Everybody in the chicken supply chain seems to assume that the price of their chicken and their profits should rise forever, equal to or greater than the cost of living increase.
That's quite an assumption. I wonder who suggested that to them, or gave them permission to make that glaring assumption?
CFO says they continuously improve. Do they?
In 1936, T.P. Wright discovered the Learning Curve where we can expect a certain rate of improvement every time the total units produced has doubled. If CFO had adopted a philosophy of continuous improvement, and helped its chicken producers, suppliers, and the entire value-added chain to understand, adopt, and apply these concepts, we would have seen the following improvements in retail chicken prices.
|Chicken Learning Curve, at 4% per doubling.|
For systems that are truly limited by raw material costs, improvements rates are typically 4% per doubling, one of the lowest improvement rates for all processes (ie. other processes have an Improvement Rate as high as 25% per doubling for repetitive manufacturing systems).
Since CFO feels that the cost of chicken is primarily determined by the input costs to purchase chicken feed (ie. a raw material), we will use this 4% as the limiting step for this example.
Why does our chicken prices go up by 2.53% per year, when according to Learning Curve, our prices should go down by 4% per year?
The simple answer, until proven otherwise, is that neither CFO, nor CFC, nor anybody in the entire chicken value-added supply chain is practicing what they preach: Continuous Improvement
They spout nothing but hypocrisy. They use fancy, politically correct words that mean nothing. If they truly knew what they are supposed to be talking about, we could call them bold faced liars.
However, we need to give them the benefit of the doubt. They may not be liars. The simplest, most obvious answer is plain incompetency.
Unfortunately, every Canadian gets to pay the price for the lies and incompetency of a few.