The economics of chicken

It's sort of interesting how this blog happens sometimes. I may start at one point, look for pictures to illustrate it and find myself reading interesting stuff that takes me off in another direction. Today, for example, my starting point was an article in The Australian Financial Review that, although it was really about the Inghams Chicken company float, included some interesting statistics about how much chicken we eat - and I will come back to that. But as I looked for illustrations I was also reminded of Bill Gates and his scheme to give African women chickens which then took me on to a bigger picture of chicken production and consumption and a whole lot of other issues world-wide. Illustrated by this diagram in the Bill Gates article:

To remind you of the Bill and Melinda Gates Foundation initiative. The idea was to give women in rural Africa five chickens each with the idea that this would allow them to make money from their chickens to the tune of some $1000 per year - a substantial sum in Africa. This would empower the women and release them from poverty and oppression - giving them all those things shown on the diagram. Melinda Gates said:

“raising chickens is considered women’s work, and the money from selling chickens and eggs belongs to women to spend as they choose”. Melinda Gates

It's a nice idea, but as the article says - it is somewhat naïve. The article goes on to list some of the difficulties - unlikely the women will be allowed to keep the money (if there is any) for a start, not to mention the difficulties of ensuring the supply of chickens and feed. Well I won't go on - read the article for the full argument - and very reasonable and interesting it is too, although it is sad is it not, that people who really want to change the world for the good are derided for their possibly misguided attempts to do just that? Maybe it is possible to institute change from the bottom up. Maybe one just needs to think it all through a bit more than it seems to have been. Surely one has to try? I could, of course, go on about the position of women in the world, but I won't do that now.

Apart from the local/individual problems the article then went on to discuss the world chicken production which is apparently led by Brazil which has invested huge amounts of money into the production of chicken for export to the world as frozen chicken. The other end of the spectrum - and as in all things really - the article suggests that the answer is somewhere in the middle.

“As usual, the aid industry can only see the two extremes and ideas that come from outside – Bill Gates’ five hens or Odebrecht’s [a Brazilian company] millions of chickens. The successes in the middle, and the successes developed locally, are ignored”. Hanlon and Smart

Well Australia is in the middle one would think, so back to the article, and the graph, that started this article off. Here is the graph. (Apologies - it's a bit wonky - I was a bit careless with the scanning)

There are quite a few things to say about this graph but the thing that struck me at first sight was how much our consumption of chicken (and fish) and to a lesser extent, pork, has increased at the expense of beef and lamb since 1990. Lamb in particular has plummeted - which would explain the current round of TV ads encouraging us to eat lamb.

The most obvious explanation is the falling price of chicken and the rising price of lamb and beef. Money is always the first motivator in what we choose to buy and chicken is most definitely the cheapest meat on the market at the moment (although not, funnily enough, chicken mince, which is inordinately expensive it seems to me). Cost does not explain the rising popularity of fish though - fish is not cheap - well some is but the price of most fish per kilo is considerably higher than that of meat. Mind you I find that one uses less fish per serve than meat - also an interesting fact. So I think there are other factors at play here too. The health industry emphasis on the need for Omega-3 being one.

Another is that chicken is amazingly versatile. Just about every culture in the world eats chicken and they cook them in their own distinctive ways. When we were young and poor I often served chicken to my friends. So much so that one of them observed that he was about to eat one of Rosemary's 1001 ways with chicken. A bit galling but it does demonstrate its versatility. It's most likely because it goes with just about everything, not having a super strong flavour of its own. Then there is that group of people who have not quite been able to go down the full vegetarian path and have hung on to chicken and fish (and also maybe pork) which are somehow seen as either less evil, or less dominating in taste - less bloody if we are honest. Yes I think it's the blood. And we probably eat less beef and lamb this days too - in our case I think it's the comparative cost.

It's certainly not an ethical thing, because although great strides have been made in curbing the horrendous conditions of some chicken farms, and in spite of a substantial move to free-range, organic, RSPCA approved and other such ventures, chickens are still farmed in an extremely callous way on the whole. As I said yesterday, it doesn't bear thinking about really, and we should all be vegetarians.

But eggs - the other chicken bounty and meatless - are also produced in an equally horrendous, if not worse way - so if you are a vegetarian for humanitarian reasons, should you eat eggs? Again - things are improving - many more free-range eggs now. I notice that the proportion of free-range eggs to cage and barn laid eggs has increased significantly in the supermarket. Barn-laid being the middle way new category of egg. But then again, what does free-range mean? It's a balance isn't it? Because if you really want to be free-range then the price will sky rocket. Maybe we should go back, Bill Gates like, to keeping our own chickens in our own backyard for food and eggs - just like our parents and grandparents did.

Back to the graph. Apparently the Australians are amongst the biggest consumers of chicken in the world - we eat 40kg per person every year. That's almost a kilo per person a day! Surely not. That means some people are eating an enormous amount of chicken. Who, where? Bet it's the poor again and I bet it's at KFC and Red Rooster and MacDonalds, not to mention every other fast food outlet you can think of. Because it's cheaper for them too.

Another interesting fact from the article:

"Average carcass weight is unchanged over the past five years at around 1.86kg a bird, but this is 50 per cent higher than in 1975-76 and 30 per cent higher than in 1995-96."

It would be interesting to know how much bigger they are than the chickens I ate in my youth. I must admit I had noticed that the birds were much bigger these days. How have they achieved this? Breeding I guess. Yet another cost of poultry production - research and development of the birds themselves, not to mention methods of production, marketing, distribution, freezing - and on and on. And I guess the size increase might be another reason for the increased consumption - if you have a roast chicken then you get a bit more meat per person than you would have got previously. And if you buy pieces - we all buy the chicken cut up these days - no more buying the whole chicken and cutting it into pieces yourself as you used to do and as all old recipes for casseroles and sautés tell you to do - and no bones either, so you also get more from your pieces.

Then there's the economics of feeding - about one-third of the cost apparently. The left-hand graph in the article shows the comparative amounts of feed needed per kilo of meat for the various categories. Lamb comes in at a hefty 9.2-13.8 kilo of feed per kilo of meat. That's grain that could be going to feed people. Chicken only needs 1.6-1.8 kilo per kilo. They still eat more than they produce though. Which is a salutary thought. And here's another very interesting element to add to that equation:

"Since 2012, feed costs have declined dramatically around the world. It would appear at first glance that this would be great news for the poultry industry. Unfortunately, feed costs also declined for competing meats. Since competing meats are generally less efficient at converting feed to meat, falling grain prices helps them more than it helps the poultry industry.

Paradoxically, high and stable grain prices are the most favourable to the poultry industry. Experience has shown that low grain prices often lead to overproduction in the poultry and competing meat industries while high grain prices make all decision makers more cautious." Dr. Paul Aho - a US economist

All in all it's depressing to think where our meat comes from. I guess the most you can say about the commercialisation of chicken is that they don't take up a lot of room and use less of the earth's resources, whilst creating less waste. Chicken poo, as discussed yesterday, is a commodity in itself. Particularly if we all went back to keeping our own. But then I guess if you are living in a flat or a Mac mansion on a tiny block in the suburbs you can't do that either. We could though. Well - there's the foxes. Maybe we should catch and eat them. Does anybody do that?

I'm rambling. It just shows that economics can be interesting though. They didn't recommend buying Inghams shares - said they were overpriced. Also interesting.