Cost pressures weigh on Jamaica Broilers
Higher grain prices and other costs absorbed by top poultry producer Jamaica Broilers Group have carved six per cent off its nine-month earnings to January.
And more cost pressures will be added this period, due to displacements in the commodities market from the Russia-Ukraine conflict, making it likely that chicken prices will rise for consumers.
The weeks-long war has sent grain prices to a historic high, first because of supply uncertainties and later due to Ukraine’s recent decision to exit the world market as a supplier of wheat, oats and other staples, while storing food to feed its citizens amid war.
One of Jamaica’s premier manufacturers of animal feed, Nutramix, an affiliated company of the Caribbean Broilers Group, has already warned consumers of price increases as the conflict in eastern Europe intensifies.
Not long after, the Ministry of Agriculture and Fisheries responded to the talk of price increases, saying it is preparing a list of items to be submitted to the Ministry of Finance for consideration of the removal of duties on more items imported for agricultural production and productivity.
Presently, farmers receive GCT relief on a number of inputs, including fertiliser and animal feed.
Jamaica Broilers itself is yet to confirm or deny plans for further increases on the price of its chicken and chicken products, with Senior Vice-President of Operations and Finance Ian Parsard saying only that the situation was “fluid”.
“At this point, we can’t say prices will go up or prices will go down. We just have to pay close attention to the developments,” he said.
Jamaica Broilers operates manufacturing plants in Jamaica, Haiti and the United States. Jamaica and the US are profitable markets for the group, and remained so over the nine-months ending January; but even in Haiti, where the company has been bleeding red, due to sometimes concurrent impacts of political instability and natural disasters, the operating losses there have fallen from $23 million to $10 million.
The worse showing was among ‘other Caribbean’ markets, with the total erasure of $981 million in operating profit to a loss of $72 million.
For the overall group, sales and profit were up in the period. The poultry company’s revenue rocketed by a third, from $41 billion to $55 billion, while its profits rose nine per cent, from $1.86 billion to $2 billion.
However, JBG’s local operation remains pressured by rising costs.
“The Jamaica operations reported a 6 per cent decline in segment profit when compared to the prior year, and this decrease was attributed mainly to increased grain prices and international shipping costs, which increased production costs, all of which were not passed on to our customers,” the company said in a statement appended to its earnings report.