Question 1- CASE STUDY- 35 MARKS

Two Weeks Before Chicken Shortage Breaks - As Coronavirus Picks Pockets, Appetite For Cheap Protein Flies High

Published: Tuesday | September 8, 2020 | 1:51 PM Jonielle Daley/Gleaner Intern

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Pan chef Lascelles Davis examines a quarter of curry jerk chicken at a farmers' market in Denbigh, Clarendon, on Friday, June 26. A shortage of chicken meat is expected to break in another two weeks, the big two poultry producers say.

As a shortage of chicken hits restaurants and dinner plates at home, Caribbean Broilers has hiked prices following an increase in production costs attributable to the depreciation of the Jamaican dollar and a spike in demand islandwide since the onset of COVID-19.All product lines under CB Foods will see a general price increase of between five and eight per cent effective today. The supply shortage in the domestic market signals a turnaround in fortunes from mid-year when the big poultry producers CB and Jamaica Broilers Group forecast that they were likely to have record-high inventory of chickens through to December.

Manager of corporate affairs at CB, Dr. Keith Amiel, disclosed that the company had not increased its prices since late last year. "The rate of production has been going up as we try to improve on all the various efficiencies. The cost that we are adding on is a direct cost as a result of the cost of production," he said. Chicken meat currently retails for about $200-$220 per pound. Both CB and Jamaica Broilers have cited a remarkable uptick in chicken demand since the punishing lockdowns and tighter curfews that restricted movement and sapped consumer demand in April and May.

Sold More Chicken

Jamaica Broilers toldThe Gleaneron Monday that it sold more chicken meat this August than for the corresponding period in 2019, a spike that has covered the deficit in supplies of the protein to restaurants and hotels, the latter which have been hit by lower-than-normal global flights. Hi-Pro has also recorded a significant increase in chick demand recently, though the company said that its database showed the 2020 summer supply to be consistent with last year's numbers. Specific data were not provided. Vice president of the Best Dressed Chicken Division, Dave Fairman, said that that branch of the business has been ramping up production weekly in response to rising demand. Best Dressed is not currently increasing its prices.

"Changes have been very dynamic during this time, but we have been monitoring the situation and responding accordingly," Fairman toldThe Gleaner. "We have responded to this by ramping up production through the reopening of our second hatchery which will impact the market within approximately two weeks. We expect to see even greater production numbers coming out of the facility."

Government policy aimed at reducing the importation of chicken products, coupled with the depreciation of the Jamaican dollar against the greenback, has created opportunities for small poultry farmers seeking to fill the vacuum. Amiel believes that the hike in demand for chicken meat is being driven by increasing hunger for cheaper protein alternatives in a recessionary economy, which has shed tens of thousands of jobs since the March onset of coronavirus in Jamaica. Less disposable income has driven down discretionary spending on higher-priced food.

Higher demand for chicken meat has also been attributed to thousands more parents and children working and studying from home. Amiel also theorises that the bump in demand may also be traced to the near four-week election campaign that climaxed with voting on September 3. Like Fairman, Amiel posits that the market will stabilise in the next two weeks. That is welcome news for restaurateurs like Doreen's, a popular eatery in Cross Roads, St Andrew, which has been having challenges in sourcing chicken from as early as July. Among her wholesale suppliers is Spanish Grain. "Business just flop because everybody eat chicken, they don't eat nothing else. For 'bout two weeks now, no matter how much bags you order at the wholesale, you only get one or two," proprietor Doreen said on Monday.

ANSWER ALL QUESTIONS

A.Critically analyze the effects of changes in prices and income on the production of both Caribbean Broilers and Best Dressed.(8 marks)

B.Highlight two (2) long run changes that Vice president of the Best Dressed Chicken Division, Dave Fairman can make in order to satisfy this increased demand. (4 marks)

C.Manager of Corporate Affairs at CB, Dr. Keith Amiel posited that the market will stabilise in the next two weeks. Give arguments to agree or disagree with this statement. Justify your responses with concepts learned in the course.(4 marks)

D.The case mentions that the rate of production has been going up due to improvement in all the various efficiencies. Using information from the case along with theories learned, explain four (4) factors that are likely to contribute to this improved rate of production.

(8 marks)

E.According to the case, "Government policy is aimed at reducing the importation of chicken products."

Discuss two (2) government policies (along with the relative impact) that may have been implemented to reduce the importation of chicken.(6 marks)