Farmers ask that the Food Chain Law be complied with: "We charge 40 cents for each chicken we sell"

"I am charging between 40 and 45 cents for each chicken. At a minimum they should be paying producers between 55 and 60 cents." Javier Sanmartín, a poultry producer from Aragón, breaks down how much farmers are charging for each bird they sell. In his case, it is a family farm in Huesca, which adds 160,000 chickens.

"We are three people and we can put up with it because we also have agriculture and we don't have repayments, but there are many farmers who are thinking of giving it up," he adds. Sanmartin is part of the Union of Small Farmers and Ranchers (UPA)an association that has considered filing a formal complaint with the Food Information and Control Agency (AICA) -an autonomous body attached to the Ministry of Agriculture, Fisheries and Food- on breach of the Chain Law by poultry companies, which the sector calls integrators.

For now, they have taken the step of raising their voices and demanding that the increase in costs reaches the farmers' pockets. "There is no excuse for some companies to continue working without signed contracts and without reviewing the price they pay farmers," says UPA.

The Law, in force since December, requires that none of the links in the production chain sell to the next below what it costs to produce. That is, that distributors, manufacturers, producers or farmers each charge a fair price, with which they can cover all their expenses. An idea that, on paper, generates consensus but that, in reality, at least in the chicken sector, does not seem so easy to fulfill.

One of the problems is that the final sale price to consumers, the average amount paid in supermarkets, stores or food markets, is not clear. Different actors point out that, currently, the price of a whole chicken reaches 3.25 euros per kilo, more than 15% above the cost at the beginning of the year. According to the INE, in April, poultry meat -without being broken down by type- became more than 12% more expensive compared to the previous year. Meanwhile, UPA points out that, on average, at the moment, the price of chicken is more than 30% above what it was a year ago.

The Ministry of Agriculture publishes the sales data in the markets, once they have passed through the integrator companies, the next link in the chain after the farmers. There, according to the latest published data -at the end of April- the average price of a kilo of chicken was close to 2.1 euros per kilo, 21% higher than at the beginning of the year and 16.5% above what it had in the same week of 2021. These data reflect that, in the EU as a whole, chicken is more expensive, 2.5 euros per kilo on average, but so far this year it has risen less, 15.4% . Of course, in annual comparison, throughout the EU, the cost of chicken has shot up more than 28.9%, from April to April.

"There is a problem with prices because, in the big cities, people don't buy a whole chicken, they buy drumsticks or breasts, they buy trays, and it's not so easy to see the rise there," says Eloy Ureña, head of the poultry sector of the Coordinator of Farmers and Ranchers Organizations (COAG) and producer of chicken meat.

A quick comparison of prices, for example, of Mercadona, Dia and Carrefour indicates that, currently, the price of the whole chicken breast is 5.76, 5.65 and 7.15 euros per kilo, respectively. Prices that, according to distribution sources, are more than 15% above what was paid at the beginning of the year.

It may not be so clear how much chicken has risen for the final consumer, although it is clear that it has become significantly more expensive. At the same time, the producers, the farmers, have problems to cover their costs. Above all, due to the rise in energy prices.

"Last year, I lost about 4,000 euros. This year, in the first six months I'm going to lose that," says Ureña. In his case, half of his income has been used to cover the cost of energy, electricity and gas. "I live daily. I don't know how long I can last. Now I'm going to consume less gas, but more electricity; and, if I don't pay for a month, they cut it off," adds the person in charge of COAG. In his case, his farm in Aragón has about 18,000 chickens, when a few months ago it was 23,000. "We must bear in mind that the energy cost overrun began in August of last year, but before that we were suffocated, because we came from a production crisis. With the pandemic, there was no tourism, there was no restoration and fewer chickens were already being produced."

In the background of the farmers' claims is a production system that differs from other meat sectors and that the producers call 'breeding and guarding'. "We provide the installation, the energy and the workforce and the integrator companies provide the chicks, the feed and the veterinarians", argues Javier Sanmartín.

"For us, as producers, 80% of the costs correspond to energy, which has doubled, as for everyone. Electricity, 100%; diesel, more than 80%; and gas around one 60%", he lists. "Poultry farming is a family business, in rural areas, where you drag the whole family because you can't go more than 15 minutes from the farm, in case something happens or the power goes out. There are people who are thinking of leaving it and , if that happens, there may be problems of shortages," lists Sanmartín.

"Of course I've thought about leaving it. Look at the rise in prices, they're skyrocketing and I haven't seen a penny. Who is going to want to buy the farm from me now? Nobody," laments, anonymously, a chicken producer from Castilla and Leon.

"We don't want a confrontation with the integrator companies because, if they don't earn money, they won't transfer it to us. They have also had a rise in energy, transportation or the cost of hatcheries. To be honest, the only The solution is to transfer all the increase in costs to the final consumer and reach us all, but if that is done, consumers would not buy chicken and, furthermore, prices cannot be intervened by law", he reflects, for his part, Javier Sanmartin.

"We must comply with the Law of the Chain, in all its links, in distribution, in companies, in the relationship between integrators and farmers," says Román Santalla, secretary of livestock at UPA. "We have had years of relationship and dialogue with the integrators and we have advanced in a business relationship model where they put up some means and we put up the farms and the work; but there comes a point where we cannot, because the companies have a lot of power, they can take longer to deliver the chicks to the farmers or deliver less, and that's another problem. We also ask that the insurance of the birds be paid between the two, because the chickens belong to the companies, but now the farmers are paying for it. What we want is for the Chain Law to be complied with, which is already in force," emphasizes Santalla.

In total, according to data from the Ministry, there are nearly 5,000 chicken producers in Spain, practically at levels similar to those of a decade ago. On the other hand, the consumption of this meat has been reduced by 16% since 2010.

Regarding the response from the companies, Avianza, the Spanish Interprofessional Association of Poultry Meat - which represents 90% of the companies in the sector - ensures that the problem with the price of chicken meat is joint. "The food, the feed, is 70% of the cost of production and that feed is paid by the integrators," says Jordi Montfort, its general secretary.

"It has not been possible to pass on all the rise in costs that we have had to distribution. We have received a rise of 10% or 12%, but the fact is that the rise in costs that we have had is 40%. We have to pay for energy, cardboard, trays, labour, distribution; and, personnel costs alone have risen more than 8%", says Monfort.

One of the main brands in the sector, Coren, explains that, in its case, it is a cooperative of producers. "Our partners are affected by this situation of low prices that we perceive for our products. We have been demanding fair products for the agri-food sector for years, since before the crisis, and especially in recent months when the rise in the cost of materials animal feed and energy premiums is becoming unsustainable," says a spokesperson. "We defend fair prices that allow the viability of the sector and guarantee the production of quality food in our country, without depending on foreign markets."

Both farmers and integrators say that distribution chains use chicken as a claim product, as is also the case, they point out, with other products, such as milk or olive oil. Different companies consulted do not value the situation of chicken prices and indicate that competition rules prevent them from talking about prices. Anonymously, they do indicate that the price of chicken is not being used as a lure to attract consumers because it is at its highest in recent years.

Given this situation, all the sources consulted indicate two options, or that the affected parties report to the AICA a breach of the Chain Law; or sit down to negotiate and propose a change in conditions.

From COAG they point out that their objective is to sit down with both the distribution companies and the integrators. Also, with the Ministry of Agriculture, to whom they say they indicated months ago the situation they were in, due to cost pressure. At the moment, the Ministry does not clarify if it proposes a sectoral meeting with poultry meat producers. UPA, for its part, opens the door to reaching an agreement before filing a complaint with the AICA, which may take years to rule on.

This Tuesday, the Minister Luis Planas did point out in the press conference after the Council of Ministers that the Executive has given the green light to a new aid package for meat producers, where 10 million euros are contemplated for the meat sector of bird "At the moment, we have not received any type of aid and, if those 10 million arrive in September as planned, it may be too late," says Eloy Ureña, head of COAG's poultry sector.

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