Paltry returns for poultry meat farmers

NSW Farmers is concerned for contract poultry farmers who are struggling to operate in an increasingly consolidated market, with many now exiting the industry.

President of NSW Farmers’ James Jackson said most Australians would not be aware of the competition issues plaguing the poultry meat industry and that contract growers, including our chicken, turkey and duck farmers, need greater support.

“Most Aussies know about the issues in the dairy sector with $1 dollar-a-litre milk, but not too many know about what’s happening in poultry.

“Chicken is by far the most affordable meat on supermarket shelves, making it a popular protein choice for consumers. Australians now eat over 47kg per person of chicken per year, but poultry meat farmers are getting paltry returns.

“There are problems at retail with the price of chicken being kept artificially low, and problems at the processor stage with limited competition restricting the ability of farmers to negotiate their contract terms,” Mr Jackson said.

“Although the market for chicken is national, the market for growing services is geographically fixed. Over the last decade, we’ve seen the closure of multiple chicken processing plants in NSW and this has left growers with virtually no choice in who to contract to in their region.

The situation has weakened the bargaining power of farmers, restricting their capacity to negotiate fair contract terms. Worse still, many growers have been left with stranded assets and no ability to contract to a different processor.

“The lack of competition in our supply chain has unfairly disadvantaged our farmers.”

“The poultry meat industry does not reflect normal market conditions, and we are supportive of investigations being made into the industry,” Mr Jackson said.

The ACCC is aware of potential competition and unfair trading issues in the chicken meat industry and have confirmed they will conduct an initial review of the sector. This review, although a positive step, will not compel stakeholders to provide information nor government to act on recommendations.

“NSW Farmers is calling for a Treasury directed ACCC inquiry into the poultry meat industry which is more thorough than a market study. This will clearly show the state of the industry and better highlight avenues of reform to support fair and effective competition.

“Similar to the dairy industry, we believe there is a need for a mandatory code to ensure contracts are fair and enable a sustainable supply chain into the future. A treasury led inquire will demonstrate this need,” Mr Jackson concluded.

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