The real price of the £2 chicken

By SARAH CHALMERS

Last updated at 22:53 12 August 2007

With its pasty flesh, tightly sealed under cellophane wrapping, the chicken sitting on a blue polystyrene tray on the shelf at Asda really doesn't look like much of an 'icon'.

Yet this is how the superstore retailer is marketing its £2 medium-sized British chicken, claiming that the cheap bird's powerful allure makes it one of the few products for which customers will 'cross town' to pop in the shopping trolley.

Indeed, weighing 1.55kg and sporting a Union Jack label to assure buyers of its provenance, the Asda chicken is flying off the shelves - with shoppers capitalising on the lowest poultry prices for decades and buying them three a time.

Scroll down for more

It's a symbol of a remarkable shift in eating patterns and proof of the way chicken has become the latest weapon (many would say victim) of the supermarket price war.

The big question is: how on earth is it possible to sell a chicken at such an extraordinarily low price? Today, a plump, tempting bird is as much a staple of most supermarket trolleys as bread, but this was not always so. Prior to World War II, there was no real market for broiler chickens - birds farmed for meat alone.

Chickens consumed in the 1930s and 1940s were typically laying hens which were slaughtered and roasted only when they had reached the end of their egg-producing lives.

But, in 1953, when post-war rationing on animals was lifted, farmers realised there was money to be made from marketing chickens purely for eating - and the broiler chicken industry started to grow, independent of the egg business.

Advances in veterinary medicine - in particular the arrival of antibiotics for animals - made it possible, and profitable, to keep large numbers of birds together in a small space. Before antibiotics were added to animal feed, birds had to be kept in far larger spaces to avoid the spread of disease.

The chickens we eat today (with the exception of free-range and organic birds) are typically reared indoors in large sheds, crammed 17 or 18 to a square metre.

The shed floors are covered in wood shavings, which in turn are usually thickly coated with chicken droppings - the stench of ammonia hits you as soon as you open the door of one of these sheds.

Deprived of natural light, the chickens are fed a rich diet of wheat until they reach sufficient cooking weight - typically at just six weeks old. Thirty years ago, it took twice as long to get a bird big enough to cook, but today they are specially bred to grow fast.

Tastes have changed as well, with our drive towards healthy eating seeing a move away from red meat

consumption towards 'white meat' poultry.

As Asda spokeswoman Sian Horner says: "We see chicken as a healthier option because it is lower in fat and cholesterol than red meat, and we know how to cook it."

The effect is plain to see on the store shelves. The big supermarkets sell more than 230 different kinds of chicken products - from chicken soup to chicken curries and chicken pies to barbecue drumsticks.

And chicken's rise in popularity is not confined to these shores: globally, consumption is growing faster than that of any other meat. But within the EU, Britain is the king of chickens.

We produce and sell the cheapest in Europe, slaughtering some 860 million birds last year, and each one of us eats 26 kilos of poultry meat a year - the weight of a seven-year-old boy - some 38 per cent of our entire meat consumption.

But there are increasing concerns about our home-grown industry's capacity to keep pace with the short cuts required to keep forcing down prices.

Asda says the £2 chicken is a loss leader, designed to attract customers into the store, where it is assumed they will then spend on other, more profitable products.

And the British Poultry Board, understandably in favour of anything that "keeps British chicken on British shelves", claims the current poultry offer has seen the superstore, not the farmer, soak up the loss.

Jeremy Blackburn of the British Poultry Board insists no one is cutting corners to produce such cheap meat. Since the birds all carry the red tractor seal of approval, indicating they have been reared in line with British government rules, standards have not declined, he says.

But the price cannot continue to come down inexorably, he adds, not least because the price of wheat has risen dramatically on the world market. "In the past two years, wheat prices have gone up 90 per cent and what the consumer doesn't realise is that a chicken, in effect, contains the same amount of wheat as a loaf of bread."

Yet while wheat prices have risen, chicken prices have still fallen in real terms. While most foodstuffs have gone up by 50-200 per cent in the past 20 years, chicken has gone up by only 15 per cent.

In real terms this means a price drop of nearly 50 per cent. Chicken prices have fallen by 4 per cent in the past four years alone - seemingly in defiance of all commercial sense.

Analysts calculate that half the cost of a chicken on the

supermarket shelf can be

attributed to the wheat

needed to feed it.

And the price of wheat is rising due to the worldwide increase in the number of acres used to grow biofuels,

unpredictable weather conditions and the tendency of emerging economies in Asia to switch from being mass exporters of wheat to mass consumers as they grow richer.

"Margins are tight," says Andrew Sheppard, a research associate at Exeter University's Centre for Rural Policy Research, who has studied the economics of the poultry trade.

"While the producer and the supermarket can afford to sell whole chickens at ridiculously low prices because they make up the shortfall on value-added chicken bits such as breasts, wings and fast food, the farmer gains nothing.

"In 2002, British farmers made just 3p per chicken. By 2005 that had fallen to 1.9p. Of the average £1.20 they get when selling the bird, all the rest goes on the cost of growing the bird, slaughtering it, disposing of the waste and transporting it."

With such slim profits, it is easy to see why the industry has to produce so many birds, with both farmers and processors dependent on selling thousand upon thousand of them.

The economics of all this are precarious, and for some farmers the question is no longer if the industry will disintegrate, but when.

Charles Bourns, a Gloucestershire poultry farmer and chairman of the National Farmers' Union Poultry Board, explains: "You simply can't get around wheat prices.

"Already farmers run at a loss because we don't accurately

calculate labour costs and the cost of upgrading facilities. Price increases at retail level is the only answer."

Bourns admits that "no one really wins" in the cost-cutting because as soon as one chain lowers its prices, the rest tend to match it, so no single producer ever really increases their market share.

Yet by engaging in this tit-for-tat price war, producers and supermarkets are leaving the door open for overseas and Third World countries to capture our market.

Since our desire for chicken is unlikely to diminish (especially in the light of red-meat scares such as BSE and foot and mouth),

eventually we will be forced to buy more chicken from elsewhere.

This, says the British Poultry Board, is a real cause for concern. "Britain is only 60 per cent selfsufficient in terms of food, yet people don't seem to recognise this is every bit as great a threat to us as our reliance on oil from overseas countries such as Russia.

"While we accept it may not be wise to rely on unstable nations for energy supplies, we do not seem to make the same correlation between food and its source - yet this is the very substance on which humans are fuelled."

Already, a substantial proportion of the chicken pieces sold in the UK are imported from Europe, Thailand and

Brazil.

Our own predilection is for chicken breasts, but millions of tons of different chicken parts are transported daily to and from countries across the globe driven by varying national preferences. China goes for the feet, Africa the legs and Europe and America the breasts.

However, if we were to rely more on overseas chicken producers, our own industry could be crushed by cheap, and possibly poorly regulated products. It's already happened elsewhere.

A Belgian development agency, which has analysed the effect of cheap frozen chicken legs and bits imported to Cameroon from Europe and Brazil, found that tens of thousands of local people lost livelihoods

dependent on Cameroon's own chicken industry.

Then there is the moral cost to us as a nation over the condition overseas birds might be kept in. After all, there is already substantial criticism of the conditions chickens are kept in at home, where the industry is heavily regulated.

Advocating the purchase of organic chickens, Compassion in World Farming spokeswoman Joyce D'Silva says: "Chickens have a pretty grim life, going from fluffy yellow chicks to the

slaughterhouse in less than six weeks.

"Because they have been specially bred to grow faster and are given so much food, they grow muscle very quickly, particularly the sought-after breast muscle. But because it isn't natural to grow so fast the chicken becomes unbalanced, finds it difficult to walk and is often lame.

"It is like putting a teenage body on an eight-yearold's skeleton - the bird's system simply cannot cope.

"A study showed that 26 per cent of British birds are lame at slaughter, and they are also prone to heart failure, sores and blisters."

Weakened in this manner and crammed together to make sure sufficient numbers are produced to make profits, the birds are susceptible to disease. Should bird flu take hold here, it would spread like wildfire through intensively farmed broiler flocks.

Yet how much greater will be the concerns about chicken produced in Third World countries,

employing cheap labour in sweatshop conditions, where a drive for lower prices might create poor health and hygiene standards?

Faced with such unpalatable possibilities, the £2 chicken suddenly looks a lot less appetising.

Regardless of its alleged iconic status.