Russia, and so the conflict over there has pushed the prices up,” he said.

Farmer Matthew Greenslade with chickens at his Riverton farm, on May 6th, 2022, in Riverton. Picture: Tom Huntley

“We are going to have to put our prices up because if you’re not making any money, it’s not worth it.”

The owner of Greenslade Chickens said diesel price rises also meant transporting a truck full of chickens now cost $550, compared with $300 last year.

“I think the price of chicken will increase by about 10 per cent. That will gradually get phased in over the next six months,” he said.

The state has about 120 farms feeding the chicken meat market.

It’s the most popular meat in Australia and industry research company IBISWorld predicts per capita consumption to reach 46.9kg this financial year.

That’s in stark contrast to people’s diets in decades gone past, when it was much less affordable due to different farming practises.

Matthew Reeves, senior analyst at IBISWorld, predicted chicken meat prices would rise by about 4 per cent over the next year, due to the increased feed, fuel and transport costs, along with labour shortages.

“Unlike in the UK, chicken prices in Australia will not reach similar levels to beef prices anytime soon,” he said.

Grain Producers SA chairman Adrian McCabe at his Salter Springs property. Picture Matt Turner.

Mr Reeves said that was due to beef and chicken prices already being closer in price in the UK, due to local market dynamics – and the strong demand for Australian beef pushing up domestic prices here.

He also predicted similar rises for beef, as farmers had been holding cattle back from slaughter to rebuild their herds after drought.

Grain Producers SA chairman Adrian McCabe said canola was fetching $1100 a tonne, compared with an average price of about $560, and wheat $500 a tonne, compared with an average of about $265.

“These prices were already rising two years ago on the back of droughts in the US, and they haven’t abated yet,” he said.

“They’re talking about going into a third year of drought, which we haven’t seen in a long time.”

Australian Chicken Growers’ Council president Allen Bullen there was “no doubt” rising costs, including gas, would put pressure on chicken prices, though he wasn’t expecting “drastic” rises.

James Hawker, of the SA Poultry Association, said his members were paying up to 25 per cent more to feed their birds compared to 18 months ago.

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