Cutting their spring and summer quotas means farmers can give processing plants some more breathing room.
The Canadian chicken industry cut output for May and June by roughly 12 per cent nationally to manage the drop in demand for chicken products brought on by the COVID-19 pandemic.
In July and August, chicken producers will increase their output slightly, said Lisa Bishop-Spencer with the Chicken Farmers of Canada, but they’ll still be 11 per cent below normal production levels.
In Alberta and other Western provinces, the reduction hasn’t been as significant, with chicken farmers cutting their output by roughly 7.5 per cent.
The industry originally determined in 2019 how much chicken it would produce for the spring of 2020, Bishop-Spencer said, but as the pandemic swept in and interrupted the regular food supply chain, farmers wanted to make sure they could handle any processing plant shutdowns.
The chicken industry is closely linked to the restaurant industry, and Statistics Canada has found 54 per cent of Canadians eat out in restaurants once a week or more. Despite the popularity of chicken across the country, grocery store purchasing of the product couldn’t make up for the consumption drop the industry saw from the closure of restaurants.
“We’ve been affected by a decrease in food service. Food service represents about 40 per cent of the production we do in Canada,” Bishop-Spencer explained. “There was a rapid increase in demand for retail product, but it’s not enough to meet the gap.”
Despite supply chain hiccups, chicken is still the most popular protein in Canada. Bishop-Spencer said demand is still high, with 83 per cent of Canadians having bought chicken the week prior and the same amount planning to buy it again the following week.
Supply management
The production of chickens in Canada is regulated by a federal agriculture policy, just like eggs and dairy, that manages the supply, imports and pricing of the product, helping farms to stay profitable and ensuring consumers can access these products at stable prices.
Supply management allows for the industry to set production quotas so there isn’t a surplus or shortage of their product.
“We’re trying to make sure that we didn’t have too much on the market, because you’ve got to find places to freeze it and store it,” Bishop-Spencer explained.
Cutting their spring and summer quotas also means farmers can give processing plants some more breathing room.
“That’s not to say that if some major plants go down, we won’t be in a position to have to probably depopulate birds. That’s still a very real risk,” Bishop-Spencer said, adding that isn’t considered an acceptable option and would only be used as a last resort. Typically, the industry works together to reroute birds to plants that have the capacity to process them, rather than culling flocks.
While the farming side of poultry is supply managed, the processing side is not. However, producers are working together right now to help ensure all birds can be processed.
Birds can only move so far in Canada, though, since there are laws and legislation on how far live birds can be transported for processing. If a major plant goes down in Ontario, some plants close by may be able to pick up the capacity, but those birds couldn’t be transported out to British Columbia, for example.
Physical distancing measures in processing plants are also resulting in changes to the type of products that are being produced. There has been an increase in bone-in, skin-on products being sold in grocery stores, and Bishop-Spencer said more whole birds are coming on the market as well, since it takes less “person power” to process whole birds.
“That’s really interesting for people on the consumer side because people might not be getting the cuts that they want, but they’re still buying the chicken and they’re using it,” she said.
Trickle-down effect
When chicken farmers cut their quotas, that reduction trickles down into hatcheries, said Drew Black, the executive director of the Canadian Hatching Egg Producers.
“Any reduction or change in the chicken market has an impact for us pretty quickly and dramatically as well,” Black said, noting the hatching industry tends to mirror the chicken industry since they are a direct supplier for them.
Canada’s 240 hatching egg farmers are responsible for some 820 million eggs annually that hatch into chicks which, once grown, go to slaughterhouses. That industry, valued at more than $370 million and supporting more than 7,700 jobs, helps supply more than 2,500 chicken farmers with chicks.
Due to decreasing chicken capacity, there will be 33 million fewer hatching eggs needed over the next few months – a reduction of roughly four per cent. That means $15 million in lost farm cash receipts for hatching producers.
Since chicken consumption in Canada is normally relatively stable, hatching egg farmers usually plan for a stable supply of eggs over the course of the year as well. With a rapid change in production, like that brought on by COVID-19, farmers lose the money they have already sunk into producing those hatching eggs.
“The product is there and it’s got nowhere to go, so there’s a bit of an oversupply issue right now across Canada and we’re working hard to address that,” Black said.
The current life of a laying flock is around 60 weeks. Black said the pandemic has forced farmers to reduce laying time to 56 or 55 weeks in order to cut the number of eggs produced. The industry is also working toward reducing the amount of hatching eggs Canada imports and focusing more on domestic product. Typically, the country imports roughly 20 per cent of its hatching eggs.
Despite the cutbacks, Black said farmers are working together in each province to help protect the viability of the industry and ensure farms won’t go under while the COVID-19 pandemic remains a threat.
“We’re taking a number of steps that we really hope (will) contribute to ensuring a sustainable industry moving forward,” Black said, noting it is still a difficult time for farmers.
“There’s a lot of uncertainty right now and I know that’s stressful for a lot of our farmers.”
The industry remains hopeful economic recovery will start in early 2021, boosting the industry back to where it was prior to the pandemic.
