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Sunday, December 15, 2013

Small Flocker Price Difference

Are Small Flockers just as bad or worse than the #ChickenMafia for gouging the public on sky-high prices?

Many who buy farm gate chicken state that Small Flockers charge more than retail, and are always sold out.

The non-TRQ tariff seems to be the main controlling and enabling factor for all prices of chicken in Canada.  The second factor is the inflated chicken feed prices, which the quota-bearing chicken farmers allowed and/or encouraged to increase 33.3% above comparable market prices for similar feeds.

Why would farmers do that when they would have to pay those higher prices?  That's easy to explain.  Every time the feed mills raised the chicken feed prices, the chicken farmers who bought that feed made additional profit.   , as the quota-boys received extra profits for themselves every time the feed mill raised prices (due to CFO's bogus inflated FCR, which they were ordered to reduce by 16.3% in Aug. 2013). Inflated feed prices cause inflated farm gate live chicken prices, inflated wholesale, and inflated retail prices.  Since each step uses a % markup, the penalty to consumers increases as the chicken passes through each step along the way, so the 33.3% premium for chicken feed becomes a 19.98% premium for live chicken, a 67.97% premium for eviscerated chicken at wholesale, and a 235.16% premium at retail grocery store meat counters.  See http://canadiansmallflockers.blogspot.ca/2013/05/chicken-feed-price-conspiracy.html

As a small flocker, I currently pay $18 per 25 kg bag, which is $720 per metric tonne of feed.  I believe the Supply Management quota-owning factory chicken operation currently pays around $388.375 per tonne (quota period A-121), which means small flockers pay 85.4% more for their feed.  Assuming feed costs are 60% of the total costs, and the other 40% of costs are similar for both small flockers and quota-boys, then small flocker farm gate chicken meat prices should be 11.23% higher than the factory farm prices (1.854 * 0.6= 1.1123 or 11.23% premium).

Now that the bogus FCR has been ordered to be fixed, there is neither a negative nor positive effect on the chicken factory farmer when a feed mill raises their prices, as the farmer automatically gets 100% reimbursed for all feed price changes, whether an increase or decrease.  Since the feed mills have over 10 years of bad habits for rapid price increases above market rates, why would they change their ways now?  Who will object when the feed mills raise their prices again and again?

What this means is that feed prices will continue to inflate, and import tariffs will continue to enable 200% to 300% over-charging for chicken, or worse.

Who pay for all these #ChickenMafia excesses and price gouging?

It's the Canadian consumer who pays.

That's the reason chicken price abuse will continue until the Canadian consumer revolts, or the government reins in the Supply Management system.

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