Available on MyShtetl:
ONE-PAGE SUMMARY OF CHICKEN REPORT
FULL INDEPENDENT CHICKEN REPORT
PRESENTATION TO RABONIM AND SHUL EXECS
READ: Why the chicken crossed the road and other Rabbinical stories.
Read all the user comments and chirps below this story - have your say too!
An esteemed audience that included the Chief Rabbi, Rosh Beth Din, Chairman of the UOS and many Rabonim and Shul execs were given a presentation by UOS executive director Darren Sevitz last night on the Report of the Independent Commission of Enquiry into the Price of Kosher Chicken.
MyShtetl was there. And we have worked through the night to ensure that we are able to bring the much-anticipated information to kosher consumers as soon as possible.
The report, compiled independently by probably the two top experts in their field, shows that kosher chicken costs consumers an average of 52 percent more than treif chicken.
The mandate of the year-long investigation was to cover the industry “from farm to plate,” the Rabonim were told. And it sure does. The major cost and margin investigations cover both the slaughter/wholesale business as the retail end.
At present there is only a single chicken abattoir in the country, the report says. While a small facility has opened in Cape Town recently, it is only supplying the catering and restaurant trade. The Beth Din has issued a license to Wachenheimers, however, for a brand new high-tech kosher chicken abattoir which will be commissioned by next month.
"All the retailers purchased from Tenderchick. Information was obtained directly from Tenderchick in respect of some of them to verify the purchases made and the prices charged."
Some of the highlights of the presentation to the Rabonim last night include:
Shechita Statistics provided to the Rbonim last night show that slaughtering - hence consumption - of chickens has declined by 32 percent over the past nine years. Chicken consumption has declined from almost 900,000 birds in 2001, to under 600,000 in 2009.
The graph below clearly illustrates this trend:
The Rosh Beth Din Dayan Kurtstag told the Rabonim last night that consumption of red meat has been stable over the same period. This is a clear indication that the relatively high price of kosher chickens is causing consumers to move consistently more to red meat.
Regarding the wholesale price investigation, the experts say that Tenderchick's cost of production is R29.87 per kg (as against an SA industry average of R13.19 per kg). The direct cost of Kashrut to Tenderchick is R4.53 per kg - of which the UOS (Beth Din) slaughter fee is R1.84 per kg. Tenderchick take just 20c per kg profit and sell to all retail outlets throughout the country at a standard price of R30.07 per kg. This price has not been increased in 18 months (see comment from Tenderchick's Ami Bolnick, below).
The report says that while "Tenderchick appears to be operating within reasonable cost structures and is recovering its costs in the selling prices charged.”
But the report goes on to recommend efficiency measures that could help reduce wholesale prices. These include:
• Introduce growth promoters in feed
• Negotiate live bird cost with contract growers
• Increase broiler stocking density by 2 chicks per square metre to reduce live cost
• Negotiate that employees only get remunerated for time worked
• Restructure to eliminate overtime
• Reduce confidential discount percentage with chain stores
• Slaughterers to commence working day on time
• Introduce progressive flow facilities to cut, pack, wrap, label and box all products which will enhance quality, presentation and efficiency
At the presentation, Darren Sevitz read from an e-mail response by Ami Bolnick of Tenderchick to these suggestions. MyShtetl e-mailed Bolnick last night to ask his permission to publish his response in either “with or without edits.”
Just prior to midnight, Bolnick responded saying: “I have no problem. I am forwarding it to you without edits, with pleasure.”
Here was his response:
1. INTRODUCING GROWTH PROMOTERS:
There is an increasing demand for hormone free grown chickens. We have followed this healthier option as hormones in the food we eat carries a significant health risk. In the past months we have subsequently succeeded in ensuring that all the kosher birds we produce receive absolutely NO GROWTH HORMONES in their feed.
2. INCREASING STOCKING DENSITY & PRICES FROM FARMERS:
Over years of experience in this industry we have through trial and error learnt that there is a direct correlation between increased stocking density in a broiler house and the percentage of treif incurred. We have again through experience with our farmers formulated the ideal growing procedures needed to produce a quality kosher live bird.
We grow our live birds with a lower stocking density because we know it reduces our rejection rate.
Yes, it increases our live bird cost but to place any more birds per sq meter is counter-productive when you are trying to grow live birds which need to pass the stringent kosher standards required when checking the lungs of these birds.
Yes, we pay a higher price to have our birds grown to our specific standards. But it is a quality vs. quantity issue. We have tried growing birds with a higher stocking density and it did not work for us. The treif incurred was far higher and unacceptable to us.
Our current status is that all our live birds receive hormone-free feed. The broiler houses are open-sided with freely available sunlight and fresh air. With a lower stocking density our birds have more roaming space.
3. EMPLOYEE REMUNERATION & RESTRUCTURING:
Subsequent to this suggestion we did restructure in December 2009 and reduce our overtime to reduce costs.
I think it is vital that the consumer is aware that the last time Tenderchick passed on a price increase was in January 2009.
On 1 July 2009, and now again in 2010, we have incurred wage increases of 7.2 percent each time.
We have incurred two UOS Schehita fee increases. One in January 2009 and another in January 2010. Both were in the region of 8.5 to 10 percent.
Electricity has jumped up dramatically in this period.
All our operational running costs have risen in the vicinity of 10 percent per annum.
We have managed to offset all these increases by streamlining our own operation thereby enabling us to hold our price for 18 months.
4. REDUCING CHAIN STORE CONFIDENTIAL DISCOUNTS:
We are thankful to Mr Kingston [the senior expert who drafted the report] who helped us convince the chain stores to reduce their rebates and thereby enable them to retail their chickens cheaper.
In the past months these chains were hereby able to sell frozen kosher whole birds at anywhere between R26.99 and R29.99 per kg, which was of significant benefit to the kosher consumer. I am indebted to Mr Kingston for assisting us.
5. SLAUGHTERERS NOT STARTING ON TIME & PROGRESSIVE FLOW FACILITY:
These two issues have an insignificant cost effect and are monitored on a daily basis and are under control.
The "Retail Price Investigation" section of the report uses prices collated on the 22nd and 23rd April and include VAT.
“The average gross profit percentage being achieved in the kosher butchery retail business in respect of most poultry products appears to be approximately 36%,” says the report.
“Kosher Retailers are achieving a Net Profit Percentage of between four and eight percent.”
Disquiet among the Rabonim
The Rabonim present were concerned that they would be tackled in their Shuls during Shabbas and wanted detailed explanations of many aspects of the Report.
Rabbi Gerson went as far as phoning a retail butcher to confirm some of the information that was provided.
Dayan Kurtstag, who had clearly worked closely with the independent experts and was completely conversant with the economic issues in the report.
While some of the Rabonim were happy to hear that a new abattoir was opening, others were concerned. “We don’t control the market,” the Rosh Beth Din told one Rabbi. “Our business is to supply the kosher market with chicken!”
In answer to another Rabbi who suggested that the Beth Din regulate the market, Chief Rabbi Dr Warren Goldstein said that the Beth Din’s job was to “meet standards. We are not in the business of social engineering,” he said.
After the meeting, long-standing chairman of the Executive Council of the UOS, Jackie Sifris, told MyShtetl that “the Report shows that there is no profiteering in the industry,” and that both the wholesale and retail industries “operated at a reasonable cost structure.”
See the three pdf documents below. open and read them, download them, print them and forward them on to friends and family.
CLICK TO READ: Why the chicken crossed the road and other Rabbinical stories
It is all very well you
It is all very well you trying to justify the high prices BUT just walk into Woolworths and look at the packaging of their chicken braii p[acks or even whole chickens. There is NO extra, extra fat and they look like you should buy them to cook and eat NOT like our chickens that are just so fatty and awful looking with feathers sticking out here and there!!!!!
Although I don't go to
Although I don't go to Woolies Food very often at all I must say it is quite noticeable that we pay far higher than premium prices for a much lower quality product.
As one of my non-kosher friends regularly remarks. The kosher chickens look like scrawny grade B product worse than those 2-3 kg bags of cheap chicken in the supermarket deep freezers.
Keeping kosher does not equate to keeping healthy when it comes to the state of our chicken!
Bottom line. Serving Hashem
Bottom line. Serving Hashem costs double the price, unless you eat red meat. How is it less healthy to use growth hormone in chicken than to fatten up our population with more affordable red meat while we blow our cholesterol out of the water. So double price, scrawny birds is our lot if we choose to keep kosher!
Chicken used to be the poor man's substitute for red meat which is why so many of the African population eat it, but in the kosher world these economics are flipped on their head.
I'm no financial whizz, but I still feel there is more to this than meets the eye. I can't understand why the economics don't play out in red meat.
I don't need to be incentivized to keep kosher, but I do feel like a captive audience that is being taken advantage of. That hardly leads me to feel there is a lot of ahavas Yisroel in the kosher business world. I do think maybe the Beth Din has a role to play in fighting for consumers on that angle.
Hi, I feel strongly about
Hi, I feel strongly about this issue and certainly feel as a consumer that we are being ripped off.
Sure the suppliers have come to air their laundry in the open but we consumers know there is something amiss here.
For instance we in the Cape get jhb frozen chicken at R39.99/kg but as soon as our local scheta is available they drop their price to R29.99 to out price the local, then when local is sold out their price shoots back to R39.99? Go figure?
I wish it where laughable but as the trend has shown the greedy are getting greedier and the consumer has to look elsewhere for supply.
Thats why we have gone to our local supply in the Cape and its healthier and cheaper.
There should be more entrepreneurs in Jhb doing the same not just one supplier this is the source of the problem.
Thanks
Anon
That's the beauty of
That's the beauty of competition, it reduces prices - it's an ecomomic reality that applies everywhere.
As per the report, there are now two kosher chicken abattoirs in JHB. Let's see what happens.
DS
Kosher is not a nice idea,
Kosher is not a nice idea, it's the law. When we consider it in that context the UOS should be taking a stance on the level of profiteering and its influence on our ability to keep a very important mitzvah.
You seem to quote 'economic reality' like it's an irrefutable law and our market is perfectly elastic without regulation. Profiteering is no different than scalping illegal World Cup tickets and those that take advantage of the observant create a very problematic situation in which many people simply find it too expensive to keep kosher.
Since when should we be serving selfish interests by limiting the ability to keep kosher to the wealthy only. We are omnivores (even the Torah tells us so simply in its mention of the food we can eat and what parts of an animal may be eaten after sacrifice) regardless of what the next bearded dude in a woolly jumper driving a Tesla might like to suggest. Vegetarian is a choice, it is not our default state of being.
This profiteering off a captive audience that observes Hashem's mitzvot should an affront to all Jews. Chicken costs 2-3x their non-kosher equivalents. Let's stop pretending the margins are somehow the same. Common sense needs to prevail.
You first need to prove that
You first need to prove that there is profiteering, and by that I mean excessive. The owners certainly do make profits and make a good living. I'm sure you earn a nice salary and wouldnt work for less.
We cant work on opinion, but on facts. The report gave us facts. If you dispute them, prove it. That's all I ask, prove that the two experts are mistaken, or liars, or whatever.
I take your point. I don't
I take your point. I don't want to mix opinion/feelings with facts. We have to also understand that it is now proven by the facts on the table that it is considerably more to keep kosher than we'd like to admit.
Perhaps the headline should have been something along the lines of, The High Price of Keeping Kosher.
I don't doubt that
I don't doubt that profiteering may well have taken place in the past. The mere fact that the single supplier is able to tell us that he has not increased his prices in the past 18 months DESPITE his stated input cost increases, tells me that his margins were pretty high 18 months ago. Thank G-d for the appointment of the commission. Imagine what we would have been paying had the wholesaler not faced such scrutiny. I say well done to the UOS!
yet i'm still feeling dicked
yet i'm still feeling dicked over.....?
O well, off to kfc i go!
What needs to be explained
What needs to be explained is what is wrapped up int he blanket term "industry cost of production". It is way too wide and hides a multitude of sins. How do we know ther eis not a double accounting for some fo the costs that then get listed under constraints? How does the industry cost of production relate to live bird volumes? If the iondustry is producing the chickens, then how come you still have tenderchick carrying the cost of live birds? So just what is included in the 'industry cost of production"? A term not defined here or in any of the links above- but just given as a blanket amount with zero explanation.
And while the report states that the rejects cannot be sold at full value, it does state that they can be sold for lower cost chunks- yet the recovery of that amount is not included above. why not? Even if it is only a few cents a kilo, other minimal costs have been included- and a claimed reject rate of 7% must produce some level of income when the industry average is 2.5%- meaning that 4.5% of rejects while not approprriate for the Kosher market can be sold into the low cost non-Kosher market! Yet a cost is recorded increasing the price, but we are not told of the level of revenue from the 4.5% of chickens that could be sold on. is this revenue included and just reducing the cost amount? Has it been ignored and only the cost included? Or are we expected to not question it?
Sadly, the report seems way too simplistic and what has been reported far too condensed to convince anyoine that a thorough investigation took place or that the reported results reflect reality.
The cost of rejects in the
The cost of rejects in the report is the net cost, after recoveries./dl>
What we are seing is the final report, no different to the final audited financial statements of a company. No doubt the auditors have files and files and tons of working papers to back up their findings - but all we see is the final report, we don't ask to see their working papers, but we accept that they are there. This is no different, with many spreadsheets and working papers in the background.
In the same way we accept that the audited financials of a company are reliable, and that the auditors were independant, this should be no different, unless of course we have pre-judged and will not accept an opinion which differs to the one we want to see. In which case, nothing can be done to convince us otherwise.
Being so close to the action and having access to all the behind the scenes documentation, I know what has gone into this report. Whether I like the findings or not, I know what has gone in to producing them.
In my personal opinion, any theories which are at odds with what the report states, must be proven, or will remian simply theories. And we are all entitled to our own opinions.
DS
Your reply is way too pat.
Your reply is way too pat. Yes we are all entitled to our opinions- but you are refusing to allow any true transparency or insight into the report. Why the refusal to break down the industry cost? What is or is not included in that industry cost? From R13 to R29 is over a 100% increase, not the 52% increase claimed- but nothing is given to justify the claimed 52%, nothing is given as to what makes up the R13 industry cost, nor is there any explanation as to what marketing costs we are payign when there is a monopoly with zero need to advertise! Teh second abbatoir is in the FUTURE- these figures are in the past. thus they need to be justified base don past figures- the old economic principal of ceterus parabus.
Bottom line- the fact that the UOS is obfuscatign and not stating the basis behind these figures removes credibility form the report. The fcat that figures are stated and not justified or broken down, removes credibility form the report. In the end, by refusing to actually give some details, it creates exactly the opposite result of what the UOS was hoping to achieve- people are left wondering what is being covered up in what you are not releasing; the reports credibility dissapears and the public is left viewing it as a cover-up where the true costs and differences in prices are not being reported to us!
Yes, its my opinion, but from the support my first comment has garnered in a short space of time, it seems to be an opinion others share.
Of course there is an easy solution to remove this from the realm of opinion; publish the facts and show us why we should trust the report. Let us know what makes up the R13 industry costs. Surely the figures are available, after all- if the report has to have any credibility, those of us reading it have to see that the figures were base don something and not just on supposition or best "guess" data
I agree with Marc there are
I agree with Marc there are too many things that have been clouded out. One cannot see how the various components of the "industry cost of production" relate to the additional costs due to the "uneceonomic scales of doing kosher business".
I would also like to see the total R12.15 per kg being broken down. Here marketing costs are included. I am not sure how much marketing needs to be done to a captive market.
Rents, electricity, employment costs etc are paid by the entire chicken industry so as Marc states there could be double counting in this regard both under "industry cost of production" and "Constraints due to economies of scale"
Breaking things down per chicken or per kg is a means of comparison.
But if I just calculate the UOS fees for kashering chickens I get 600 000 chickens at +/- R3 per chicken i.e. R1.8m in fees from chickens or am I missing something.
You are missing nothing -
You are missing nothing - 600000 chickens at R3 is R1,8million in fees.
There could indeed be double counting, there could be fraud, cover ups, hidden costs, padding and secret agendas. The investigators could have been bribed. But as I said before, we either accept that they are independant experts, or we need to prove that they are not, otherwise its just opinion.
For the comment of one or
For the comment of one or more of the Rabbi's that it is shown that ther is no profiteering is ludicrous. The non-Kosher market is characterised by numerous suppliers who are able to be competitively profitable at significantly lower prices. There individual volumes are no more conducive to economies of scale than thise of the single Kosher producer. It is clear that the direct Kashrut cost of R4,53 is not the reason for the enormous disparity in price and the only other logical explanation is the lack of market drivers which are commonly characterised in monopolistic situations, couples with opportunism and profiteering on the part of the producers.
The end of the market dominance of one producer (or even two for that matter) should be actively promoted and facilitated by the Beth Din as it is this organisation which has the De Jure and De Facto power over such matters and therefore the market. A truly independant investigation would be preferable and to this end, it is probably best that an external organisation such as the Competition Commission, which has the legal power to determine such things, do so. To my mind, this apparent 'white-wash' of the status quo is a disingenious attempt to legitimise current inequitous practices by the industry and to avoid such an external investigation.
How was this not
How was this not independant?
We have indeed been contacted by the competition commission, they felt there was nothing to investigate. Our policy is to allow freedom of entry to all applicants that meet our standards. The more the merrier. If it such a profitable business, why have we not had more than 3 applications in 40 years. PLEASE, bring them on, bring them on.
The fact that the producer
The fact that the producer has managed to maintain prices constant for 18 months in the face of higher than zero inflation in the general broader economy and that sector over the comparable period speaks volumes in itself. I am interested to know how, in the face of such thin margins and inflation of various inputs, not least of which is labour which features prominently in the report, this is possible, without the starting point being inordinately high. Has the comparative treif market also had a comparative price stagnation over the same period?
Anyway, like they say about
Anyway, like they say about religion - for a believer, no proof is necessary; for a non-believer, no proof is possible.
Everyone was waiting for this report, but when it doesn't say what they wanted, they disregard it. They all seem to know more than the experts who actually did the work. Why then was the report necessary, when all we need to go on is our gut feel and our intuition. If feelings is all that matters, why waste time and effort on facts.
I think it is futile to have this discussion. It's kinda like arguing with missionaries - we bring logical and textual proofs, but they are all emotion and feeling. It's a hopeless situation.
When the missionary is able to bring facts and proof of their position, there may be what to talk about. If all they have is feeling, there is no point in debating.
We can ask questions and
We can ask questions and feel disappointed, even if it is all true and we can't fix it. So I'd agree there is not much to debate other than how we feel, but try to remember that a great many of us were hoping this would result in more affordable prices.
I did look through the report properly, but the bottom line for me is that it hurts my pocket each month and I do get surprised quite often as I do my weekly shop. The impact is real and the only choice I really have is whether to keep kosher or not (which is hardly a choice at all!)
Seems there is a bigger
Seems there is a bigger problem with the retailer side of the value chain. Were there no surveys done to assess the price at a number of retail chains? Were the retailers too chicken to provide prices?
As for volume of production, many more people (even non-Jews) would buy kosher chickens if the price differential was not so high. Bring down prices and volumes will go up.
In the USA they separate the treif chickens into different bins and remove them for sale in the non-kosher market. Why do we need to make this cut to prevent the chicken from being used.
I also feel that many interviewess may have given some colured information using a marketing oriented approach
The High Price of
The High Price of Kosher
Funny how a braai pack at Norwood Pick 'n Pay cost me R68.95/kg today. That's so much more expensive that the other prices listed during the investigation. I'm convinced they were R59.99/kg a few weeks ago!