Ipswich shutdown could lift supermarket prices, experts say
CHICKEN prices at the supermarket could increase after the Steggles processing plant at Wulkuraka closes.
A potential reduction in the national supply of chicken combined with the nation's love of a cooked chook has the potential to push up shelf prices.
The company was one of two to announce last week it would close, with Churchill Abattoir to slaughter cows for the last time later this month, sparking a city-wide jobs crisis.
Steggles is expected to stop operations in the current capacity early next year.
Beef eaters will be less affected at the cash register, experts say, as the beef industry has capacity for suppliers to negotiate contracts with other processing facilities, where chicken farmers are usually unable to.
USQ Australian Centre for Sustainable Business and Development director Professor Julie Cotter said beef and chicken industries operated under two very different models which meant prices would be impacted differently by the closure of Churchill Abattoir and Steggles.
"The chicken meat value chain services mostly the Australian domestic market with very few exports," Prof Cotter said.
"Once this market is saturated and there is an oversupply of chicken meat, prices paid by consumers will decrease and it becomes more difficult for meat processors to remain financially viable.
"If the closing of Baiada's processing plant in Ipswich results in a reduction in the national supply of chicken meat, consumer prices would be expected to increase.
"However, if processing at other Australian locations increases, then no impact on price would be expected."
She said the impact on consumer prices and supply in the beef industry should be minimal as the meat could be processed at a number of alternative abattoirs.
Prof Cotter said there were some important differences between the value chains for beef and chicken meat, and the potential impacts on farmers were also different.
"Chicken producers tend to have contracts to supply a particular processor with a certain amount of chickens," she said.
"This provides certainty for the farmer; but when a processor such as Baiada closes a processing plant, the chicken farmers have very few alternative places to sell their chickens.
"There are a limited number of chicken meat processors in southern Queensland. The impacts could be devastating for chicken farmers supplying to Baiada."
She said beef producers could have a supply contract with a particular abattoir or could sell their cattle through saleyards with the impacts of Churchill's closure for cattle producers expected to be relatively low.
"There is currently an under supply of cattle for slaughter, due to high export demand and drought conditions over the past few years, with many abattoirs in southern Queensland unable to utilise the available capacity that they have," she said.
"Beef farmers that are contracted to supply Churchill Abattoir should be able to negotiate a supply contract with another abattoir or sell their cattle at auction."