Chicken shortage looming for the food and hospitality industries

Industry Insights

Chicken is soon to be in short supply, with prices set to go up by 12 percent before Christmas. 

Jim Hoang, Sales Manager at Master Poultry said, while the shortage has been tipped to hit in a few weeks, his business is already experiencing a significant drop in supply.

"I've had so many people calling asking me for prices and wanting to buy chicken, but we just don't have enough, not even for our regular customers," said Jim.

Why is there a chicken shortage?

Petrol increases, electricity price hikes, labour shortages and limited wheat supplies (main ingredient in chicken feed) due to the Ukraine war have culminated to create the perfect storm for chicken suppliers. Some chicken breeders have also reported a higher than normal mortality rate with only 50% of their birds hatching and others have lost sheds due to flooding reducing their breeding capacity.

"The price of feed is very high at the moment so producers reduce their farming so they don't have to feed and process as many chooks and because the supply is low, prices go up and they get more money for fewer chickens. On top of that the price of fuel, utilities and rolling labour shortages are making it worse," said Jim.


What does this chicken shortage means for the food industry?

Head of Supplier Relations at Foodbomb, Nathan Lo Russo said, food scarcity and shortages were becoming commonplace in Australia with lettuce, leafy greens and potatoes all experiencing major supply issues this year. 

The food industry usually feels it first, ahead of consumers, because major supermarkets get first dibs on supplies due to contractual reasons. Food suppliers, hospitality, venues and caterers are left to fend for whatever supplies remain and this doesn’t really trickle down to affect customers for weeks, sometimes months,” said Nathan.

"While the shortage is currently at a supplier level, the reality is it will hit all of Australia soon” said Nathan.

"We haven't seen any price increase on our free range chickens for five years, but recently we've had two price increases. Overall chicken prices have gone up 25 percent and we've been told to prepare for more, with another price increase coming next week,” said Jim. 

Australian supplier Oroso Poultry also said their prices will soon be increasing anywhere from 2 to 12 percent in the coming weeks.

It’s the new potato shortage, which we knew about months ago at a wholesale level, but has only really hit customers in the wider market via chips shortages now,” explained Nathan.

“The industry has never seen this before, because historically the prices go up and then they come down, but now they just keep going up. Over the last 30 years chicken has consistently been the same price, but we're hitting record prices now. We're telling our customers to prepare for rolling shortages because even if they shop around, other suppliers will tell them the same thing," said Jim. 

Why have there been so many shortages of produce this year?

Most of the shortages we've seen this year (lettuce, potato, chicken) are the result of three combined factors: the wild weather patterns affecting growing regions at the worst possible time, the impact of the Ukraine war on the price of fuel, feed and other essentials and the aftermath of the pandemic whoch dramatically reduced labour in Australia.

Nathan Lo Russo also said that whilst suppliers have previously been reluctant to pass on price and market fluctuations, they’re being forced to do so now in order to survive. 

Historically, suppliers would absorb price increases, as they were minor and usually temporary, but now due to various factors like inflation and staff shortages those price increases are too high for suppliers to absorb alone. As a result, chicken prices will not come down for supermarkets, hospitality venues or food service businesses, they’ll just keep going up to a point and then plateau, creating the new norm,” said Nathan.


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