Processors under pressure to cut prices

An increase in production, coupled with less robust holiday sales, could translate into a quota reduction

Canadian turkey farmers could receive a belated lump of coal this spring, as reduced Christmas sales come home to roost.

With 2015 closing stocks sitting at 19 million kilograms, Phil Boyd said a reduction in the national quota allotment is a possibility. Closing stocks in 2014 came in at 14.7 million kilograms.

“What we’ve seen is that consumption of whole birds has stayed relatively flat, it’s not even quite on par with population growth,” said Boyd, Turkey Farmers of Canada’s executive director. That fact, combined with less emphasis on turkey at the retail level during the 2015 holiday season, has resulted in a greater surplus, he said.

“Retailers weren’t featuring turkeys as much as they had, in terms of price point, so we saw a bit of a decline through the fall markets on Christmas sales and we ended up with a bit more in frozen inventory at the start of the year,” said Boyd. “So the processors that carry that inventory are making a reasonable point that we probably need to reduce our volume of whole birds for the coming production year.”

Bill Uruski of the Manitoba Turkey Producers said retailers often use whole turkeys as a loss leader during the lead-up to the holiday season, but he questioned how prudent that was in the long term.

“One of the contributing factors of these increased stocks is that the large retailers reduced the amount of featuring during the festive season by using turkey as a loss leader,” he told producers gathered for the organization’s annual general meeting in Winnipeg last week. “While in the past this type of marketing did pull through a lot of birds, it’s difficult to understand how this type of marketing strategy benefits our industry in the long run.”

Customers who are used to purchasing underpriced turkeys in the lead-up to holidays like Christmas, Thanksgiving or Easter, may balk at buying turkey when the true price of production is reflected, he said.

“This certainly puts all turkey processors under pressure to cut prices and guess where that leads to next? Our doorstep,” Uruski said.

But reduced holiday sales aren’t the only factor reflected in the current increase in frozen inventory. Uruski said there was also a slight increase in production in 2015.

“But with this kind of inventory, it’s hard at this point in time to see any growth for the 2016-17 marketing year. In fact I can safely say that there is mounting pressure to lower our national allocation for this coming year,” he said.

As for what a reduced quota allocation might look like, Boyd said it is still too early to tell. Processors and board members will have to discuss the issues at hand before a decision will be made.

“There may be a small reduction in the whole bird volumes,” said Boyd. “We’ll know that by the end of March.”

About the author

Reporter

Shannon VanRaes is journalist and photojournalist at the Manitoba Co-operator. She also writes a weekly urban affairs column for Metro Winnipeg, and has previously reported for the Winnipeg Sun, Outwords Magazine and the Portage Daily Graphic.

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