Canadian Cheap Chicken

Sobey's and Olymel have teamed up to bring the people of Ontario inexpensive, Canadian chicken.  My heartfelt congratulations and thanks to everybody at Sobey's, Olymel, and elsewhere who made this possible.

Cheap Chicken for Ontario at $4.34/kg ($1.97/lb)
is about the same as the everyday US price

As I was cruising the Foodland grocery store looking for bargains, I happened to spot the sign "Whole Chickens $1.97/lb."  Wow! Now there is a bargain.

This is the second time in two months that Foodland has run a similar sale on chicken (see Blog posting Affordable Chicken for Canada Day)

This price is close to, or the same as the every-day price of whole chickens in the North East United States (eg. Michigan, Ohio, Illinois, etc.).

Cheap chicken, or inexpensive chicken?  In other words, is this junk chicken?  The label says "Canada Grade A", but is that good enough?

On some quick investigating, I learned that these chickens being sold are Flamingo Brand, produced by Olymel LP.  The box label has CFIA Establishment # 39G, which is Olymel's St-Damase, QC abattoir.

Just because they were processed in Canada doesn't mean these chickens were Canadian born and raised.  A "Canada Grade A" can be awarded to a chicken of any nationality.

Wholesale chicken label, fresh "Flamingo" branded
Canada Grade "A" chicken from Olymel

Ms Sarah Stover, Communications Manager for Sobeys Ontario (owners of Foodland) informed me that these chickens are not "spent chickens", and they are raised on a Canadian farm and processed in a Canadian abattoir.

I bought one of these chickens for a quality taste test.  In my opinion, this on-sale chicken is of equal quality to the regular commercial, mega farm chicken that is typically offered in the grocery stores.

OK, typical commercial quality chicken it is.  Let's dig a little deeper.

The eviscerated weight is 1.262 kg (2.78 lbs.).  The live to eviscerated weight ratio is usually 0.68628 so we estimate the live weight to be 1.839 kg.

According to CFO's Form 101, that is a Category 5 bird, which earned the farmer $1.622/kg live weight in Quota Period A-124 (May 17, 2014 until July 12, 2014), according to CFO's Live Price Bulletion 1626.

Converting back to evicerated weights, we get the farmer's gross income as $2.363/kg of eviscerated chicken.

We therefore conclude, that a Canadian #ChickenMafia overall system markup (from farm gate to grocery store shelf) of 183.66% is still occurring at this "cheap chicken price".

I previously posted that the US wholesale to retail chicken price markups were at a rock solid constant of about 40.2% (see previous Blog posting Chicken Price Parity: Will it Ever Come?).   If we assume that the same wholesale to retail markup in the US is good for Canada too, then the chicken processors are taking a 31% markup for their abattoir services.

It is rumored that at the price of $4.34/kg., Sobey's is selling at about $0.25/kg below their costs.  If true, that puts their wholesale purchase price at $4.59/kg.  We know the farmers received at least $2.363/kg., so that is a processor markup of 194% gained by Olymel in this case; one of the largest pork and chicken processors in Canada.

If US retailers sell chicken day in, day out at $1.99/lb ( $4.378/kg) and wholesale to retail price markup is 40.2%, that puts the wholesale price of US chicken at $2.79/kg.  If Ontario farmers are getting $2.363/kg, that leaves $0.427/kg (equivalent to $0.539 per bird) to send it through the abattoir.

There is little justifiable reasons for an abattoir to charge by the kg., as their costs don't really change with the weight of the bird.  The fair way to charge is $ per bird processed.  Greed however, justifies many things.

If Canadian abattoirs ran at a 40% markup like in the US, the Canadian wholesale price would be $3.308/kg.  If Sobey's was to gain $0.25/kg for their shipping, handling, and overheads, then the retail sale price would be $3.558/kg.  This is still considerably cheaper than the typical prices Ontario shoppers are forced to pay.

ISO Polar estimated that the freight rates for 53 foot refrigerated trucks are about 10 to 15 percent more than non-refrigerated equipment because the carriers have to factor in the additional fuel consumption. A refrigeration unit consumes approximately one gallon of diesel per hour. A typical freight charge is about $0.082/tonne-km.  Assuming 500 km of refrigerated shipment for the chicken, that adds $0.041/kg to the price of the chicken.

Some interesting math.  In the end, we conclude that Sobey's and Olymel are doing Ontario consumers a favor with chicken selling at a price similar to US chicken.  Hopefully everybody will realize that it is in their best interest to continue on this path, and that others in and near the #ChickenMafia come to join them.

One day soon, perhaps it won't be for just a 3 day sale once a month that we deserve affordable chicken.

Affordable Chicken for Canada Day

Sobey's Foodland (and perhaps other grocery stores owned by this grocery store giant), brought affordable chicken at $1.88 per pound (ie. $ 4.14/kg) to Canadians last week for a 3 day sale; 57.14% less than regular pricing.  I wonder why?

Ontario Canada ad for affordable chicken, offered by Sobey's Foodland
stores in June 2014.  This chicken sale price is just 57.14% of the regular
Ontario retail pricing.  The $1.88/lb sale pricing in Canada is equivalent
to the current, every-day price of US chicken.

Was Sobeys feeling patriotic, in preparation for Canada Day celebrations?  Were they feeling guilty for their prior aiding and abetting of Canada's Chicken Mafia plans to rule the chicken world?  Was Sobeys being cunning at exploiting a known, heart-felt grievance of Canadians, so as to gain market share from its competitors by actually siding (or seeming to side) with consumers?

I have been writing in this Blog of late about the unaffordable chicken prices in Ontario (see LICO-Chicken = "Let them eat Cake"and Unaffordable Chicken in Ontario and Squeezing The Pimple).  This affordable chicken sale is quite a contrast to that historically bleak pricing of chicken.

I have written an email to both Sobeys and MapleLodge Farms (the Canadian supplier of the affordable chicken being sold by Sobeys) seeking more information on their motivations and corporate policies on this affordable chicken.  Hopefully, we will soon learn more about this fantastic sale of affordable chicken in Ontario.

The Meat Department Manager at my local Foodland store told me that he brought in 720 chickens in preparation for this sale.  All of those 720 birds were sold out in Day 2 of the 3 day sale.  He also said that those 720 birds were equivalent to the amount of chicken he would typically sell in a month.

It appears that Canadians are ready, willing, and able to respond when the price is right.

This chicken sale is even more remarkable, as beef  and pork prices go through the roof; beef because of the herd collapse in US due to the severe drought in the South West USA, and pork because of the herd decimation from the on-going PED virus that is killing pigs throughout North America.  With beef and pork prices rising for understandable reasons, the Chicken Mafia could have ridden on their coat tails, but Sobeys Foodland comes in with a huge sale that significantly helps consumers.

I guess we shouldn't look a gift horse in the mouth, just count our blessings.

So a sincere tip of the hat and heartfelt appreciation goes out to Sobeys, and/or Sobey's Foodland, and/or MapleLodge Farms for bringing this sale of affordable chicken to Canadians.  If you started the idea, approved it, or aided in making it happened, you are to be congratulated for doing so.

Affordable chicken comes to Ontario for 3 days. Don't stop now, just 362 more days to go!