You might wonder how I figured we only have to wait for one more generation before we have affordable chicken in Canada.
Here's the chicken pricing for good 'ol USA.
For more than 22 years, the US broiler chicken composite markup between wholesale and retail prices (ie. the green line in the above graph) has run at a steady 40.2% (ie. WholesalePrice/RetailPrice= 0.402). This 40.2% is the profit & expenses of wholesale distributors. Composite price is a weighted price based on relative fraction of weight sold for the various cuts or whole chicken.
Chicken prices in USA for both retail (red line) and wholesale (blue line) have been trending up at the same average inflation rate of 5.4% per year from 1990 to 2012.
On the Canadian side of the border, we get something totally different. Today, our Canadian average wholesale chicken prices in Canada are approximately twice the US wholesale price, and climbing.
Ouch!
Source: http://www.cfo.on.ca/_pdfs/CFO-SM-Brochure-03.pdf
2014/10/06: The above link was found broken. CFO removed the incriminating evidence from their website. Fortunately, I saved a copy which is still available here
The rate of wholesale price increase in Canada is approximately 2.6% per year vs. the 5.4% in the US. Canada. With a higher chicken starting price but a lower chicken inflation rate in Canada, this means the US prices will eventually match Canadian prices.
If my math is correct, the US-Canada price gap will close around Feb. 8, 2035 (ie. 22.7 years from now).
Hold on, Canada, chicken price relief is coming. The day of chicken price parity with the USA will soon be here (in another 22.7 years).
The retail price increases for chicken seem out of control. Below is the CFO's Chicken Consumer Price Index, showing rapid inflation of chicken at the retail grocery store (Ref: CFO-SM-Brochure-03.pdf, pg. 4)
Fortunately, Canadians are a very patient people. In the mean time (ie. the rest of my natural life), Canadians will have to do cross-border shopping if they want a good deal on chicken. Hopefully, the Canadian poor will be able to hitchhike to the US grocery stores and return with their affordable chicken.
Sooner or later, Canadians will have had their fill with price gouging on chicken.
George Morris' data for May 2010 - May 2012 shows a steep collapse of chicken sales from Sept. 2011 to Mar. 2012, interpreted to mean that Canadian consumers were disgusted with excessive chicken prices, and closed their wallets. The sudden leap in sales for April 2012 was US chicken wings imported by retailers at excellent prices, so as to better serve Canadians.
This demonstrate that Canadians don't hold a grudge, as they are willing to quickly respond to reasonably priced chicken.
I was at the Louisville farm show a month ago. Our hotel was right beside a Walmart with a full grocery selection. My wife and I shopped there one night and I took note of fresh, skinless, boneless chicken breast. It retailed for $1.99lb US dollars. That was regular price, it was not on sale. We also stopped at the Walmart in Sarnia on the way home. It also has a full grocery. The same product there retailed for $13.54kg Canadian dollars. Raube Beuerman
ReplyDeleteThanks Raube, great data. Your $1.99 per lb. is $4.38 per kg. so the Canadian price of $13.54/kg is 3.09 times the price of the US chicken. Ouch!
ReplyDeleteThat may pay to take a trip for those living close to the border.
I CAN'T REMEMBER WHEN WE PURCHASED POULTRY IN CANADA! WE DON'T THINK THAT THE CANADIAN ECONOMY AND THE GREEDY POULTRY PRODUCERS WILL SUFFER WHEN A COUPLE OF PENSIONERS BYPASS THEM, TRYING TO SURVIVE ON OUR POULTRY, SORRY PALTRY PENSION. OUR SURVIVAL INSTINCT TELLS US ALSO TO BUY MILK, CHEESE AND GAS TO MAKE THE TRIP WORTHWHILE, MAKING OUR CANADIAN DOLLAR REACH TWICE AS FAR.
ReplyDeleteI CAN'T REMEMBER WHEN WE PURCHASED POULTRY IN CANADA! WE DON'T THINK THAT THE CANADIAN ECONOMY AND THE GREEDY POULTRY PRODUCERS WILL SUFFER WHEN A COUPLE OF PENSIONERS BYPASS THEM, TRYING TO SURVIVE ON OUR POULTRY, SORRY PALTRY PENSION. OUR SURVIVAL INSTINCT TELLS US ALSO TO BUY MILK, CHEESE AND GAS TO MAKE THE TRIP WORTHWHILE, MAKING OUR CANADIAN DOLLAR REACH TWICE AS FAR.
ReplyDelete