Inghams, one of Australia's largest poultry producers, has warned that rising fuel prices could cost the company up to $10 million, putting pressure on its bottom line and potentially leading to higher prices for consumers.
Fuel costs surge
The company said in a statement to the Australian Securities Exchange that it expects fuel costs to increase by between $8 million and $10 million in the current financial year, driven by global oil price rises and a weaker Australian dollar. The warning comes as businesses across the country grapple with rising input costs, from energy to transport.
Impact on operations
Inghams said the higher fuel costs would affect its logistics and distribution network, which relies heavily on trucking to move feed, live birds, and processed chicken products. The company operates hatcheries, farms, and processing plants across Australia and New Zealand.
"The increase in fuel prices is a significant headwind for our business," Inghams chief executive officer Andrew Reeves said. "We are working hard to mitigate the impact through efficiency improvements and cost management, but some of these costs may need to be passed on to customers."
Potential price rises
The warning has raised concerns that consumers could face higher chicken prices in the coming months. Chicken is a staple protein in Australian diets, and any price increase would add to household budget pressures already strained by rising living costs.
Inghams said it would continue to monitor fuel prices and adjust its operations accordingly. The company also noted that it has hedged some of its fuel exposure but that the recent price surge has exceeded expectations.
Industry-wide challenges
The poultry industry has been facing several challenges, including rising feed costs and supply chain disruptions. Inghams' warning highlights the broader impact of fuel prices on the agricultural sector, where transport costs are a major expense.
Analysts say that if fuel prices remain high, other food producers may also issue similar warnings, potentially leading to higher grocery bills for Australians.
Inghams shares fell 2.3 per cent on the news, closing at $3.40. The company will release its full-year results in August.
