Covid sparks poultry shortage as Inghams staff isolate, KFC slashes menu

Close contact rules have fuelled staff shortages at Inghams, prompting KFC to reduce its menu and Australians to embrace frozen chooks.

Lenard Poulter, founder of Lenard's, is considering leasing his own trucks to maintain distribution. Picture: Renae Droop

Pandemic isolation rules have hit the supply of chicken, forcing fast food giant KFC to alter its menu as poultry producer Inghams warns of significant ­disruption to output and ­distribution.

Food distributors are asking for national cabinet to scrap close contact rules, which mean anyone who shares a home with a person infected with Covid-19 is forced to isolate, regardless of whether they have contracted the coronavirus.

Inghams chief executive Andrew Reeves said the rapid spread of the highly infectious Omicron variant across Australia’s eastern states created “unprecedented challenges” for the company.

“Many Inghams employees (are) being forced to isolate at home due to contracting Covid in the community or as a result of being close contacts,” Mr Reeves said.

“The operational and trading difficulties have resulted in significant operational inefficiency, additional costs and the temporary suspension of a number of Ingham’s products. Inghams is working closely with our customers and we are focused on supplying as much product as possible to customers while the current disruption continues.”

Inghams is one of Australia’s main chicken producers. Along with Steggles and Golden Farms it supplies fast food chain KFC which says the disruption to supplies has forced it to reduce its menu. “KFC is currently experiencing intermittent supply chain disruptions nationally due to Covid-19 related absenteeism at our chicken suppliers, meaning some of our restaurants are unable to offer our full menu, which relies on fresh chicken,” a KFC ­spokesman said.

While whole chickens are readily available, cuts that require more processing such as breasts and medallions are in short supply. Inghams shares slumped 6 per cent to $3.32 on Tuesday.

Mr Reeves said it was too early to quantify the hit to earnings.

He said it was “premature to draw any conclusions on the overall impacts on the business and trading results”.

“The company continues to manage the cumulative impacts associated with Covid issues which have arisen through FY22,” Mr Reeves said.

“We will continue to closely manage our working capital and inventory and seek to implement initiatives to minimise the financial and other impacts of Covid through the second half (of the­ ­financial year).

“We are currently maintaining our Australian processing ­operations while seeking to ensure the safety and engagement of our employees, many of who are demonstrating outstanding levels of commitment to work through the current challenges,” he said.  

Inghams customer Len Poulter of national franchise chain Lenard’s Chicken said the disruption to supply was likely to spark changes to how chicken is sold, with frozen products becoming more popular, given their longer shelf life.

“We’ve been selling the story that fresh is best. At the end of the day there is not much difference (between fresh and frozen now),” Mr Poulter said, who also supplies chicken to IGA supermarkets.

“We were trying to supply fresh to IGAs but by the time we got there, we were losing four to five days’ shelf life. Consumers don’t want that. So we chose to go with frozen and it’s been successful for us.”

Mr Poulter said he was also considering leasing his own trucks to supply his home market in Brisbane after facing delays from IGA distributor Metcash.

“They are already 48 hours behind the delivery,” he said.

“They’re scrambling to keep up. I’m making sure that we can get stock to them and if they are getting further behind at least I can have one or two drivers on the road delivering stuff to people in Brisbane at least.”.

Robert Ceccato, managing director of distributor Global Food and Wine, said about half his staff of 350 were in isolation, making it ­difficult to consistently supply his customers. While welcoming the relaxation of isolation rules in NSW and Queensland, he said a national approach was needed.

“We need to have a national agreement for the whole country or the distribution model will fail,” Mr Ceccato said. “I mean, typically Australians eat 9 million chickens a week and they all come from down south so we wouldn‘t even be able to get them in Queensland unless they relaxed these laws.”

Originally published as Covid sparks poultry shortage as Inghams staff isolate, KFC slashes menu