Historically, it took 2.5 lb. of feed to put 1.0 lb. of meat onto a chicken. With improved genetics and feed formulations, the time taken from day-old chicks to market-ready chickens has been drastically reduced, and so has the FCR.
OMAF website provides the following info on how farmers get paid for the chicken they raise:
Chicken Pricing
Chicken Farmers of Ontario (CFO) has price-negotiating authority. It negotiates the base price paid by primary processors for live chicken with primary processors every sixteen weeks. The live chicken price is determined by a formula established by the Agriculture, Food, and Rural Affairs Appeals Tribunal that includes the price of chicks, feed and producer margin. The producer margin is negotiated annually whereas the feed and chick prices are updated for each pricing period. If the two sides cannot reach an agreement, the dispute goes to final offer arbitration.
The producer margin provides a reasonable profit margin for the farmer, and pays for the farmer's operating expenses and overhead (eg. property taxes, labour, electricity, etc.). The feed cost is defined by the farmer's feed purchase price ($/kg) multiplied by the FCR (ie. [$/kg feed] * [kg feed/kg meat]= [$/kg meat]).
In the Figure above, from a May 2009 report commissioned by the BC Chicken Marketing Board, A75 to A84 refers to the chicken quota production periods of approx. Jul 2007 to Dec 2008. We can see that Ontario usually has a 1.82 FCR in the above period. However, in the recent pricing formula use by CFO, an FCR of 2.0 is assumed. This is an inaccurate bias, giving chicken producers an additional 9.8% above the true cost of their feed. If feed is 60% of the total cost of raising chicken, then this unfair feed pricing boosts the cost of live chicken by additional 5.9% for the farmers.
Of course, that 5.9% of unfair profit for farmers gets passed on to the consumer, but it's multiplied by the markups at each of the subsequent steps in the value-added chain. Allowing for a live to eviscerated weight ratio of 0.7372 and the live farm-gate price of $1.17/kg of live chicken for Period A-116 (Feb. 14, 2013), our equivalent eviscerated price is $1.587/kg of eviscerated meat paid to the farmer. With a recent Sarnia ON Walmart pricing of $13.54/kg (see Raube's comments), we have a total markup factor of 8.53 (ie. 853% markup from farm gate to meat counter at the grocery store). Therefore that unfair feed pricing premium of 5.9% at the farm gate gets multiplied to a whopping $0.80/kg at the grocery store.
Since we consume about 1.182 Billion kg of chicken per year in Canada, we have an unfair chicken tax of $945.6 Million per year, just from jigging the farmer's FCR.
Unfortunately, that isn't the only place that the system is rigged against the consumer. Be patient, my faithful Blog Hounds, we'll get to those other issues soon enough.
