27 November 2006
BEIRUT: Poultry prices in Lebanon have spiked since the war with Israel this past summer, with production levels continuing to fall far short of local demand. In light of the persistent shortage on the local market, some poultry farmers have either ignored or circumvented the fixed price of chicken imposed by the government in September and the long-standing ban on imports.
The price increase is reverberating across the economy, leading many stakeholders to demand that the government abandon its protection of the poultry sector and allow the market to set prices for chicken.
According to the head of the Syndicate of Supermarket Owners, Nabil Sahad, Lebanon's poultry industry is only producing 20-25 percent of the chicken needed to satisfy domestic consumption. Sahad says the "arbitrary" fixed price of LL3,800 per kilogram - which is far below the current cost of production - imposed by the Economy and Trade Ministry is partially to blame for the insufficient supply of chicken.
"Because the price is fixed, as soon as we put whole chickens on shelves they are snapped up, so the prices of cut chicken and eggs have skyrocketed," Sahad told The Daily Star in an interview.
"We don't understand why the price is kept so low, and our philosophy is to let the forces of supply and demand dictate the price of commodities," he added. "If there is not enough supply, producers will be motivated to produce more, and prices will go down."
The blockade imposed by Israel forces during and after the July-August war initiated the chicken shortage and the consequent rise in prices. Since livestock feed was unavailable, local farmers were forced to slaughter nearly 1 million chickens, according to a postwar report on losses sustained by the agricultural sector that was conducted by Oxfam International, a major private relief agency.
Hani Saffieddine, the head of the Association for Southern Agriculture, said skyrocketing feed prices, coupled with the evacuation of many farmers from their land, caused production levels to drop by at least half in July and August. The unavailability of frozen chicken imports - technically forbidden by the Ministry of Economy and Trade though the ban is large unobserved - also led to a hike in prices.
He argues that traders should import more frozen chicken to stabilize prices in the poultry market.
But the president of Hawa Chicken, the country's largest producer, denies importing any frozen fowl. He also insists that chicken prices have returned to normal, contrary to reports from restaurants across the capital.
"They went up after the war but are down again, and once hens have had time to lay eggs in one or two weeks egg prices will stabilize too," Jean al-Hawa told The Daily Star over the telephone.
"We do not import chicken," he insisted when asked whether Hawa observed the government's ban.
Though the Economy and Trade Ministry imposed the price cap in September in response to complaints from consumer-advocacy groups, it appears to have benefited neither shoppers nor restaurant owners.
"The high price of poultry has hurt everyone in our syndicate," said Paul Ariss, the head of the Restaurant, Hotel and Cafe Syndicate. "I don't know if prices have stabilized yet, but during the summer they were at least 40 percent higher."
Ariss, like other poultry buyers interviewed by The Daily Star, argued that the price of chicken in Lebanon has always been controlled by Hawa, which has an effective monopoly on the market since it processes the chicken produced by most local farmers and manufacturers its own live-stock feed.
Losses from the July-August war notwithstanding, Ariss says that Hawa's domination of the Lebanese poultry market, coupled with government regulation, has been largely responsible for both the shortage and price increase.
"The problem is that these days you can't raise issues like this with the government because they have more important things to worry about," Ariss said.
A restaurant manager in Achrafieh who preferred to remain anonymous agreed that the price of chicken has long been determined by Hawa, not the government. Since his restaurant consistently orders large quantities of poultry, Hawa has maintained low prices, but for smaller vendors and clients the cost has risen.
"In Lebanon you can always get what you want, but sometimes you have to pay," he explained when asked whether his restaurant has felt the impact of the poultry shortage.
The manager laughed out loud when asked if the fixed price of chicken has been observed by anyone.
"The minister of economy says one thing and Mr. Hawa says another," he told The Daily Star. "He sets the price and if there is not enough, he imports boat loads of chicken from Europe."
Macro-economic forces are also affecting the market, according to Arslan Sinno, the owner of Dora Flour Mills, which sells grain for feed production.
The prices of the raw materials needed to produce feed - namely corn, soybean, wheat, and oil - have gone up by more than by 50 percent since June, said Sinno, due to both a poor crop in the United States and the increased conversion of agricultural products into alternative energy. Corn is an increasingly popular source of fuel in the US; Brazil is producing ethanol from sugar; and Europe is shifting toward bio-diesel.
"Since the consumption of these products has risen globally, and the American corn crop has deteriorated, the cost of producing feed has risen tremendously for people like Hawa, and a lot of consumers cannot afford higher-priced products," Sinno said, adding that the cost of corn in Lebanon has risen from $150 per ton to $225 per ton in the past six months.
This has been especially painful for small-scale chicken farmers, many of whom have been unable to pay off loans, let alone invest in new livestock to meet local demand, Sinno said.
